Uncle Al Guns It
Stock index futures and the dollar index sank after the
Fed cut overnight interest rates by a highly anticipated and expected 50 basis
points. The move was intended to accelerate the economy out of a looming recession
but is considered by many to, nonetheless, be action insufficient to prevent a recession.
Some market participants believed the Fed would take even
more aggressive action today. The nearby Federal Fund futures
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chance of a 75-basis-point cut today.
A 50 bp cut was already priced into the market and stock
indexes sold off after gyrating in the minutes following the Fed’s announcement
at 2:15 PM ET.
As Lewis Borsellino describes in his S&Ps
and Stock Index Futures Trading Course, the S&P futures often make
three moves, or fakes, before settling into a decisive trend in the time immediately
following a Fed announcement. The following charts in the two-minute time frame
show how that pattern repeated today. Borsellino also alerted
TradingMarket.com members to the potential for this three-moves-and-go pattern in his Borsellino’s
S&Ps PM today.
Longer-term debt futures rallied in
reaction to perceptions that the Fed will have to become even more aggressive in light of this week’s data that
showed declining consumer confidence, a super-weak National
Association of Purchasing Management (NAPM)-Chicago report and a GDP rate of
just 1.4% last quarter. T-bonds
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and
10-year notes
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March dollar index futures
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showed resiliency in the face of what many have thought would be a greater sell
off. The ECB is not expected to follow the Fed with a rate cut tomorrow
at their monetary policy meeting, but they could surprise. Euro FX futures
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rallied .00640 to .93430.
The
Canadian dollar
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High yesterday.
Unleaded gasoline fell sharply after weekly statistics from the American Petroleum
Institute and Energy Information Agency showed inventory building at a rate eight to10
times greater than expectations. March unleaded gasoline
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has been setting up to make a large move–a situation highlighted by its Multiple Days Low
Volatility
reading–and crumbled over .0350 before settling .0207 lower at
.8262.
As pointed out in this morning’s
Pre-Opening Futures Outlook, energies might also be pressured by what
appeared to be a slip of the tongue from the Managing Director of the National
Iranian Oil Co. The official apparently said that he sees a “glut” of
supply over the next two months! Iran is a member of OPEC. The weekly API and
EIA data were bullish for crude oil. March crude oil
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lost .40 to close at 28.66. Heating oil
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.7596.
Natural gas
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larger-than-expected drawdown in weekly gas inventories.
March feeder cattle
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aftermath of reports that animal products may have been fed to cows on Texas a
feedlot, a practice that spreads mad cow disease. Feeders are the leading
contact on the Implosion-5 List
and slipped .47 to 84.975. (Click
here to read a Reuters update on the mad cow situation.)
A day late, March sugar
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rally, triggering a Turtle Soup Plus One buy setup which registered
yesterday. Sugar closed .24 higher to 9.95.