Wednesday’s Futures Setups
Stocks suffered deep losses
Tuesday as
continuing accounting concerns weighed heavy on investors’ minds, dragging down
big names like International Business Machines (IBM),
J.P. Morgan Chase (JPM),
Disney (DIS)
and Nvidia (NVDA).
Since the Enron debacle, companies’
financial-disclosure practices have come under intense scrutiny. Analysts say
repeated disclosures about questionable accounting practices have bruised faith
in the reliability of earnings reports, which in turn has sent stock prices
tumbling.
Three of the broader index futures fell and
closed below their S2 Pivot Points today. The March S&P 500 (SPH2)
futures closed at 1083.700 down 21.100. The March Nasdaq 100 (NDH2)
futures closed at 1394.500 down 45.50 and the March Dow (DJH2)
futures dropped 160.00 to 9738.
March wheat futures (WH2)
tumbled Friday on the Chicago Board of Trade. Accompanied by a bland outlook
for U.S. exports. After trading slowly all last week, wheat bounced off of its
support level today to close higher at 277.75 up 2.5.
April gold (GCJ2)
April gold (GCJ2)
on the Comex division of the New York Mercantile Exchange broke below its
initial support of 295.30 and found support at its 20-day EMA. Gold closed at
293.50 down 5.40. We have been warning investors to watch for weakness in gold.
Gold has a tendency to pull back after a large fast movement.
May cocoa (CCK2)
is pulling back from its high. Support is at around 1400. May cocoa dropped
35.00 today to end at 1432.00.
March pork bellies (PBH2)
has been trading right around the 50% retracement line. Today bellies broke out
higher to 76.85 up 2.55. Bellies have overhead resistance at 77.
March natural gas (NGH2)
broke out above its resistance line then closed just below it at 2.397 up
.19.
March cotton (CTH2)
has been trading in a channel between 38 and 35. We were looking for a breakout
to the upside, however when watching a channel, you should be looking at a
breakout on either side. Today cotton broke down below support and bounced on
its secondary support (33.67) and closed just above it at 33.85 down 1.72. If
cotton for March breaks below 33.67 the next support is at 30.00.
|
Contract |
|
|
|
| March U.S. dollar (DXH2) | Pull Back From Highs | UP |
break above 121.00 |
|
Channel |
UP |
break above 38 |
|
| March 30 YR Treasury (USH2) | Inverted Head and Shoulders | UP | break above 104 |
| March 10 YR Treasury (TYH2) | Inverted Head and Shoulders | UP | break above 107 |
Please note that while
there are strong trends in some commodities, one bar or a series of bars forming
a setup can sometimes indicate a contra move for the next day. This contra move
may not be long-lasting — maybe only for a day or two. Trading with the main
trend is always the highest probability trade.
Use stops on all your
trades.