Why The Tumble?
It’s been one of the
worst weeks in the history of bond trading. Or best, if you were short.
While the rally to a contract high through November 1 was impressive, the
decline has been more so. Why the tumble? Among the reasons is the fall of
Kabul may have made traders feel better about their portfolios, and traders
sold to remove some of the “war premium” built into bonds. And on
the economic front, a record strong retail
sales report this week (thanks to Detroit’s 0% car financing), a
notch down in weekly unemployment claims, and a slowing of the decline in
regional economic growth coalesced to suggest the economy could be closer to
a bottom than perceived.
This suggests the Fed
may soon stop cutting interest rates.
T-bonds
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threw support levels suggested in Thursday’s Futures Setups to close down 1
11/32 at 104 30/32. The pattern suggesting that a big sell-off was in store
was pointed out in this column on November 8. The Nightly Futures Traders
Report has also had T-bonds on its short list. Yesterday, the contract made
good on an Off The Blocks
short after registering on the
New 10-Day Low List. The signs were there if one knew where to look for
them. T-bonds fell more than five-and-one-half points this week (about 178
ticks, where each tick equals $31.25).
Stock index futures closed down slightly, but remained near their highs in
churning action, a good way to potentially work off the heady froth (i.e.
their overbought condition) from gains made since the September lows.
December Nasdaq 100 futures
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situation yesterday, so watch for an explosive move, either way, as trading
resumes Monday.
January soybeans
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gap left in October, closing up 5 3/4 at 452 1/2.
December wheat
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(rallied out of a long, intraday consolidation), then exploded into the
close to finish up 9 at 289 1/4.
In volatile trading, pork took a sharp turn south again. February 2002 pork bellies
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had set up in a
Turtle Soup Plus One
Sell for today and provided entry by trading above yesterday’s highs before
cascading to close down .900 at 74.350.
December lean hogs
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March cocoa’s
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and contract high nullified the theory that it would retrace its parabolic
run from yesterday’s high of 1245. Notice how this Momentum-5
market continues to make good on Off The Blocks
openings.