You’ll Like This Price

• June 20, 2001
• Marc Dupee

Drivers will soon be getting a break at the pump. Unleaded gasoline
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which reflects wholesale prices, took its biggest dive in five months, tumbling
to where prices began at the beginning of the year. The plunge took the price of
unleaded down over half a buck or .0634 to .7903. Last night’s American
Petroleum Institute report showed inventories of unleaded are up 9%
year-on-year. Unleaded gasoline has been on the Implosion-5 List
since June 5. 

Other energies took it on
the chin as well, although the API was not as bearish those markets. July crude oil
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fell .98 to 26.50 and heating oil
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Stock index futures provided excellent intraday trading opportunities by
testing yesterday’s highs and lows. The S&P futures
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traveled rather precisely over measured moves off a double-top and head-and-shoulders bottom. The Spooz closed 5.30 higher at 1229.20, but had gyrated over
45 handles. Nasdaq 100 futures
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and
Dow futures
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One of the most notable events in interest rate futures was
the market pricing in a 50% chance of a 50-basis-point rate cut for next week’s
Fed meeting. 

The
Japanese yen
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a heavy-support level. Two and three days ago, the yen hit New 10-day lows. (But
due to implosive action in stock index futures, the yen has not appeared on the
Implosion-5 List). 

Prime Minister Koizumi’s cabinet reportedly has drafted a
report titled the Basic Policies of Upcoming Economic and Fiscal Management
and Structural Reforms of Economy and Society. The report mentions that the
government will no longer exert “wide authority,” implying it will cut
back pork project spending, local political subsidies, and will implement plans
to speed the elimination of the mountain of bad bank debt plaguing Japan.
Naturally this process will take a long time — years — and Koizumi’s reform
panel said as much by noting economic growth would be slower than the 1.7% GDP
target. Of course, a negative yen is dollar positive.

German financial officials also cut growth forecasts saying
their economy would not reach a 2% target set for this year. This comes at a
time when prices are rising. With inflation rising, the market doubts the ECB
will be able to cut interest rates much further. Both are negatives for
euro FX futures
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Swiss franc
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Early downside action in the currencies was a collective
plus for
September dollar index futures
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out of their Pullback From Highs
setup and closed up .05 at 119.44. Negative economic fundamentals of the US’s
most important trading partners — and the impression the Fed will be more adept
at managing the global economic slowdown — could continue to be dollar
positive.  

From the Momentum-5
List, July sugar
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day as it continues to move out of its recent consolidation/triangle. A push
through the May year-to-date highs in the 9.00 to 9.20 area would be very
constructive. Continued steady moves up will keep this contract on the Multiple Days Low
Volatility List, a signal of an impending large move.

After head faking higher out of its triangle-on-low two
days ago, cocoa
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set a fresh five-month low. The contract closed at what will be a Turtle Soup
Buy trigger for tomorrow, down 30 at 895.

Orange
juice’s
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head at 83.10 and a (conservative) neckline at 78, traditional measured-move
analysis suggests a test to a new low down into the 73 area. Juice closed on its
lows and at a contract low, down .70 at 75.25.

Coffee
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pressure from yesterday’s engulfing bar that wiped out the prior three days’
gains. Coffee is trading on its lows after an early test higher which is
equaling a contract low and a nearly eight-year low for the breakfast
bean. 

The second leading contract on the Implosion-5 List,
July cotton
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fifth consecutive session to new contract lows. This market is nearly one half
its November price now and closed down .51 at 37.68.

Momentum-5
List leader
August lean hogs
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has been on the M-5 list the entire month of June. My Off The Blocks
entry method has either kept you out of the market on flat days or down
days or got you in as this market advanced. Hogs closed .325 higher at 67.525
after reaching a new contract 68.100.