Futures Point To A Weak Open
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INTEREST RATES
OVERNIGHT
CHANGE to
04:17 AM
The ongoing uncertainty toward the economy was manifest in most of the numbers
late last week. In fact, we have to think that the retail sales readings were
the most telling off all the figures. In our opinion, the biggest risk to
Treasury bulls is the potential for soaring retail sales into the holidays and
the numbers last week seem to mitigate that risk.
STOCK INDICES
Overnight
the market was given an additional downward push by the fact that the Nikkei was
down sharply off terrorism threats lodged against
and by the weak Industrial production readings from the Euro zone. Given the
technical damage on the charts, it would seem that stock prices are set to slide
for at least the early part of this week and could possibly return to the late
October consolidation low early next week. We would assume that the trend in
prices is down until something changes “headline sentiment”.
FOREIGN EXCHANGE
Dollar: The Dollar continues
to mount recovery bounces but would seem to be entrenched in a downward track.
So far, the market isn’t the least bit interested in finding anything positive
from the
numbers but with the Euro zone posting some weak numbers this morning, the
Dollar probably sees the selling pressure abate slightly. However, minor rallies
of 20-30 points in the Dollar should be seen as a selling opportunity. Short
term technical indicators remain in a sell mode and with the US expected to see
more negative headlines from Iraq and sagging consumer sentiment, we suspect
that the Dollar will hardly be able to return to positive ground before another
wave down is seen. The next critical target in the Dollar comes in off the
monthly charts down at 90.74 and then again down at 89.05. Until something major
changes, assume that the trend is down in the Dollar.Â
EURO:
Euro zone industrial production readings detract from the up trend and with the
Euro approaching critical levels on the charts, it
might take some back and fill before the Euro makes a run to new contract highs.
Short-term technical indicators are pointing up but the 0.6% decline in
industrial output from the Euro zone really undermines the bull case in the
early going today. Therefore, critical resistance will be seen at 118.42 but
support in the Euro should be formidable at 117.59.Â
YEN: We
are not sure if the Nikkei losses or the terrorism threats against
are responsible for the Yen slide this morning but given the magnitude of the
slide, one can hardly argue against additional losses. In fact, we see the Yen
sliding to support of 90.82. Detracting from the weakness in the Yen is the fact
that no other currency seems to be capable of dominating the action. In other
words, the trade would just as soon be a seller of all currencies today!
SWISS:
The Swiss might be viewed as the currency with the most to offer in the near
term. In fact short-term technicals are pointing up
and a return to the October highs might be in order. Therefore, expect the Swiss
to run up to 76.86 until significant resistance is encountered.Â
POUND:
Right behind the Swiss in terms of leadership this week, could be the Pound.
Certainly short-term technical indicators are favorable for the Pound, with near
term targeting seen up at 169.42. So many other currencies are out of favor that
the Pound and the Swiss might win buyers by simple default.
CANADIAN
DOLLAR: There is some talk that commodity currencies might come under pressure
because of the Producer inflation readings from the
last week. However, we don’t get the sense that the Canadian is that vulnerable
but from a technical perspective, the overnight trade in the Canadian is rather
suspect. Near term corrective potential is seen down
to 75.76.
METALS
OVERNIGHT CHANGE to 04:17
AM:GLD-0.20, SLV-1.00, PLAT-0.80Â London A.M. Gold fix $398.00 +$2.65 LME COPPER
STKS 496,850 tons -800 tons COMEX Gold stocks 2.963 ml -498 oz
Comex
Silver stocks 119.9 ml oz -337,508 oz OVERNIGHT: The psychological barrier of
$400 gold limited gold overnight.
GOLD:
While the market managed a $401.4 trade overnight, it would seem that the key
pivot point of $400 affects the market. It would seem that equity prices will
enter the week on a down note, with the Nikkei down 380 points and the
market showing moderate weakness in the early action. Apparently it has been
suggested that
would become a target of terrorism if that country sent troops to
SILVER:
The silver market probably comes into the week with a net spec and fund long of
66,000 contracts, which is moderately over done but certainly not without
additional buying capacity. It does appear that silver will continue to ride the
coattails of gold and with the short-term technicals
in silver surprisingly leveled, one can’t rule out more gains in the near
term. Near term resistance and targeting in silver comes off the monthly charts
up at 557, while critical support comes in down at the pivot zone of $5.22.
PLATINUM:
While platinum is showing another poor technical trade overnight, it has managed
to reject technical vulnerability in the past and continue on with the up trend
pattern. Unlike gold and silver, the technical setup in platinum is a little
less impressive. In fact, if world equity markets continue to exhibit weakness
and the economic attitude deteriorates, that could foster a correction in
platinum similar to the correction seen at the end of October (a $30 decline).Â
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COPPER:
The copper market appears to be pausing to consider the overall direction of the
world economy. Like platinum, copper has enjoyed a significant run for the past
6 months and can’t simply discount the lack of macro economic optimism. After
another minimal
copper stock build last week and the negative action in world equity markets
overnight, the bull camp in copper would seem to be off balance.
CRUDE COMPLEX
OVERNIGHT
CHG to 04:17 AM:CRUDE-28, HEAT-68, UNGAS-56Â Energy markets exploded higher last
week as funds continued to get long based on a fragile supply situation,
escalating political tensions in the Middle East, and concerns over the security
of oil facilities and transport. The API/DOE report last week confirmed that oil
supplies are tight, with both crude and distillate supplies less than 8 million
barrels above year ago levels while gasoline stocks are still over a 1 million
barrels under year ago levels.
NATURAL GAS
The funds
continued to exit their massive short position and the commitment of traders
report with options indicates the funds were adding to shorts as recently at
November 11th, which may prompt more short covering this session. Technically,
the market has made a solid bottom around 4.85 basis
Jan nat gas and the close back over 5.25 projects a
rally back to 5.550 and possibly 5.715.