Futures Point To A Slightly Weaker Open
INTEREST RATES
04/05 OVERNIGHT CHANGE to 04:05 AM:BONDS-4
Typically it takes two full sessions to fully factor in a surprise payroll
report and the report Friday certainly qualifies as a bearish surprise.
Therefore, we have to conclude that more downside action is due, especially
since the weekend Press failed to discount the readings. However, overnight it
should be noted that both Euro zone and UK economic stats were soft, leading
some to conclude that the US economy is operating in a generally suspect
environment.
STOCK INDICES
04/05 OVRNIGHT CHG to 04:05 AM:S&P-300, DOW-15,
NIKKEI +142, FTSE-12 The stock market acted pretty much as we expected it would,
as it got favorable numbers Friday but had already factored in a good set of
numbers. However, considering the magnitude of the numbers Friday, one could
suggest that the market under-performed. Overnight the Nikkei was sharply higher
again and that at least provides some positive spin to start the US session.
DOW
While the Dow did manage a new high for the move overnight, we are not sure that
prices are going to come out of the box and soar. Certainly a correction back to
even number 10,400 should be considered a buy, but a more logical correction
point, might be 10,419. A critical upside pivot takes place with a trade above
10,457.
S&P
Trend line support in the June S&P comes in this morning at 1132.20, while an
upside pivot point takes place with a trade back above 1142.90. We see no reason
why the June S&P can’t make it back to the consolidation high zone of 1146 to
1157.30, especially if the jobless recovery concern is effectively put behind
the market.
FOREIGN EXCHANGE
US DOLLAR
The Dollar chart is pointing up and the fundamental
track would seem to verify the upward tilt. While some longer-term position
players might have trouble accepting a bull trend in the Dollar, it would seem
that the international numbers confirm such a track. In fact, this morning Euro
zone and UK stats were soft leading more traders to conclude that the economic
differential and possibly the interest rate differential, favor the Dollar.
Therefore, maybe the US isn’t poised to hike rates, but it would seem that the
ECB might be close to cutting interest rates than many might realize. In short,
the trend in the Dollar is up but the trade is having trouble getting fully
behind the bandwagon. We think that the market will have to be forced into a
bullish view toward the Dollar, simply because the entrenched view has been so
negative for so long!
EURO
With Euro zone February retail sales coming down
0.8% and the US coming straight off an ultra strong set of numbers, it shouldn’t
take much for the Euro to weaken further. In fact, considering the negative
setup on the charts we suspect that the June Euro could manage to slide all the
way down to 120.25 without much fanfare. A pattern of lower lows in the euro
gives us a near term downside targeting of 118.09! In order to send the Euro
shooting down through support of 120.25, the ECB will have to show actual signs
of cutting interest rates.
YEN
Apparently quantitative easing is undermining the
Yen this morning despite another sharp rise in the Nikkei. From the charts, the
Yen looks extremely vulnerable and could see a return to the old consolidation
highs down at 95.42 to 94.67. If US corporate earnings are strong on Tuesday,
that could facilitate a slide to 95.07 in the June Yen, by the end of the coming
week.
^next^
SWISS
As long as the Swiss holds above 77.00 it might
avoid aggressive long term liquidation. However, we see no reason why the Swiss
would hold up in the range, especially with the charts looking really negative.
The bottom of the trend in the Swiss is so far down, we don’t even want to
publish it.
BRITISH POUND
While the UK numbers were disappointing overnight
(February Industrial production was down -0.6%) we still see a chance for the
Pound to stand against the liquidation pressure. In fact, a pattern of higher
lows in the Pound would seem to balance the negative technical picture. Trend
line support comes in at 179.52 basis the June Pound.
CANADIAN DOLLAR
Given that the Canadian has shown periodic
correlation to the Dollar, we suspect that prices will have a favorable bias.
Near term critical support in the Canadian comes in at 75.70.
METALS
OVERNIGHT
GLD-0.80, SLV+10.00, PLAT+1.20 London
A.M. Gold Fix $420.55 -$5.50 LME COPPER STOCKS 181,850 -3,075 tons COMEX Gold
stocks 3.72 ml -96 oz Comex Silver stocks 121.8 ml -71,811 oz
GOLD
As we suspected the gold market saw some flight to
quality and economic anxiety liquidation but the liquidation was a little more
aggressive than we expected. In other words, there was quite a large contingent
of economic uncertainty longs in the gold market. With the Dollar higher again
today it would not seem like the weakness window is set to close quickly.
SILVER
As we suggested Friday, the silver market needed a
good payroll report in order to foster talk of improving physical demand.
Certainly weakness in gold held silver back but with the overnight Asian buying
and the return to the proximity of the highs, suggests that the bull camp in
silver is still in control. Trend line support in silver comes in down at
$7.854, while the top of the trend comes in all the way up at $8.60.
PLATINUM
A big range overnight in platinum shows some signs
of favoring the upside but the fact of the matter is that platinum has seen an
extended sideways consolidation for the last month and that hints at a loss of
momentum. Certainly the economic numbers from the US last Friday foster ideas of
strengthening physical demand but we have to think that platinum prices around
$900 are already factoring in pretty solid demand. The COT report spec and fund
long was pared by 1,000 contracts and stands just under 5,000 long, which is
well below the record spec long.
COPPER
Copper bulls have to be disappointed by the response
to the payroll report Friday, as the market passed on the opportunity to push
prices up. In fact, the inability to hold at the breakout zone on the charts is
fairly discouraging and could foster some long liquidation. Fortunately for the
bull camp the recent COT report in copper showed a moderately spec and fund long
position of only 29,000.
CRUDE COMPLEX
While the general bull market condition remains
in place, it is possible that energy prices could continue to slide. Therefore,
to temporarily break the back of the bull camp, it might only take another
moderately significant build in weekly US inventory stats. According to OPEC,
the seasonal rebuilding threat was supposed to take place in the Second quarter
and since the second quarter has only just begun one could logically fear more
significant rebuilding ahead.
NATURAL GAS
The natural gas market might have gotten carried
away with recent upside price action. In fact, we suspect that seasonal
Agra-Business purchases might have provided temporary support to prices and with
the overt weakness in the regular energy complex, we would be surprised to see
May natural gas prices hold above $5.70 in the coming week. In fact, unless the
natural gas market can manage to extend the draw season, beyond the April 1st
end, we doubt that natural gas will be to hold above the mid March highs.