Futures Point To A Flat Open
INTEREST RATES
Another massive range down in bonds undermined a
number of long term technical signals, but the big range down was also mostly
rejected and that may signal a near term oversold standing in bonds. However,
with a flurry of important US economic reports due out over the next two
sessions, the tilt in the market could be presented with another major decision.
While some think the market is oversold and that prices could shift upward, the
trade can’t stand up to a strong economy.
STOCK INDICES
The stock market really faltered off a poor
excuse this week but since the market was looking for an excuse to break, that
hints at either an overbought status, or that sentiment toward the recovery
isn’t as conclusively bullish as we thought it was. The Nikkei fell aggressively
overnight and early US action looks somewhat weak and that suggests that the
earnings parade just isn’t serving to boost investment interest. Apparently Wall
Street is jumping onto the higher interest rate bandwagon, even though Wall
Street economists were recently predicting no rate hikes for as far as the eye
could see! We do agree that the earnings sweep has thus far proven to be
disappointing, especially when one looks at the previous earning cycle results.
DOW
The Dow only seems to have slowed its downside momentum present during the
action Tuesday, it doesn’t seem to be poised to recover sharply. In fact, the
near term tilt is down unless the US numbers ring the recovery bell even louder.
Seeing the June Dow below 10,361 anytime in the first hour of trade, should be
considered bearish, while a trade back above 10,383 could shift the near term
tide to the upside. An extremely critical upside pivot point in the June Dow is
seen at 10,419. We predict a critical low to be made above the 10,324 level
either this morning or Friday morning.
S&P
The S&P did manage a reversal yesterday but the reversal wasn’t what we call a
classic reversal. In other words, it would seem that the market made a temporary
bottom and that prices are preparing for an upward attempt. However, we would
not rule out a return to the 1124.00 level below the market turns up with an
aggressive tone.
FOREIGN EXCHANGE
US DOLLAR
So far the Dollar has remained within the prior days
range and is showing signs of being short term overbought. We think that the
Dollar is a lot like the US bonds and US stocks in that it needs a very steady
diet of supportive information just to carry it higher in the face of constant
political ridicule. In other words, the US economy has to show significantly
higher growth just to overcome the discount that the world has attached to the
Dollar. In short, the numbers have to bury the bears in the Dollar just to
continue adding to the recent gains. It should not be a difficult task to see
the US claims come in better than expectations, as the trade is expecting an
increase in claims. The two other reports due out from the US call for 1-2 point
gains in the Philly and Empire State reports, so the Dollar bulls will need to
see a gain above 2. In the mean time, the Dollar has support at 90.56 and then
again down at 90.20. The Dollar just fell short of the 91.08 first retracement
point off the 2003 high to 2004 low move yesterday and that level could be near
term resistance.
EURO
Trend line support in the Euro comes in today at
117.45 but as mentioned in the Dollar section, the Euro probably needs to see
very strong US numbers to continue down in the midst of a moderately oversold
technical condition. Another element that might have to present itself for the
Euro to fall further would be talk of that ECB rate cut. However, with the US
economy showing signs of recovery, we have to think that the ECB is in a wait
and see mode. From his cave Bin laden the great granted European countries a
temporary terrorism pass and that might be worth a little bounce in the Euro
(1-2 ticks).
YEN
Another new low for the move this morning in the Yen
and significant weakness in the Nikkei overnight would seem to project even
lower Yen prices ahead. In fact, we would not be surprised to see the Yen slide
to 91.68, especially if US numbers are stronger than expected.
^next^
SWISS
While the Swiss is showing some resistance to the
downside pulse in prices, the trend is still pointing down. Critical support
comes in at 76.72 but traders might want to wait for a rally to 77.23 to get
into fresh short plays.
BRITISH POUND
A fresh chart violation clearly presents a
continuation of the downside thrust. In fact, the Pound might be headed to
176.30 before support is encountered. An even lower support level is found off
an old gap down at 175.38.
CANADIAN DOLLAR
While the negatives seem to be lining up against the
Canadian, we think the market made or will soon make a major bottom. Critical
support comes in down at 74.00 and just a back and forth fluctuation in the
currency might allow for a bounce to 74.90. Buy the June Canadian at 74.20 and
use a stop below 73.80.
METALS
OVERNIGHT
London A.M. Gold Fix $398.00 -$7.75 LME
COPPER STOCKS 162,850 -2,450 tons COMEX Gold stocks 3.96 ml +95,486 oz Comex
Silver stocks 122.2 ml +50,323 oz
GOLD
The liquidation tilt continues, as the gold market
certainly hasn’t completely pulled down the record spec and fund long to a
nominal level. However, the market should be much closer to a firm low with the
$396.1, $394 and $391 levels all potential bottoming zones. However, with the
Dollar strong again, the market still technically vulnerable and the French
Finance Minister suggesting that the French Central Bank might sell part of its
gold reserve in order to obtain a higher rate of return on investment the gold
is still facing a negative outlook.
SILVER
The silver market sits in the same boat as gold,
with the speculative crowd spooked and temporarily without a supportive theme.
Technically the silver market looks like it could continue the slide to lower
support of $6.70. Perhaps the most supportive development yesterday was the fact
that a number of commodity funds returned to the buy side in a number of
recently frequented markets and that could be a sign that the funds are not
going to simply walk away from the markets.
PLATINUM
Something very impressive seems to be going on in
the PGM metals. Not only have prices avoided a tight correlation with gold and
silver, but US import totals for platinum and palladium continue to be very
strong. In February, the US imported 15 million grams of palladium versus 3.9
million grams last year.
COPPER
The copper market tried to recoil away from the new
low posted yesterday morning but is having trouble shaking the liquidation tilt.
Chinese copper prices were slightly higher but the market is still not showing
the type of buying that was present during the January through early March time
frame. Therefore, it is clear that the market will need to see favorable US
numbers to turn the slightly sloppy structure.
CRUDE COMPLEX
The energy complex was stymied Wednesday by the
US inventory readings. While the US crude stocks did manage an impressive
increase the build was partially countervailed by the fact that gasoline stocks
declined. Some even suggested that new data methods might have altered the crude
stocks build and that is something that could really surprise the market if the
big build is questioned.
NATURAL GAS
The Natural gas market was partially undermined by
the softness in the regular energy complex on Wednesday. However, we have to
wonder if a moderate injection in the weekly inventory readings today will serve
to give the bears a slight edge, as that would indicate an end to the draw
season. However, it should be noted that heating oil stocks managed an
impressive decline for late in the season and that could cause the gas storage
level to come out toward the big draw end of the range of forecasts.