Futures Find A Bid From Oversold Condition
INTEREST
RATES
OVERNIGHT
CHANGE to  4:55 AM :BONDS +1
We see several factors supporting Treasuries to even higher prices in the coming
sessions. First of all, the fact that the BOJ is suggesting that they will
continue to intervene against the Yen (despite the comments from the G7) creates
the potential for more central bank buying. Secondly, the macro economic case
seems to be deteriorating slightly and that should provide some long interest.
STOCK
INDICES
OVERNIGHT
CHANGE to 4:55 AM:S&P+170 DOW +15 NIKKEI -31 FTSE -42Â As far as we are
concerned, both the technical and fundamental setups are suggesting more
downside in the near term. Historically, the stock market doesn’t bottom quietly
from breaks of the type seen Wednesday and with end of quarter considerations,
we see fund managers having little patience. Fundamentally, there are a number
of discouraging elements fanning the flames of the bear case.
FOREIGN
EXCHANGE
EURO:
After seeing the Ifo rise and many European outlets talking about the potential
to hike interest rates, the Euro has economic and interest rate differential
support for a significantly higher exchange rate. In other words, the 115 level
might become support instead of resistance and the Euro might be headed for
117.50.
YEN:
A Japanese official suggested that various exchange rate levels will still bring
the BOJ in against the Yen, but right now the trade is only slightly fearful of
the BOJ. Soft economic numbers, a pattern of losses in the Nikkei and the world
exchange markets sensing blood, should mean that the Yen is poised to make even
higher highs in the sessions ahead. All that one can project for a high, comes
off the monthly chart up at 95.00.
SWISS:
The momentum is mounting and we suspect that the Swiss will be pulled up by the
Euro and by the gold market sentiment. Next resistance comes in at 74.95.
POUND:
Next resistance in the Pound comes in up at 166.66 off the weekly chart. Macro
economic reports and other views on the economy probably don’t matter in the
near term, as this market is all about momentum.
CANADIAN
DOLLAR: The Canadian dodged a bullet, as the Dollar problems could have pulled
the Canadian into its vortex. However, the Canadian isn’t out of the woods yet,
because the Dollar seems to be supported today by hopes that the BOJ can do
something about current conditions. Longs should not tolerate a slide back below
the 73.32 pivot point.
METALS
GOLD:
We suspect that the sharp gains in Australia overnight were mostly inspired by
the Forex action seen Wednesday. However, it would seem like investors are
plowing money into gold because a lack of alternatives. Yesterday the stock
market even turned a negative eye toward high tech stocks and other issues that
until recently had been in favor.
SILVER:
While silver might be lagging behind gold on the charts, it is poised to forge a
breakout of its own. Near term resistance comes in at $5.38 and then again up at
$5.60 on the monthly chart. One thing to remember is that silver seemed to get a
strong buying wave prior to the gold recovery Wednesday, and that could mean
that short term technicals are a little over extended.
PLATINUM:
A gap up move in platinum makes it clear that platinum will join the ranks of
precious metals in favor. However, the platinum market could easily be
considered to have the most bullish fundamental setup of all the metals,
considering its crimped supply. Therefore, even a moderate amount of increased
investment demand might result in extreme tightness in supply. Since prices are
already historically high, one has no history to project where platinum goes if
the Gold market manages to rise significantly above the $400 level! Therefore,
we at least expect a return to new contract highs in the coming sessions.Â
Â
COPPER:
Unfortunately the same conditions that are supporting the precious metals are
coming in a little negative toward the industrial metals. Certainly seeing
dealers dump out of long plays and having the US stock market fall apart
pressures copper prices. However, copper has managed to hold the up trend
channel pattern despite a slackening of the macro economic case.
CRUDE
COMPLEX
OVERNIGHT
CHG to    4:55 AM Â
:CRUDE +30Â ,HEAT+75Â
,UNGAS-10Â The energy complex was surprised by the fact that OPEC
decided to cut the output ceiling without many players expecting a move. Maybe
OPEC saw the price weakness early in the week off the idea that no cut was
coming and decided to preempt the market.
NATURAL
GAS
The
expectations for the weekly injection report call for an 80 to 105 bcf injection
and that is a big enough injection to continue to narrow the annual deficit. We
also have to think that the regular energy complex strength and a record fund
short provided the buying and that buying didn’t necessarily come from
significant amounts of fresh buying.