Indications Pointing Lower
Globex futures action is indicating a lower open
Thursday, on the heels of a weak performance in overseas markets and a general
lack of buying interest this morning.
Thursday’s pre-opening outlook:
INTEREST RATES
OVERNIGHT
CHANGE to Â
4:15 AM
:BONDS +2
Evidently, soft US economic numbers finally resulted in distinct recovery action
in bonds. After failing to respond to weak numbers, the bonds suddenly spiked
higher when the
purchasing managers report came in much weaker than expected and the GDP was
also below expectations. The declines in the Chicago PMI
readings, were very large and the recently strong employment sector,
within that report, also showed a decline.
STOCK INDICES
OVERNIGHT
CHANGE to  4:15 AM:S&P-520 NIKKEI -84 FTSE -39 One has to give the stock market
a lot of credit Wednesday, for fighting back after a flurry of very weak
economic reports and by holding sentiment together after AOL confirmed they were
in fact, the subject of an official Justice department inquiry. It is clear from
at least four countries, that sentiment indicators in
July were damaged by the equity market slide but at least the market is in a
position to discount negatives. We are fearful of a profit-taking setback
especially when one considers the potential volatility off the monthly payroll
report on Friday.
FOREIGN EXCHANGE
Dollar: Dollar bears must be
scratching their heads, given the response in the Dollar to the weak
numbers Wednesday. Furthermore, the Dollar nearly gapped higher overnight and
has climbed above several extremely critical pivot points on the charts. Maybe
the market is predicting a much better than expected payroll report or maybe
coordinated intervention is behind the move. In any regard, the Dollar rally is
now entering a stage where short covering can’t explain the action. Getting back
above 108.33 could spark some stop loss buying. We would have to think that some
of the early gains would come out on the numbers release this morning but that
the Dollar will then re-gather itself.
EURO:
Next downside targeting is seen at 96.86 especially since the Euro was
undermined by some extremely weak French consumer sentiment readings. The theory
is that the Euro zone is coming into the slowing pattern, that the
entered two months ago and that the
might be close to climbing out of the dip while the Euro zone could see weakness
for at least the next month’s numbers. Therefore in
the near term profit taking is to be expected in the Euro. Several trend lines
have already been broken.
YEN: Near
term support in the Yen comes in at 83.13 as we said yesterday but given the
Dollar action, it is possible that the Yen falls down to a low of 82.31 instead.
Softer Japanese auto sales in July were partially offset by a massive 29.6%
increase in steel exports. More downside in the Yen.
SWISS:
Even number support at 67.00 looks to be tested and it is possible that the
Swiss falls all the way down to 66.45 given the ultra strong Dollar performance.
POUND: A
soft PMI number in the
countervails the strong sentiment readings floated on the retail sector on
Wednesday. We think the Pound is involved in some intervention action and is
headed down to 153.60.
CANADIAN:
We are simply at a loss to explain the action in the Canadian, as it seemed like
the big July wash was entirely an anxiety reaction. Those that managed to sell
the December Canadian at 62.80 and buy 10 of the December 67.50 calls need to
book the short futures profit on this dive. Use a downside target of 62.50 even
if that only covers 1/4 of your total call expense. A decline to 62.50 is a buy.
METALS
OVERNIGHT CHANGE to 4:15
AM:GLD-3.00 ,SLV-2.8Â ,PLAT+0.40 Â London Gold Fix $300.65 -$4.85 LME Copper
Warehouse
stks
893,400 tns +9,300 tns Come
Gold stocks 1.837 -2,003 oz COMEX Silver stocks 106.1 ml oz +19,626 oz
OVERNIGHT: A strong Dollar undermined Japanese interest and sparked
sellin
GOLD:
Another failure appears to be underway with the
market following Asian selling pressure to a new low for the move. Apparently,
even weak US economic numbers can’t undermine the US Dollar and that prompts
more position longs to exit. It is also possible that the late recovery in the
stock market disappointed those longs in for the anxiety kicker.
SILVER:
The silver market wasn’t acting very well before the gold market began its slide
off the Wednesday high and now there would appear to be added
liquidative pressure. The silver market was already
showing a negative price track to the soft
economic numbers posted Wednesday and now it would appear more of the small spec
and fund longs will be forced out of position. Near term support in the
September silver comes in at 453 but a more deflated liquidation down to 4.50 is
possible.
PLATINUM:
A minor gap down move overnight might be a signal that the bottom is about to
come out of platinum. We at least expect to see October platinum slide to 509
but under poor economic numbers, extremely weak world equity markets and hints
of Russian reform one can’t rule out a slide to $495. Using pattern analysis the
next low should be seen down at $507.70. Â
COPPER:
Two days in a row have brought massive increases in LME stocks and that catches
the copper in a bad demand window. Adding to the pressure in copper are very
weak signals from the
economy in the broadest measure of all, the GDP. Furthermore, the Chicago
Purchasing Managers report was significantly weaker than expected, causing some
concerns for the Friday unemployment report.
CRUDE COMPLEX
OVERNIGHT
CHG to  4:15 AM  :CRUDE +2  ,HEAT+13 ,UNGA-38  Volatile market action
brought on by the expiration in August product markets pushed Sept crude prices
lower Wednesday, but the downside will likely be limited by jitters over the
looming US military strike against Iraq. With the US Senate panel holding
hearings regarding the Bush administration’s intensions toward
destabilization of
oil flow is in the forefront of trader’s minds.
NATURAL GAS
Sept nat
gas prices are getting some support from the weather in the Northeast staying
hot basically through early next week before
moderating. The second day of power outages in the
area also had the trade a little jittery.
|
Today’s Program Numbers |
| Buy | Sell | Fair Value |
1.88 |
-1.83 | 0.71 |
Â
|
Today’s Futures Pivots |
|
S&P |
Nasdaq |
|
R2 |
926.70 |
 |
R2 |
992.17 |
|
R1 |
919.10 |
 |
R1 |
978.33 |
|
Pivot |
903.90 |
 |
Pivot |
960.17 |
|
S1 |
896.30 |
 |
S1 |
943.33 |
|
S2 |
881.10 |
 |
S2 |
928.17 |
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