Futures Indicate Stronger Open
INTEREST RATES
OVERNIGHT
CHANGE to
AM
BONDS
+17 — It should be difficult to shut off the upward track in bonds, as US
economic numbers look to reconfirm the slowing trend and world equity markets
are still under the gun. Already the trade is anticipating a
weak auto sales readings from the afternoon reports and that should be
piled on top of a soft ISM reading from the morning trade, to lift bonds to even
higher levels. The biggest threat to the bull camp in Treasuries is probably the
lack of significant upside momentum and a slightly overbought short-term
technical condition.
STOCK INDICES
OVERNIGHT
CHANGE to 4:15 AM: S&P +180,
DOW +46, NIKKEI
+14, FTSE +41 — While stock prices appear
to be coming in a little firmer this morning, we don’t see technical or
fundamental evidence to suggest that a major bottom was put in place yesterday.
We do think that the market is approaching what could be one of the most
critical junctions in modern times. In our opinion, not ending the war this week
could easily result in a significant degradation of the global economy and
certainly a massive escalation in the hatred against the "
FOREIGN EXCHANGE
DOLLAR: The Dollar might see a pause in the selling but not a turn in
the trend. Worldwide hatred for the
attack of
continues to undermine investment flow into the
and therefore we suspect that a rally in the Dollar to 98.71 should be sold. We
have to think that the majority of US economic numbers due out today will
highlight the weakening of the
economy. If the war can’t be thrown off quickly, we suspect that earnings
downgrades and massive job losses will be seen. In fact, if the war can’t be
ended by the Friday morning unemployment report, we suspect that the Dollar will
be headed directly back to the March lows down around 98.20. Unless there is
some surprise geopolitical development today the Dollar might mount a weak
technical bounce and then head lower for the rest of the week.
EURO: If it were not for concern over Euro
zone numbers the Euro would probably already be above 109.00. Apparently March
Consumer sentiment in
continued to fall and that is joined by forecasts for record unemployment
figures for the month of March. In other words, the Euro zone economy is really
undermined and the flight to quality issue is allowing the trade to mask over
the problems with the economic structure. In other words
flight to quality buyers have the advantage, but risks are rising. If the
war ends, the Euro could make a critical top later this week!
YEN: So far, the fear of SARS has not
directly influenced the Yen and with Japanese auto sales rising for the 7th
straight month, we have to think that the Yen could forge an upside bounce.
However, if the June Yen can’t regain the 85.00 level today, we might have
already forged a critical top in the Yen.
SWISS: One has to be impressed with the
technical action in the Swiss, we also think that current conditions are nearly
ideal for the Swiss but we have to question how long that will last. Position
traders should consider buying a June Swiss put today and putting that position
away as an investment.
POUND: Unless the Pound can regain the
critical moving average at 158.24, we doubt that the trend is going to turn up.
With the CBI reporting an extremely weak March retail sales reading, we have to
think that recent Pound gains will stall at current levels.
CANADIAN: We are now beginning to fear a
broadening top formation in Canadian, especially if a majority of the flight to
quality reasoning is gone by the end of the week! Longs should exit the Canadian
and wait for a large correction or confirmation that the up trend is something
more than simple flight to quality buying.
METALS
OVERNIGHT CHANGE to
4:15 AM
GLD
-0.70, SLV -1.0,
PLAT +2.10, CP +95;
Gold Fix $335.65, +$.15; LME Copper
Warehouse stks 812,950 ton, -1,750
tns;
Comex Gold stocks 2.383 ml, +22,375 oz;
COMEX Silver stks 108.6 ml oz,
-315,566 oz; OVERNIGHT: Only minor buying in
with gold lacking fresh incentive overnight.
GOLD: While the energy complex is softer
this morning, it has been showing strength off the fear that another supply
incident might be seen. The trade thinks that the ongoing war increases the
chance of some surprise terrorist action against oil facilities and that same
type of sentiment has been partially responsible for fueling gold and silver
higher over the last five trading sessions. In other words uncertainty being
throw off by the war is partially supporting gold
prices.
SILVER: Near term resistance is seen at
$4.495 in the May contract with support tagged today at $4.43. Unless gold
manages to provide stronger leadership we could see the silver consolidate at
slightly lower levels on the charts. We still think that economic recovery is
the shortest path to a bull market in silver and that flight to quality is only
a short term driving factor.
PLATINUM: Surprisingly April platinum
managed to shut off the fears of deflation overnight. A two-week old strike at
the Impala mine might have resulted in some 16,000 ounces of lost supply and
that is evidently supportive in a relatively small market. Near term resistance
in the July platinum contract is seen at $640 but support should be close in at
$625.
COPPER: Weaker Chinese copper prices were
seen overnight as concern for the global economy rises and the war in
contributes to that anxiety. We continue to think that copper is being
influenced by the SARS disease, as there has to be concern that travel to and
from China might be restricted, if Hong Kong can’t contain the spread of the
respiratory illness. We also see continued weakness in European economic numbers
and that combines with fears that today’s
auto sales figures will show weakness to limit the bounce potential in copper.
CRUDE COMPLEX
OVERNIGHT
CHG to 4:15 AM: CRUDE -67,
HEAT -108, UNGA
-155 — The energy complex continued to show strength Monday despite news
that coalition forces were garnering more and more control over Iraq. In other
words, the security of Iraqi oil wells is improving dramatically.
NATURAL GAS
Apparently bear factors are still being discounted by the natural gas market and
that is specifically because the regular energy complex is providing support to
gas. With the coming three days expected to bring much above normal temps,
followed by normal temps late in the week, we have to think that the natural gas
is seeing its foundation of support erode.