Drugs and Software Weighing Down…
INTEREST RATES
OVERNIGHT
CHANGE toÂ
4:15 AM
:BONDS +1 While positive stock market action, makes economic recovery hopes more
prevalent, there continues to be significant trouble spots and a lingering fear
of deflation and that should begin to provide support to bonds. Furthermore, now
that the bonds have seen a 7 point slide, from the October high, to the recent
low, we would have to assume that downside volatility will decrease. However,
many think that the Microsoft earnings report this morning is going to fuel the
stock market sharply higher today.
STOCK INDICES
OVERNIGHT
CHANGE to Â
4:15 AM
NIKKEI +126Â FTSE -55Â The stock market will battle fears of an overdone status
and the residual of the slack economic numbers seen Thursday. The bulls cite a
favorable earnings surprise from Microsoft, as a reason to press prices higher
today, while the bears dredge up slack earnings readings from Ericsson, as a
sign that bullish sentiment is running ahead of reality. We have to suggest that
softer energy prices and a more dovish diplomatic approach toward
is a supportive development from the overnight newswires.
FOREIGN EXCHANGE
EURO: The
EU President suggestions that EU budget rules are folly, did seem to spark the
Euro slide, and given a chance to retract the statements the President stood by
his claims. Therefore, some the Euro losses are off internal developments and
some of the recent losses in the Euro, are because money is moving toward the
in hopes of seeing above average rates of return. With the Microsoft earnings
making Ericsson earnings seem even worse, we can see the Euro remaining near the
downside breakout point of 96.72. In other words, if US stocks soar the Euro
falls back to the weeks lows but probably doesn’t forge a new low. Aggressive
traders might be a buyer of the December Euro at 96.83, with an objective of
97.28.
YEN: An
extraordinary session of Parliament saw another anti-deflation speech from the
Japanese Prime Minister but all that was offered as a plan, was government
support of the banking sector. Therefore, the Yen looks to continue the downside
breakout with an initial target now, down in the 79.00 to 80.00 trading zone.
SWISS: We
suspect that heavy selling of the Swiss will wane today and that a near term
bottom might be forged around 66.13.Â
POUND:
The
posted some strong numbers with net
lending rising smartly in September and an increase in money
supply. Therefore, the trade detects no slowdown in the
economy. With the Dollar possibly without as much direct support from its equity
market that could clear the way for the Pound to bounce further away from the
recent low. In fact, we think that the big probe down was rejected and that the
Pound might try to rise back into the early October
consolidation range, which is bound by 154.30 to 155.00.
CANADIAN:
While the Canadian might be overdone technically, it could maintain the upside
climb if the
stock market managed to open higher and continue higher. However, it would not
be surprising to see the December Canadian correct with a dip to 63.39 and then
build a base to work higher from in the action next week.
METALS
GOLD: As
the
stock market and US corporate earnings spark equity market rallies worldwide, it
is clear that more
flight to quality longs are exiting gold. Unfortunately, there is
not enough physical buying, to compensate for the long liquidation and gold
prices look to maintain a downward tilt. Even the Dollar is creating negative
pressure for gold.
SILVER:
If the gold market sees less pressure, then the silver market might be free to
respond a little more favorable to the equity market surge. However, we are not
sure that silver is ready to come out of the bottoming
consolidation pattern, especially with heavy overhead resistance
around $4.40. With a key European mobile phone company reporting reduced sales
projections this morning it is clear that the strong stock market rally has yet
to translate into improved demand for products that use silver.
PLATINUM:
We are actually surprised that the platinum stalled with the external conditions
so favorable. However, it should be noted that the economic information released
Thursday were all, softer than expected. As long as January platinum holds above
$577.2 the bull’s control.Â
COPPER:
Another big day up in US stocks might allow the December copper to climb above
70.00 and head toward the September high of 71.40.
copper stocks declined 3401 tons in a pattern that continues to hint at
moderately good demand inside
Certainly some of the gains Thursday were funds covering shorts but we also have
to think that some fresh buyers came into the market.
CRUDE COMPLEX
OVERNIGHT
CHG to Â
4:15 AM
:CRUDE -6Â Â ,HEAT-42Â ,UNGA+32 Â While the market didn’t respond to the decline
in DOE gasoline stocks, we have to think that is an important development.
Certainly the massive build in DOE crude stocks, diffuses some near term bull
sentiment, but with the
refinery rate at such a low historical level, we can’t help but think that the
old product issue is going to build back in as the primary supporting issue for
the energy complex.
NATURAL GAS
We are
impressed with the natural gas markets ability to forge a new high close in the
face of a 48 bcf injection in stocks. The gain in the natural gas is even more
impressive given the generalized weakness in the regular energy complex.