Early Red For Monday
INTEREST RATES
Closed
due to holiday!
STOCK INDICES
OVERNIGHT
CHANGE to
4:15 AM
S&P -350,
NIKKEI -230, FTSE -52
— The S&P continued to violate critical chart support levels
in the early action today. Therefore it now appears that a moderate retrenchment
of the October gains is underway. It would seem that the “world” is somewhat
concerned about the pace of global recovery, but most of that concern is
centered on the
economy.
FOREIGN EXCHANGE
DOLLAR: About the best thing
that the Dollar has going for it this week, is an extremely thin economic report
slate. With some critical earnings reports and a statement from Greenspan
Wednesday, there might be a chance for a mid week bounce but from the charts it
appears the Dollar is headed down. The weekly chart offers up some support about
25 points below the projected lower opening, but we have to wonder if some
bigger historical adjustment is taking place in the Dollar. In fact, maybe the
break in the Dollar isn’t coming because of the concern over the
economy but maybe the break is coming because the flight to quality premium or
war premium in the Dollar is being extracted. In our opinion, the markets might
have been interjecting some war premium into the Dollar
since the July low and are now extracting that back out. However, since
it would appear that the Dollar is set to fall below the July levels, on the
monthly chart there is evidently more than 1 factor behind the sell off. We have
to think that the Dollar will slide into new low especially if we see two more
days of declines in the
stock market. The downside target in the Dollar this week,
is 65 ticks below the opening range.
EURO:
There is no history for the euro at current price levels and since it continues
to win by default, we are uncomfortable being long. For those looking to benefit
from the Dollar slide, we would strongly suggest being long the Swiss or the
Pound, as we fear the EU economy could get in the way of a sustained Euro rally.
After all, the ECB is certainly against cutting rates and an ECB official this
morning is indicating that they feel no need to cut rates. Therefore, if the
world economy continues to soften one might expect the ECB to be the last to do
anything about it.
YEN: Just
when the
economy could have sent an economic shock wave through the Japanese economy, the
Japanese numbers are riding to the rescue. Machinery orders for September posted
strong enough readings to take away the focus away from US exports (at least in
the near term) and therefore the Yen continues to rise. However, we think the
Yen has risen enough that the BOJ will be ready to respond but maybe not until
the December Yen climbs to 86.00.
SWISS:
About the only thing that is missing from the Swiss climb, is a sense of global
anxiety and that might be added this week if world equity markets slide as
expected. The Swiss should at least be headed to the July highs or another 40
points up on the weekly charts.
POUND:
The Pound is the new “leader-currency” with apparently a more respected economy
than the
The next upside target in the Pound comes in 180 points above the opening
indications this morning. With
inflation readings coming out right on expectations this morning, there would
seem to be little to alter the upward track in the Pound.
CANADIAN:
The Canadian is vulnerable to even more liquidation this morning, as it appears
the Canadian Dollar is being lumped into the same negative focus as the US
Dollar. Initial support is seen at 63.58 and then again down around 63.38. We
would have thought that the recently released Canadian payroll report would have
been enough to mitigate corrections in the Canadian, but apparently those
readings were totally discounted. +
METALS
OVERNIGHT CHANGE to 4:15 AM:
GLD -0.20, SLV -0.2,
PLAT -3.50; London Gold Fix $321.10, -1.455;
LME Copper
Warehouse
stks
859,475 tons, +900 tons; Comex Gold stocks 1.994,
Unchanged; COMEX Silver stocks 107.1 ml oz, Unchanged; OVERNIGHT: Despite weak
equities Gold was softer in Japan. Yen prompted selling.
GOLD: The
gold market continued to get direct support from the weakness in the equity
market last week, but gold appeared to give ground off the highs Friday because
of the UN resolution. Furthermore, we are a little surprised that moderately
weak global equity prices overnight did not prompt buying of gold in
or in
While the trend looks to remain up, we would suggest longs be prepared for some
weakness in gold early today.
SILVER:
We would give the silver market a little slack this morning on the opening, just
to see if the weakness in the
stock is going to alter what appears to a corrective tilt. The silver market
isn’t nearly as overbought as gold, but it does have 26,000 contracts long in
the spec position. We somehow get the sense that silver is paying a little more
attention to the deflation threat than is gold.
PLATINUM:
A gap down extension suggests that the slack economic look is positioning
platinum for a decline to at least $572 basis the January contract. According to
the last COT report the platinum is long enough in the spec position to see some
sustained selling.
COPPER:
The copper market comes into this week with nearly 28,000 spec longs but that
number is probably overstated given the slide since the report was measured. The
equities markets are generally soft and the world is a little negative toward
the recovery, which should weigh on copper prices. Asian copper prices were
weaker and we would have to think that Chinese buyers would at least wait to see
if a correction to 70.00 cents (basis the December futures) might unfold before
placing fresh buy orders.
CRUDE COMPLEX
OVERNIGHT
CHG to
4:15 AM
CRUDE +26, HEAT +92,
UNGA +111 — The trade will be
watching closely for the Iraqi response to the UN resolution. Supposedly, the
Iraqi Ruling Council will respond today to the UN resolution.
NATURAL GAS
The
natural gas market showed a moderately large spec long position of 24,000
contracts in the COT report and the position might even be a little longer than
that now, considering the action seen since the report was taken. With the
recent cold weather in the
we would have to expect to see another draw in the coming inventory report.