Futures Find A Bid From Oversold Condition
INTEREST
RATES
OVERNIGHT
CHANGE to 4:15 AM: BONDS -5 — A big decline in stock prices and a weak
Kansas City Fed manufacturing reading confirm that the recovery track is
still suspect. With the string of losses in stocks extending and the
Thanksgiving holiday spending spree being slowly lost in the shuffle,
the bond bulls are finding it easier to push prices up. So far, the
threat of a massive tax cut is seen as a distant threat to bonds and
that means that near term economic reports and stock market action will
be able to lift bond prices.
STOCK
INDICES
OVERNIGHT
CHANGE to
4:15
AM
S&P +600,
NIKKEI -23,
FTSE +33 — While last Friday was close to qualifying as a
classic technical bottom, it has been followed up by a
“lower-low” and that doesn’t bode well for near term price
action. We stand by the theory, that the stock market makes a better
“traders bottom” after a concentrated massive downside pulse
that is rejected within the session, that prices were punished. Slightly
higher initial action this morning would seem to suggest a little short
covering profit taking and not a revived bullish attitude.
FOREIGN
EXCHANGE
DOLLAR:
It would seem to be an easy task for the Dollar to slide toward the
November low, especially if the
US
numbers today again prove to be soft. Thus far, the holiday sales
patterns have not been that supportive to the Dollar and right now there
is little else to alter the trend of pricing. In other words, the
downtrend is your friend in the Dollar. Near term support is seen at
104.85 but we suspect that the Fed meeting will pass without anything
significant and that in turn will allow for another failure in the
Dollar. Near term resistance in the December Dollar is seen at 105.18.
EURO:
An upside breakout overnight suggests that even with thin news, the Euro
is going to forge a move to a higher trading zone.
The ECB was out overnight discussing its inflation fighting
policy and in a way, defending its recent lagged rate cut action. In any
regard, the trade isn’t downgrading the Euro
because the ECB dragged its feet, as evidenced by the upside breakout
overnight. Near term upside targeting in the December Euro comes in at
101.65.
YEN:
After a new low for the move, the Yen found a little support on the
charts, but remains technically damaged. In order to turn the trend up
in the Yen, it might take a trade back above 81.23. Some minor political
leadership changes in
Japan
,
might stimulate a little optimism as anything that promises faster
reform, is deemed positive to that economy and to the Yen. We continue
to maintain a downside target in the yen of 80.00.
SWISS:
Since the current slide in the Dollar is about evaluation and not
because of some major anxiety event, the Swiss is only making minor
gains in sync with the Euro. Near term resistance of 68.85 might limit
the Swiss, unless the
US
stock market falls hard.
POUND:
A new high for the move and a failure to hold that high,
is negative to the Pound in the near term. Seeing a trade back below
157.42 could be more damaging than many might expect in the Pound. A
massive trade deficit posting from the
UK
this morning should add slightly to the profit taking mentality that
seems to exist today.
CANADIAN:
A clear pattern of lower highs suggests that the Canadian has lost
momentum. We fear a lower-low this week, down around the 63.57 level. In
fact, a trade back below 64.03 could pivot prices downward at a little
more aggressive pace. +
METALS
OVERNIGHT
CHANGE to 4:15 AM: GLD +0.40,
SLV -0.5, PLAT +4.10;
CP London Gold Fix $325.95, +$.65;
LME Copper
Warehouse stks
866,950 tons, -700 tns;
Comex
Gold stocks 2.03 ml, Unchanged; COMEX Silver stocks 106.0 ml oz, -300,022
oz; OVERNIGHT: Consistent Dollar declines have had little impact on gold
prices
GOLD:
The gold market continues to slide off the high forged last week, partly
because there is a lack of distinct fundamental information to drive
prices and partly because so many fundamental conditions are undecided.
The war issue is undecided, the recovery track of the
US
economy is undecided and lastly, the policy of the new Treasury
Secretary is largely unknown. A normal retracement
of the December rally, would project a correction to $324.8 in the
February contract.
SILVER:
In the silver market we sense a greater risk of missing a rally than in
gold, as the silver market has shown the ability to rally in good and
bad equity market environments. A couple moderate declines in COMEX
stocks might be a signal that indeed physical demand is starting to
improve but more than likely it is simply an ebb and flow of casual
business. In any regard, we would monitor the inventory stats and watch
for a downside breakout below 104 million ounces as a sign that physical
use is manifesting itself in tightening.
PLATINUM:
After the gap higher action Monday, platinum posted a poor close and is
exhibiting sloppy action. However, one has to assume that the trend is
up and that improved equity market action could ignite the platinum for
a run to an even higher level and eventually 639.
COPPER:
The copper market fell below a critical trend line support level with
the action Monday and needs to get back above 74.40 to keep the technicals
positive. Both
London
and
Shanghai
copper prices were lower overnight but
Shanghai
dealers were periodically seen buying on a scale down basis and that
could help stem further aggressive losses. Volume and open interest have
both declined aggressively since the November 26th session, and that is
a sign that prices above 74.00 cents are deemed a little expensive by a
portion of the trade.
CRUDE
COMPLEX
OVERNIGHT
CHG to
4:15 AM:
CRUDE -16,
HEAT -2, UNGA -38
— The energy complex was taking no chances with the situation in
Venezuela
as prices were bid
sharply higher Monday, just in case supplies from that country were
halted. However, overnight it would seem that the President is preparing
to offer up elections in a bid to stem the violence and the economic
damage to the national economy in
Venezuela
.
NATURAL
GAS
More
mild temps seen in the
US
and that could serve
to check recent upside momentum. However, looking further out the trade
can easily cite the annual deficit and another moderately large draw in
inventories as a reason to see solid support and possibly more near term
gains.