Futures Point To A Flat Opening
INTEREST
RATES
OVERNIGHT
CHANGE to
4:15 AM:
BONDS +0
— Certainly the bonds were deserving of the nearly 3-point rally off the
January low, as the
US
numbers have been
softer than expected. In fact, the
US
economy really
hasn’t responded to the potential benefits of the stimulus package.
Maybe optimism toward economic recovery will surface once Congress
begins to show signs that passage of the plan is
possible, in the near term.
STOCK
INDICES
OVERNIGHT
CHANGE to 4:15 AM:
S&P +80,
NIKKEI +149,
FTSE +16 — Apparently, Bank stocks managed to
lead the market into a firmer opening in Europe this morning and that
would seem to discount the concerns over the US recovery present for
most of last week. However, with energy prices soaring and
US
housing starts possibly poised to post another contraction, we would
not expect stocks to mount anything more than a narrow short covering
rally. Given the headlines from the oil sector, that OPEC might be
incapable of checking the rise in oil prices, we would not be
surprised to see early gains reversed sometime before mid session.
FOREIGN
EXCHANGE
EURO:
An expansion in the Euro zone trade surplus should be slightly
supportive to the Euro but with the Dollar showing signs of technical
short covering, the trade figures are a non-event. However,
Germany
reported another round of favorable survey readings with the ZEW Index
posting the first positive reading since June. Therefore, the outlook
for the Euro zone in general should continue to attract capital,
especially once the technical correction has dropped the Euro to
106.07. In our opinion, all the Euro zone
has to do is post any positive readings and the
US
economy will pale in comparison.
YEN:
Despite rumors of intervention by the BOJ, there has yet to be an
official confirmation that the BOJ has intervened. Overnight economic
readings from
Japan
were a little better than expected, with December crude steel output
rising by 12% and bankruptcy debt declining by 15%. Near term
technical support in the yen comes in at 83.78. Just the technical
overbought status of the Yen could prompt a continued slide to 83.92.
SWISS:
The Swiss would not appear to be poised to directly resume the upside
track off flight to quality track as oil prices are soaring overnight
and the Swiss is re-testing last Fridays lows.
POUND:
Inflation readings from the
UK
continue to be under control and on the face seemed to lack the same
type of deflationary threat as was seen in recent
US
numbers. A trade below 159.56 could be damaging from a technical
perspective, especially if the Pound fails to rise in the face of
slack economic readings.
CANADIAN:
We suspect that the Canadian Dollar is vulnerable to a correction
because of its overdone status. Near term support is pegged at 64.70
and resistance is seen up at 65.07. Open interest also suggests that
the Canadian is due some type of corrective action for the early part
of this week.
METALS
OVERNIGHT
CHANGE to
4:15
AM
GLD -0.80,
SLV -2.0,
PLAT +5.90;
London
Gold Fix $355.55, -$1.35;
LME Copper Warehouse stks
854,875 ton, -2,400 tons; Comex Gold stocks
2.038 ml, -97 ounces; COMEX Silver stks
107.3 ml oz, -598,715 oz; OVERNIGHT: Longs cautioned by slightly firmer
Dollar action ranges were limited
GOLD:
It would seem that the gold market enters the week with a slightly
smaller net spec long than expected and with war talk only slightly
changed from the condition seen late last week. In other words, the
net spec long in gold only reached 112,000 contracts as of the January
14th mark-off date, but keep in mind gold has posted an additional
gain of $4 an ounce since the COT calculation and at one time was
another $7 above the close where the COT was measured. Therefore, we
suspect that the net spec long in gold has probably reached 119,000
contracts.
SILVER:
The net spec long in silver actually contracted by 900 contracts,
which should make the silver less vulnerable to corrections than many
might have expected. Trend line support in March silver comes in at
$4.75. Considering the sharp rise in open interest since late
December, we continue to see silver as slightly less powerful than
gold.
PLATINUM:
A strong gap up move overnight would seem to project a follow through
buying wave in platinum. However, platinum was already spec
long 6,000 contracts and that comes on an open interest of 8,890
contracts. Since the COT report was measured platinum has managed to
post $13 in additional gains. Therefore, platinum might be the longest
of the precious metals especially if one considers the relative
overall size of the platinum trading volume.
COPPER:
A Strike at a Grupo Mexico facility
evidently sparked a massive overnight response in LME action and those
gains could easily sustain if the
US
equity market maintains projections for a higher opening.
The significant overnight price response, to an isolated
strike, highlights what must be a pretty tight physical supply
condition. With the new high for the move overnight, we have to give
the bull camp credit for fostering such bullishness, despite the slack
US macro economic outlook that dominated last week.
CRUDE
COMPLEX
OVERNIGHT
CHG to 4:15 AM:
CRUDE +41,
HEAT +149, UNGA +69
— The energy market appeared to opened weaker and faded
toward the close Friday, but then managed to pull back and close in
positive ground and that is clear cut sign of the impending
bullishness in the market. Neither the
US
nor the IEA would
even discuss the potential to release reserves as both entities feel
the need to save the supply for what could be more traumatic times
ahead.
NATURAL
GAS
The
natural gas market saw its net spec long position climb to 41,000
contracts, but the March contract was trading $5.05 on that mark-off
point. With prices coming in today around $5.41 we have to think that
the net spec long is now closer to 46,000 net long.