Futures Point To A Slightly Stronger Open


BONDS +1 — The bonds come into the session
peaking out above chart resistance and are being driven by renewed war fears and
a slumping stock market. Seeing a March S&P trade below 836, would probably give
bonds an added lift, as that would ratchet up anxiety and could serve to crimp
consumer confidence. The UN testimony takes center stage today with the
Secretary of State expected to offer up more evidence.



4:15 AM
S&P -400, DOW
-3.5, NIKKEI +64,
+5.9 — Supposedly, the stock market fell Tuesday off a
combination of Insurance sector woes and the escalation of war fears. In the
overnight action, we saw slightly higher action, which would seem to mitigate
the anxiety present in the market yesterday. The pattern of reaction in the
stock market has shifted slightly, with the market falling yesterday off the
fear of war and that is slightly different than the action in early January,
when getting on with the war was seen as a supportive issue.


DOLLAR: The war tilt selling seen Tuesday
continues today with the Powell testimony the focal point of the bear camp in
the Dollar. However, if it were not for the bearish tilt fostered by the war
issue, the macro economic readings from the Euro zone might have provided the
Dollar some support. Considering that the German jobless figures rose by as much
as the


readings are expected to decline in the coming report, the


economy could be viewed in a better light. However, the war issue is going to
continue to dominate the Dollar. In fact, the UN speech today will be extremely
critical to the Dollar, as the failure to sway other countries will result in


going it alone with the


and that will simply turn up the liquidation pressure on the Dollar. Downside
targeting in the March Dollar today is initially 98.70, but if the Secretary of
State provides significant proof and some countries shift their support, we
could see a temporary bottom form in the Dollar around 99.00.

EURO: As suggested before, the German
jobless ranks jumped by 62,000 and that reading is made even worse by the fact
that the unemployment rate jumped to 11.1% from 10.1%. In other words, German
unemployment is now “5%” above that of the


and yet the trade is enamored with the Euro.  The Euro zone also posted a slight
decline in the January services PMI and noted increased job cuts in the month.
In the end, the Euro “has” to have the war issue in order to continue pressing
the Dollar lower! Those that are long the Euro should begin to plan an exit
strategy, or should at least purchase some protective puts.

YEN: Overnight


posted weaker readings in leading indicators however; with open interest falling
on the recent slide in the Yen, it would appear that the market is rejecting the
downside tilt. We also have to think that significant weakness in the US Dollar
into the UN speech, is providing the Yen with a lift that may not sustain. If


convinces other countries with its testimony today that could halt and reverse
the overnight rally in the Yen.

SWISS: Initially the Swiss appears to be
grasping flight to quality interest but the buying doesn’t appear to be as
aggressive as in past buying waves. Near term targeting in the Swiss comes in at
74.70 but we might be moving into a topping formation in the coming 14 sessions.

CANADIAN: We are very impressed with the
Canadian performance this week as it apparently deflected the corrective tilt
and remains poised to forge new highs. We assume that the next Canadian payroll
report will provide even more evidence that the Canadian is undervalued. The
trend is up but longs should carry some cheap put protection.


+6.80, SLV +3.7,
+5.00; London Gold Fix
$385.00, +$10.15; LME Copper Warehouse sts
851,550 ton, +21,125 tns; Comex Gold stocks
2.147 ml, -12,633 oz; COMEX Silver stks
108.1 ml oz, +497,987 oz; OVERNIGHT: Another new high for spot gold but gains
were pared very quickly

GOLD:  The wild action reported in


gold overnight, hints at the potential for volatility in the coming two weeks.
Supposedly, gold rocketed higher and then encountered massive selling before
managing to finish the session several Dollars above where the US gold market
finished its action Tuesday afternoon. Apparently some buyers in the




were buying gold because of fears of some type of confrontation with

North Korea

SILVER: The May silver managed to breakout
of the up trend channel to the upside overnight in the first sign of solid
strength since the early January probe. However, we calculate the net spec long
in silver to be closing in on 80,000 contracts and that is basically a modern
day record for the spec long position. Like gold, silver longs should consider
carrying some cheap puts for protection in the coming two weeks.

PLATINUM: The platinum market surprisingly
isn’t showing significant strength like the gold market overnight and that could
be because platinum volume is extremely thin overnight, or it could be because
traders are starting to balk at the extremely high price of platinum.  

COPPER: The copper market finally woke up to
the outside macro economic concerns of war. Furthermore, the LME posted a
massive increase in stocks overnight and that could prompt more long liquidation
ahead if stocks start a building pattern. We suspect that copper could easily
slide to 76.00 in the March, while a slide below 836 in the March S&P, might
ignite an even bigger slide to 75.40.


CHG to 
+71, UNGA +81 – The trade wasted no time in
pumping up the war premium into energy prices with the product markets taking
the leading role. The trade clearly suggested that the upcoming testimony from
the Secretary of State was the primary purpose but we see a number of bullish
issues rising to the forefront.


A fresh
contract high was posted Tuesday partly because of the upcoming cold and mostly
because of the strength of the regular energy complex. Trend line support in the
March contract comes in at $550.6 with the top of the up trend channel not
coming into until $5.98.