Futures Point To A Stronger Open
INTEREST
RATES
OVERNIGHT
CHANGE to Â
4:15 AM
:BONDS -6Â The
bonds are seeing more follow through selling this morning, but profit
taking could be cut short if today’s economic data is weak. A much
weaker than expected Dec Consumer Confidence reading added to the market
perceptions that the economic recovery is on fragile ground. If today’s
ISM number also comes in weak, with the unemployment rate at 8 year
highs, and businesses afraid to make any capital spending commitments,
market expectations will be peaked for the Fed to lower interest rates
again.
STOCK
INDICES
OVERNIGHT
CHANGE to  4:15 AM    Â
:S&P+140 DOW +14Â FTSE
+195Â With bonds down and the Dollar up in overnight trade, stocks
could see further short covering this session if the economic data
doesn’t come in weaker than expected. However, volume levels should
continue to be light as the majority of investors are likely to stay
sidelined with political tensions & economic uncertainty running
high. Also, investors are unlikely to rush in and go on a big buying
binge before 4th quarter earnings results are out.
FOREIGN
EXCHANGE
DOLLAR:
The Dollar closed on its low Tuesday as more economic bad news killed an
early short covering attempt. While the Dollar traded firmer overnight,
the currency may be in for more bad news today with the release of the
ISM Manufacturing Index. If this number is weak and the Dec unemployment
rate sees another up-tick, the Fed will have plenty of reason to cut
rates, which is damaging to the Dollar. Early profit taking in the Euro
gave some support to the Dollar on Tuesday, but without any fundamental
change in the
US
economic outlook or significant ease in geopolitical tensions, any
higher price action is likely to be only a “dead-cat” bounce.
Although over sold, traders will need to see some technical indication a
low is in place, which has not yet happened. If the Japanese intervene,
the Dollar could get a temporary boost.
EURO:
The Euro pushed to new higher ground, trading to a 3 year high against
the Dollar on Tuesday as the currency continues to benefit from a
blanket of negative Dollar sentiment, which include the
US
conflict with Iraq & N. Korea. The lower reading on the Euro-zone
Dec Manufacturing PMI, which came in at 48.4%, down from 49.5% in Nov,
may prompt some profit taking early this session, but focus will be on
the US economic data out later this morning. The next logical target for
the Mar Euro is at 105 with support at 104 then 103.79.
YEN:
The yen saw minor profit taking Tuesday, but traders need to be a little
concerned about bank of
Japan
intervention. We continue to suggest buying a March yen put for
protection of any long positions. Intervention amid thin market
conditions could create excessive volatility. The 84.21 to 84.00 area is
the next support zone for Mar yen.
SWISS:
Safe haven buying remains strong, as traders don’t want to be caught
without protection over the holiday. A sharp rebound in Gold &
Silver was also supportive to the Swiss. With US amassing troops in the
Middle
East
in preparation for war, market jitters remain high. Next target for Mar
Swiss is at 73.75 then 74.82 based on the monthly chart pattern.
POUND:
The British pound rallied on indications that the
UK
would not be entering the Euro-zone any time soon. Pound prices broke
above resistance at 1.60 and are poised for a test of the 1.6090 to
1.6120 price range.
CANADIAN:
The Canadian broke away from the negative influence of the Dollar to
trade higher on Tuesday as an early push toward 63 support held. The
rally was likely due to book squaring ahead of year end as the weak
US
consumer confidence number is a big negative for the Canadian economy
since the
US
is
Canada
‘s
largest trading partner. Weak
US
numbers today put the Canadian at great risk to break below 63.Â
METALS
GOLD:
The reasons to be long gold are still in place. Gold gained nearly 25%
in 2002 with war concerns, recession, terrorism threats and the collapse
in the US dollar to new 3-year lows as the key positive forces. So far,
interest rates have stayed low enough to make it unprofitable for gold
mining firms to commit foreword sales as well.
SILVER:
Tuesday’s upside breakout is significant and should leave the market
well supported on minor corrections. Until the
US
economy turns up, silver is likely to be a follower of gold. Flight to
quality is still a good reason to be long.
PLATINUM:
Supply uncertainties are clashing with economic concerns to keep
platinum in a steady, but choppy uptrend. Russian news is harder to come
by. April Platinum buying support comes in at 591.20 and 584.20 with
613.20 as next upside objective. Â
COPPER:
Copper demand from the
US
and
Europe
is the biggest concern for the bulls and rightfully so.
China
demand remains very strong with solid growth potential again this year.
Soft consumer confidence readings and higher LME stocks pressured the
market on Tuesday, but stocks fell back a similar amount this morning.
CRUDE
COMPLEX
OVERNIGHT
CHG to  4:15 AM Â
:CRUDE +28Â ,HEAT+55Â
,UNGA+84 Â The greater than expected draw in crude stocks in
Tuesday night’s API report should be enough to spark a run back into
Monday’s big range day today. It may not be enough to send the market to
new highs, though, given the surprise increases in product stocks and
the higher than expected refinery rates, particularly in light of OPEC’s
announcement Tuesday that it intends to boost production to make up for
lost production out of
Venezuela
.
NATURAL
GAS
With
the 6-10 day forecast calling for normal to above normal temperatures
out through Jan 10, there is little for the market to get bullish about
at this point. There is very little technical support until the 4.50
October high in the Feb contract.