Futures Point To A Stronger Open
INTEREST RATES
OVERNIGHT
CHANGE toÂ
AM
BONDS
+3Â — Barring any significant change in the geopolitical situation, bonds will
focus on this morning’s Dec Consumer Confidence data with the market looking for
a slight improvement to a reading of 85.3%. However, given what some retailers
say were the worst holiday sales in 30 years, we would not be surprised if the
December data came in weak. A weak number could drive March bonds to test the
113-11 to 113-17 area, while a number stronger than expected could trigger some
profit taking with support around the 112-14 area then around 112-00.
STOCK INDICES
OVERNIGHT
CHANGE to
4:15 AM
S&P
-150, DOW -10, FTSE
+125Â — While the S&P managed to climb back into positive territory on Monday,
the market will need some good news on the economic front to see further gains.
Volume levels are extremely thin ahead of the New Year as institutional
investors are now basically sidelined. Therefore, it doesn’t take a lot of
activity by Fund and spec traders to move prices.
FOREIGN EXCHANGE
EURO: Although technical signals are waving
warning flags, the Euro could see another upward acceleration against the Dollar
if the
Dec consumer confidence reading is weaker than expected. A thin trade could
exaggerate any market reaction to the
data. Mar Euro resistance is at 105, support at 104.08.
YEN: The Yen continues to soar against the
Dollar, but we get the feeling that traders are not being spooked by Japanese
officials threats of intervention. Few traders
believe they will intervene before the Japanese markets reopen Jan 6th. However,
an intervention may have more of an impact if trading conditions are thin, so
traders who are long Yen should also think about buying a put for some temporary
protection. However, intervention will not have a lasting effect unless the
fundamentals justify a change in currency direction and right now there looks to
be few good reasons to invest in the
Traders can consider buying a March Yen 83.00 Put at 75
obj 165, Risk to 55 as a way to capitalize on
intervention if it occurs. Next resistance for March Yen is at 85 to 85.09.Â
SWISS: We are impressed the Swiss was able
to hold on to gains Monday despite a sell-off in gold and the energy markets, on
top of US seeming to move back a military conflict with Iraq and take a
diplomatic route with North Korea. However, if the
economic report is strong today, traders may be too tempted to take profits.
Near term support in the Swiss comes in at 71.56.
POUND: The strength in the Pound may be
cracking with solid resistance at 1.60. Unwinding of short Yen/Pound positions
was cited as a reason for a weaker Pound Monday. A strong
confidence number could trigger more profit taking today.
CANADIAN: When the
gets a cold,
gets pneumonia. Therefore, a poor reading in the Dec consumer confidence report
could push Mar Canadian to test support at 63, with next support at 62.70.
METALS
OVERNIGHT CHANGE to 4:15 AM:
GLD -0.60, SLV
+0.7, PLAT +3.00;
London
Gold Fix $342.75, -$4.55; LME Copper
Warehouse stks 856,400 ton, +800 tons;
Comex Gold stocks
2.04 ml, unch;Â COMEX Silver
stks 107.3 ml oz, unchanged; OVERNIGHT:
Some bargain hunting helped support cash overnight, but with
Tocom closed and Australia traders exiting early,
the overnight trade in comex was down slightly. Even
numbered resistance of $350 seemed to hold gold back
overnight.
GOLD: The reasons to be long gold are still
in place in spite of the sharp correction yesterday. The overbought condition of
the market and the fact that speculators are net long near 108,000 contracts may
be a good reason to be patient about entering new longs but is not a good reason
to be short. Speculators in sugar have held similar net long positions in the
recent past and the correction breaks are usually not as volatile as feared
until the fundamentals shift.
SILVER: Silver has consolidated recent gains
in an orderly fashion and appears to have significant upside potential for the
coming year. Until the
economy turns up, silver is likely to be a follower. Flight to quality is still
a good reason for ownership.
PLATINUM: More uncertainty on supply due to
spying issue could make buyers a bit more nervous going into 2003. April
Platinum buying support comes in at 584.20 with 613.20 as next upside objective.
Â
COPPER: The reversal this week seems to be a
temporary low but the
economy problems remains a potential obstacle to a sharp recovery. Active buying
support was noted from Chinese trade houses this week which adds to the idea
that a short-term low may be in place. Speculators who want out may be out soon.
CRUDE COMPLEX
OVERNIGHT
CHG to 4:15 AM: CRUDE
+16, HEAT +38, UNGA
+58 –Â The energy complex corrected off what initially appears to be a leap of
faith on the part of the bear camp. With the Venezuelan Oil Minister suggesting
that production in that country will recover to 1.2 million barrels per day, by
the middle of next week, the market was taken by surprise.
NATURAL GAS
With the
regular complex under pressure and the near term weather forecast for much above
normal temps in the US, we have to favor the bear
camp. In fact, seeing another probe below 472 in the February
contract, might spark some stop loss selling by a
rather burdensome small spec long position.