Futures Point To Higher Open
INTEREST RATES
OVERNIGHT
CHANGE toÂ
AM
BONDS
-25 — The bond market starts the week out on a damaged footing and into what
appears to be an upward breakout in the equity market. With Wal-Mart posting
record three-day sales and other stores posting much better than expected
activity, the punishment seen in bonds last week could easily continue. With
international equity markets showing strong action early, that should simply add
to the selling incentive in bonds.
STOCK INDICES
OVERNIGHT
CHANGE to 4:15 AM: S&P +820,
NIKKEI -41, FTSE
+22Â — The Wal-Mart story is the primary driving force in the market this
morning, as Wal-Mart posted a record three-day sales tally and an all-time
record sales for last Friday. The euphoria off the retailing sector means that
the consumer is still alive and capable of supporting the recovery. However,
this type of retail sales activity is a double-edged sword for the stock market,
as the Press is reporting extensive discounting and that could in the end hinder
profits.
FOREIGN EXCHANGE
DOLLAR: Despite some short-term
technicals
registering overbought status, the Dollar has managed an upside breakout in the
overnight action. Supposedly, the Dollar is being directly benefited by the
Wal-Mart sales surprise and probably is seeing some benefits from the
significant decline in the Yen. With the overnight highs, the Dollar has only
managed to return to the bottom of the summer consolidation zone that is bound
by 107 to 109. We suspect that the initial equity market action today, will add
to the US Dollar gains but if United Airlines files for bankruptcy that might
discourage additional gains. Short-term technical indicators are overbought, but
have not entered sell zones yet. Early
economic numbers might simply create a pullback that can be bought in the
Dollar.
EURO: The December Euro makes a downside
breakout this morning with a trade below 98.66. Short-term
technicals are in a sell mode and have yet to signal an end to the
declines. Evidently seeing the EU expand its membership isn’t something that is
viewed as a positive for the Euro. Some traders fear that the ECB is already
unwieldy in policy decisions and having an even larger representation will
simply handcuff the central bank. Last week there were hopes that the ECB would
cut interest rates but under the vastly improved equity market action, it’s
possible that the odds of a rate cut have declined. Until the Euro reaches down
to 98.00 and below, we doubt that the Euro has found a bottom. Deflecting the
decline in the Euro were stronger German PMI readings and hope that the ECB will
in fact cut rates in the coming meeting.
YEN: Evidently, the Japanese Finance
Minister suggested overnight that the Yen could fall 20%. The MOF also suggested
that a much weaker Yen would come from continued easing and that a lower Yen is
good for some Japanese businesses. Therefore, many in the trade have taken it
for granted, that the Yen will slide aggressively. Another ratings agency
completed its analysis on
and it left its outlook negative. Therefore, the Yen looks set to slide toward
the next downside target of the October lows of 79.81.
SWISS: Like most other currencies the Swiss
is still in a sell mode and isn’t that close to being completely oversold. Near
term downside targeting in the Swiss is seen at 66.00.
POUND: There is a chance that the Pound will
find support at 153.62 without falling all the way down to 152.50.
stock market action wasn’t that impressive suggesting that the euphoria in the
is more prevalent. A critical chart support zone is seen at 153.99.
CANADIAN: A clean shot to the November high
is seen, but under current conditions one would expect the Canadian to rise to
the highest level since mid August. Positive correlation between the
stock market and the Canadian should give the bulls confidence to pay up for the
currency.
METALS
OVERNIGHT CHANGE to 4:15 AM:
GLD +0.20, SLV
+1.0, PLAT +7.60; Â London
Gold Fix $317.30, -$.95; LME Copper
Warehouse
stks
862,550 tons, +2,250 tns;Â Comex
Gold stocks 2.04 ml, Unchanged; COMEX Silver
stocks 107.0 ml oz, -4,704 oz; OVERNIGHT: Minor losses in Asia
possibly fostered by favorable equities action
GOLD: Early indications are that US equities
will start the session out strong and that could weigh on gold and silver.
Additionally, it would seem that holiday sales patterns were stronger than
expected and that also serves to reduce concern toward the economy. Therefore,
some gold longs might feel the need to liquidate.
SILVER: Like gold, short-term
technicals in silver suggest more downside before a
bottom is expected. Heavy losses in the Yen overnight probably undermined Asian
interest in both gold and silver, which have yet to transition into physical
demand driven commodity markets. We still think that silver will become a
physical commodity benefited by the economy, much quicker than gold will.
PLATINUM: Last week within the holiday
euphoria there were stories about significant growth in Chinese jewelry demand
(platinum jewelry included) and that should provide some support to platinum.
Critical support seen around $580 whereas an upside breakout might be seen with
a move back above $590.9 in the January contract. Â
COPPER: A gap up move in Chinese copper,
fuels the US copper market sharply higher into its opening. We have to think
that positive stock market action today, will propel
the March copper toward the 80-cent zone. Maybe economic reports due out this
morning will undercut the magnitude of the rise in copper prices but little
looks to be hold this market back.
CRUDE COMPLEX
OVERNIGHT
CHG to 4:15 AM: CRUDE -5,
HEAT +31, UNGA
+2 –Â The energy complex enters the week with a slight bit of disappointment, as
we suspect that some longs bid up prices before the close last Wednesday in
anticipation of some flare up in Middle East tensions. The COT report was
delayed from after the close last Friday, until this afternoon, but given the
last report and the market action seen since the last COT report we would not
expect the energy complex to register much of an overbought status.
NATURAL GAS
The
natural gas market comes into the week sitting right on a critical pivot point
on the charts and would appear to have a massive over resistance to overcome.
However, we have to think that vastly improving macro economic conditions stand
a decent chance of propelling natural gas back up into the late November
consolidation.