Futures Point To Lower Point
INTEREST RATES
OVERNIGHT
CHANGE to
4:15 AM
BONDS
-9 — The bond market saw another situation where the market was pent up for a
moderately weak
economic number and was disappointed. Despite the fact that the retail sales
numbers were unchanged and
ongoing claims jumped by 89,000, the bond bulls decided to dump. Even though
some economists explained away the better retail sales readings as a result of
early winter clothes buying, the bonds found no reason to hold longs.
STOCK INDICES
OVERNIGHT
CHANGE to 4:15 AM: S&P +200,
NIKKEI +200, FTSE
+38 — The stock market in general wants to go higher, as it managed to fashion
an unchanged retail sales reading into a bullish moniker. The fact that the
initial market action overnight is higher in the face of less than favorable
comments from Wall Street is an indication that the bull tilt is still generally
in control. The fact that stocks are higher against evidence of "rising
terrorist chatter" is also an indication that the bulls are still in control.
FOREIGN EXCHANGE
DOLLAR: The dollar has had a nice run this week, but unless the stock
market gives reason to add to the gains, we suspect that the dollar will top
out. The US economic numbers today are expected to be soft, but in the recent
past the numbers have not been as soft as expected and that has resulted in a
relief rally of sorts in the dollar. If the
numbers had actually been positive this week, we could buy into the idea that
the dollar should continue to climb. However, we get the sense that the stock
market is in for a week ending profit taking and the
numbers again today would seem to have a good chance of being soft. Therefore,
recent dollar longs might want to put long side objectives around 105.80 and
exit. If Industrial production readings from the
are actually positive, then we might change our mind on the dollar topping
today.
EURO: While some might want to make
something out of the fact that EU inflation readings were increased, the ECB has
recently suggested that inflation was toned down, so we don’t see a threat to
the recent tilt toward lower interest rates. However, the euro remains in a
slight liquidation pattern, with more downside expected today. However, we
suspect that near term support will be seen around 99.67 unless of course US
numbers are better than expected and then a decline to 99.23 might be seen in
the December euro.
YEN: October department store sales in
fell again and that almost gives a full year of declines in that reading.
Countervailing the department store readings was a decline in the bankruptcy
rate in October. With the charts negative and the numbers sloppy we suspect that
the yen will continue to slide toward 82.24 before a bottom is forged.
SWISS: We are calling for a critical low
today in the Swiss today but that low might not come until the Swiss falls to
even numbered 68.00.
POUND: Supposedly BOE minutes showed a split
decision on the last MPC rate discussion and that could undermine the status of
the pound. With the charts also negative it might be possible for a liquidation
wave to continue to 155.20.
CANADIAN: Negative talk about Canadian
border security could actually undermine the Canadian in the near term, as the
government is broadcasting a warning of increased
terrorist chatter. The chart setup would suggest a bottom pattern is unfolding
but the Canadian must hold above 63.26 or risk seeing another wave of stop loss
selling.
METALS
OVERNIGHT CHANGE to 4:15 AM:
GLD +0.7, SLV
+.1, PLAT +11, CP
+50; London Gold Fix $318.50,
-1.10; LME Copper Warehouse
stks
872,300 tons, -1,950 tons; Comex
Gold stocks 1.99 ml, -5,980 oz; COMEX Silver
stocks 108.0 ml oz, +968,023 oz; OVERNIGHT: Minor gains posted as the
break evidently enticed some return buying
GOLD: The gold market held up pretty well
against what could have been a massive liquidation wave. All the factors that
appeared to be driving gold higher in late October and early November were
reversed in the action Thursday. In fact, given the size of the stock market
rally, we have to think that some additional long liquidation can be expected
today, if the stock market has another good showing.
SILVER: A moderate increase in
Comex stocks dampens sentiment a little heading into
the opening this morning. However, silver could easily finish its transition to
a physical demand driven commodity market with a strong showing and reversal off
the two-day break. However, March silver stands right on a critical up trend
channel support line and must hold above 455 to respect the bull formation.
PLATINUM: The platinum market certainly
liked the stock market action yesterday and it certainly likes the chance to see
better economics because of the no war potential. An upside breakout on the
charts overnight would seem to project a run to $600, with support coming in at
$591 in the January.
COPPER: The Chinese were buyers overnight
and that will send a positive message to the
copper market, if the
stock market is higher.
copper stocks were down 10,091 tons, to 109,153 tons and that is also a
supportive development. In our opinion, copper might have to play a little catch
up to macro economic condition with a slight bounce away from the recent lows.
CRUDE COMPLEX
OVERNIGHT
CHG to 4:15 AM: CRUDE +29,
HEAT +52, UNGA
+41 — While a refinery problem might have provided the lions share of the gains
Thursday, it would seem to be clear that the whole Iraqi issue will see its
impact on prices wane until the middle of next week. With the weapons inspectors
not due into
until Tuesday or Wednesday of next week, there is little expectation of a
surprise development today.
NATURAL GAS
The
natural gas trade was expecting an injection and got what appears to be a semi
impressive draw of 48 bcf. However, natural gas didn’t manage to sustain an
upside move above the consolidation zone and that is bearish.