Futures Point To Weaker Open
INTEREST RATES
OVERNIGHT
CHANGE to
4:15 AM
BONDS
+7 — The bond market apparently favors the bottom of the last ten days trading
range. With bond prices sagging in the face of US numbers that were softer than
expected, we hardly expect the coming numbers to lift prices significantly.
However, given expectations, it would seem that numbers for the rest of the week
will promote concern over the economy and should at least discourage bonds from
more weakness.
STOCK INDICES
OVERNIGHT
CHANGE to
4:15 AM
S&P
-380, NIKKEIÂ -166,
FTSE -30 –Â The macro economic condition would seem to be
deteriorating with anecdotal dialogue from the holiday shopping season basically
disappointing. Traders might try to key off the wide daily range posted on
Monday, as that range might prove to be an effective breakout indicator. We
continue to think that a number of longs are hanging tough in this market, in
hopes that some type of Christmas rally will unfold.
FOREIGN EXCHANGE
DOLLAR: Soaring open interest in the Dollar on moderately high
volume, certainly accompanied the Dollar on the slide off the December high and
that could hint at a long term down trend pattern. With the US Dollar falling
and the prospect for soaring energy prices, one might fear a spiraling situation
where the
trade deficit explodes as payments for oil hamstring the
economy. Alternatively a soaring Euro has certainly been mitigating the impact
of high-energy prices on that economy and that could be why money is leaving the
for the Euro. We also have to think that the world is moving away from the US
Dollar because of the threat of military action in the coming month. With the
poised to declare
in violation of the UN resolution, even more money might exit the Dollar soon.
Unless the March Dollar Index can manage a trade back above 104.78, we assume
that the general trend is down. Early in December, many hoped that ultra strong
holiday shopping patterns would save the Dollar but thus far that is not
happening. In fact, it is now possible that the
stock market begins to slide and that in turn could undermine the Dollar.
EURO: Extremely weak German
Ifo readings undermine the Euro or it would be
making more new highs. Just to highlight the evidence of underlying favor toward
the Euro, it should be noted that the Press decided to focus on a favorable
“business expectation” reading within the Ifo report
as the “critical development” instead of playing up the idea that the overall
index made an 11 month low in the report. Therefore, traders should be poised to
buy a minor correction in the Euro down to 101.90.
YEN: News that Japanese crude steel output
rose by 14% over last November, suggests that the Japanese economy is making
longer-term strides at recovery, even if the BOJ is openly concerned about
recent stock price action. In fact, the BOJ suggested overnight that they are
concerned about recent volatile action in the Japanese stock market and that
might simply be an effort to talk the currency down. We are actually a little
surprised that the BOJ hasn’t intervened yet, but with the Yen tending toward
weakness they are probably adopting a wait and see policy. One can’t sell the
Yen in the hole but one can sell a rally in the Yen to 83.00.
SWISS: Anxiety levels are a little lower
this morning and that could undermine the Swiss. However in general, conditions
remain favorable for more Swiss gains and the chart looks very strong.Â
POUND: The
released a November jobless rate that came in near the lowest levels on record
and that has to solidify the standing of the Pound especially in the face of
such Dollar weakness. Corrections to 158.40 should be bought in the coming three
sessions.
CANADIAN: Critical support in the March
comes in at 64.19 but since volume has declined sharply since the December 10th
spike, it would seem that the Canadian is losing buying interest at higher
prices. However, if the Canadian is going to benefit from the slide in the
Dollar, then there is no reason not to think that more gains are ahead. We still
think that longs in the Canadian should carry some long put coverage. +
METALS
OVERNIGHT CHANGE to 4:15 AM:
GLD -0.20, SLV
+0.0, PLAT -6.90;
London Gold Fix $337.05, -$3.95;
LME Copper Warehouse
stks
859,525 tons, +1,125 tns;
Comex Gold stocks 2.04 ml, +6,444 oz;
COMEX Silver stks
107.8 ml oz, +1,000,640 oz; OVERNIGHT: A slightly less optimistic posture by the
trade seen in Asian action
GOLD: The talking heads talked up the
extreme overbought status of the gold market and that resulted in some
profit-taking. The question becomes will the sizeable correction, off the recent
high, propagate even more selling. The first retracement
point off the December rally would project a decline to $332.8 before some
balance is garnered.
SILVER: With gold weak, the silver market
could also see some spillover pressure. One should not rule out a correction to
455.5 basis the March contract, especially given the
overbought status present around the recent highs. With the macro economic
outlook also rather poor one might expect initial support to be tested today.
PLATINUM: It would appear as if platinum is
in for a significantly weaker opening, with the downgraded macro economic
outlook contributing to the profit taking. Maybe traders take all the talk about
increased fuel cell applications, as a sign that platinum might see some
industrial uses replaced with new technology. Bottom of the up trend channel in
the April platinum comes in all the way down at $590.8.Â
COPPER: Like the stock market, the copper
market is behaving impressively considering poor economic numbers, soaring
energy prices and a sagging Dollar. Certainly, copper should have gotten support
from news that certain production totals are declining, but we have to think
that the magnitude of correction since the December high, is also beginning to
diffuse the downside effort. Since the December high, copper has declined over
400 points and
and
copper markets overnight showed positive but extremely quiet action.
CRUDE COMPLEX
OVERNIGHT
CHG toÂ
AM
CRUDE -18,
HEAT +0, UNGA +1 –Â The market
was simply overbought and in need of a temporary pause. We seriously doubt that
the fundamentals were responsible for the weakness especially with the White
House expressing concern over Venezuelan oil exports to the
NATURAL GAS
Supposedly profit taking dominated the natural gas, but we have to think that
prices are a little more than overbought they are in need of rationalization of
such lofty levels. With much above normal temps coming in last night and near
record highs expected today, longs in natural gas should be concerned.