Holding Steady
Futures are remaining steady in the wake of the
blip downward after the June Employment Report Friday morning.
Dow issue Disney
(
DIS |
Quote |
Chart |
News |
PowerRating) is off nearly 15% in
the pre-market after lower guidance for Q3 was issued after Thursday’s close.
Friday’s pre-opening outlook:
INTEREST RATES
OVERNIGHT
CHANGE to
4:15 AM
:BONDS +5 The
sum total of economic information already seen this week could have wrecked the
stock market and exploded the bonds to the upside, if it had come out during the
peak of the accounting panic. Therefore, the monthly
payroll report this morning, takes on added importance. An as expected
number, stems the negative tide but does little to
support the bonds gains off the low this week.
STOCK INDICES
OVERNIGHT
CHANGE to
4:15
AM
NIKKEI -83 FTSE +24 We think the stock market is on the ropes today. While the
market might not be as vulnerable as it was into the darkest days of the
accounting fiasco, investors are unsettled off the prospect of a double dip
recession. The numbers this week have not only been soft, but they have been
exceptionally soft and therefore the question of return is on the minds of
investors.
FOREIGN EXCHANGE
Dollar: The Dollar was found
to have no clothes on early this week and the key monthly payroll report today
would further expose that fact, if that were indeed "the fact." With the Euro
zone consumer confidence readings coming out mixed this morning that could take
the sting out of a soft
reading but the Dollar is overbought and vulnerable without a good story today.
Downside targeting in the Dollar today comes in at 105.89. However, if the
Dollar is ever above 107.03 today that could mean the threat of liquidation has
passed and that the bulls are in charge again. In the end, the most likely
scenario is that the Dollar slides. Even if the
payroll data is as expected, the pattern should be for some light selling in the
Dollar.
EURO:
Euro zone July consumer confidence readings declined by 1 point to -10 with
industrial confidence unchanged. Supposedly, the two largest Euro zone sectors
managed to post an improvement in the figures but the composite slid slightly.
Therefore, the Euro sees initial short covering and then probably sees
additional fresh buying on events in the
Expect the Euro to climb toward key resistance of 99.56 and possibly 100.00 if
the
payrolls create anxiety in the
equity market with a trade below 873.
YEN: Near
term targeting in the Yen comes in at 84.81 but the currency should have a
strong upward bias because Japanese numbers are supportive. An increase in
household spending is not insignificant as that sector was main problem during
the recession. In fact, the Japanese government did everything possible to
stimulate household spending and now they have results. Household spending
increases are direct improvements in confidence levels. More
upside, with the gains becoming aggressive if US assets lay down early.
SWISS: We
see the Swiss moving higher but we don’t see some big anxiety event. Therefore,
we expect the Swiss to lag behind the Euro. Near term upside targeting in the
Swiss today comes in at 69.31.
POUND:
Near term targeting in the Pound comes in at 158.08 with the recovery aggressive
given the magnitude of the Pound break early this week.
CANADIAN:
The time to put on the short futures/long 10 December call play will pass after
the post employment report throttling of the Canadian. The Canadian has become
the whipping post of the North American currencies and given the softening in
the
numbers this week, the Canadian is set to slide. Therefore, we will be expecting
to finance a large call play with the break. We lower our downside target on
short futures to 62.30 today.
METALS
OVERNIGHT CHANGE to 4:15
AM:GLD+2.00 ,SLV+5.2 ,PLAT+3.00 London Gold Fix $306.50 +$5.85 LME Copper
Warehouse
stks
893,375 tns -25 tns Come
Gold stocks 1.835 -2,250 oz COMEX Silver stocks 105.5 ml oz -578,018 oz
OVERNIGHT: Despite lower Asian gold price action, the London fix managed to
ris
GOLD: We
suspect that the chain of weak
economic information is prompting some speculative buying of gold, thinking that
the
payrolls will be soft and that the Dollar will continue the slide started
yesterday. After seeing generally strong results from other gold miners, Kinross
Gold posted a 2nd quarter loss, probably because production declined to 204,148
ounces from 233,722 ounces. In the near term, the gold has to prove that it has
a fresh story because some of the funds were noted as sellers this week and we
suspect that a number of small specs have stood aside.
SILVER:
While gold might provide silver some positive direction, the macro economic case
is taking away some of that benefit. Silver probably has the capacity to climb
back toward the recent highs of 469.5 but it would seem that the fundamental mix
in silver isn’t that conducive to big gains. With the industrial sector showing
signs of weakening in the
and business spending known to be soft, the outlook for physical demand isn’t
very strong.
PLATINUM:
While the platinum is showing firmer overnight action, we doubt it has the
capacity to climb out above the late July high of 526, particularly after the
numbers seen from the
this week. Unless you think the stock market is going to soar today, look to
sell the October platinum on a rally to 523 using a tight stop of 529 around the
payroll report. Use a downside target of 507.70.
COPPER:
The copper market has suffered a beating this week at the hands of the impending
season and because of the dismal readings on the industrial side of the
economy. The chart simply doesn’t look capable of mounting a strong recovery
move unless the unemployment rate declines and payrolls come in at or above
expectations of +60,000.
copper stocks declined 3,315 tons for the week and that serves to offset the
series of massive single day builds in the LME stock figures.
CRUDE COMPLEX
OVERNIGHT
CHG to 4:15 AM :CRUDE -30 ,HEAT-80 ,UNGA-26 Energy markets remain in a
volatile state, as escalating fears of Middle East instability are being
countered by signs the US economy could fall into a double dip recession.
However, overnight news that
has invited the head of the UN weapons inspection team to talks will probably
soften prices into the opening today.
NATURAL GAS
Despite
hot temperatures in the
and Northeast, rally attempts in September natural gas have consistently failed,
as the market remains smothered by burgeoning stocks. Another 60
bcf injection into gas stocks added to the market’s
bearish sentiment, as stocks are now 324 bcf above
year ago levels.
|
Today’s Program Numbers |
| Buy | Sell | Fair Value |
1.86 |
-1.99 | 0.69 |
|
Today’s Futures Pivots |
|
S&P |
Nasdaq |
|
R2 |
920 |
|
R2 |
981 |
|
R1 |
902 |
|
R1 |
949 |
|
Pivot |
891 |
|
Pivot |
931 |
|
S1 |
873 |
|
S1 |
899 |
|
S2 |
862 |
|
S2 |
881 |