Markets Look To Open Slightly Down
INTEREST RATES
OVERNIGHT
CHANGE toÂ
AM
BONDS
+7 — We get the feeling that the bond market is on the cusp of a liquidation
washout. Certainly, a number of economic conditions remain tenuous, but it would
seem that the numbers are trying to turn up a little and that could easily
result in an upward adjustment in recovery sentiment. For example, the
expectations for the GDP are for a higher number while the Consumer confidence
numbers are also expected to make gains over the prior readings.
STOCK INDICES
OVERNIGHT
CHANGE to
4:15 AM
S&P
-190, NIKKEI -120,
FTSE -23 –Â We are a little surprised that the stock market hasn’t
shown better performance over the last three sessions as the outlook toward the
economy has improved slightly. It is possible that the stock market is a little
overbought technically but one has to expect at least a feeble attempt to rally
into the holiday ahead. While the bull camp would like to have seen better
information from German economic numbers overnight, the general expectation is
that US numbers today will boost economic sentiment.
FOREIGN EXCHANGE
DOLLAR: The Dollar took out a critical pivot point Monday and seemed
to have tested a critical moving average level overnight. The BOE suggested that
the
economy is at its low point and is set to recover and that could be lending the
Dollar some support. However, the Dollar is held back slightly by German
economic readings that were not as weak as expected. The
has a heavy slate of readings due out today and it would seem unlikely that the
market would be unable to come to a conclusion by the end of the week on the
recovery or no recovery view. With
and the
sitting in decent economic position the
economy has to recover, just to keep the Dollar from sliding back toward the
early November lows. In other words, the Dollar has to have better than expected
numbers today, to avoid a reversal of the last two weeks upside action.
EURO: German
Ifo readings showed contraction but were not
nearly as weak as the market predicted. Therefore some pressure is taken off the
Euro, as the trade waits for the
data. However, while expectations were down, current conditions actually showed
an improvement. The Ifo
did suggest that the ECB policy was too conservative and that probably
countervails the benefits of the Ifo coming in
better than expected. Like the Dollar, the Euro has pulled right down onto a
critical moving average line and will either bottom this morning above 98.82, or
fail and decline quickly to the September and October consolidation bound by
98.47 and 96.66.
YEN: The Japanese posted an improvement in
auto production totals and a decline in supermarket sales in October and that
leaves the currency capable of simply holding above the recent consolidation
range of 81.36 to 81.97. The talk is that the Japanese might be poised to make
more quantitative easing moves as a preventative move for
more bad loan issues in the March book closing period ahead. In other
words, the Japanese economy might be recovering but the BOJ thinks that one more
hurdle remains early next year. We just can’t get excited about buying the Yen
at current levels but would be interested in selling the Yen on a rally back
above 82.52.Â
SWISS: Unlike the Euro, the Swiss has
already failed at a number of critical technical points and looks set to decline
all the way down to the middle of the October consolidation around 67.00.
POUND: A decline in business investment in
the 3rd quarter, simply adds to the liquidative
trend in the Pound. If the US numbers are decent, then the Pound should be
headed down to the middle of the late October and early November consolidation
zone bound by 156.10 and 154.80.
CANADIAN: In our opinion the 63.50 level is
a no mans land in the Canadian. If the
recovery tilt expected for today fades then the Canadian might decide to fall
back into the 62.75 to 63.40 trading range while a good set of numbers from the
should put the currency up into the 63.50 to 64.25 range. The bias is to see
higher Canadian prices ahead.
METALS
OVERNIGHT CHANGE to 4:15 AM:
GLD +0.10, SLV
+0.7, PLAT +3.40; Â London
Gold Fix $319.50, -$1.50; LME Copper
Warehouse
stks
867,200 tons, -1,225 tns;Â Comex
Gold stocks 1.99 ml, -1,768 oz; COMEX Silver
stocks 107.5 ml oz, unchanged; OVERNIGHT: The Japanese were buyers,
while Australian dealers were sellers
GOLD: The Dollar is down but not
significantly weak, so the gold market probably only sees minimal benefit today
from the currency market action. With the stock market temporarily stalled,
recent optimism toward the economy is dulled and that might also temper some of
the recent selling pressure in gold. A series of lows around $318.1 would seem
to be enough chart support to discourage another liquidation wave, but with
February gold trading right on the 40 day moving average ($318.9 today) the
trend is difficult to determine.
SILVER: The silver is also approaching a
critical 40 day moving average point at 449.3, in the May contract. Also like
gold, silver has seen a noticeable increase in volume over the last five
sessions. While some of the volume might be attributed to contract roll over,
that action was spread out over 3 sessions and saw open interest hold steady.
PLATINUM: The platinum market made a very
poor trade overnight and in fact it would seem like the market is close to
violating up trend channel support of 579.4 basis the January. Volume in
platinum over the last two months has been extremely light and that makes the
gains above $560 suspect. On the other hand, if the
economy is going to be upgraded today (in the eyes of the marketplace) that
could repair the recent concern for platinum demand. In the end, platinum is a
physical demand driven market that needs proof of recovery! Â
COPPER: A pattern of lower highs continues
to prevail, despite the fact that the economic outlook toward
was found not to be as negative today as it was yesterday. Furthermore, the
trade is also positioning to see a slightly better set of numbers from the US
today and that could also underpin copper prices. However, the Chinese market
was lower again today, with the trade specifically citing profit taking, as the
root of the selling.
CRUDE COMPLEX
OVERNIGHT
CHG to 4:15 AM: CRUDE +9,
HEAT +27, UNGA
+30 –Â After a massive range and a weak close the energy complex looks to be
more vulnerable than many would have expected. With retail gasoline prices
reaching some of the lowest levels since early summer it’s clear that the war
threat is being toned down.
NATURAL GAS
We have
to think demand readings released Monday combined with the isolation of cold
weather in the East, undermines the natural gas. A close below the $4.29 level
could also end leaving natural gas right on critical moving average lines which
could leave some of the recent long positions in danger of stopping out.