Markets Ready To Open In The Green

OVERNIGHT CHANGE to 4:15 AM: BONDS +8 — Maybe the bonds bulls can’t get a lift
because the trend of prices has shifted down and the market is preparing for
economic recovery. For the stock market to take what many called a weak Fed
Beige Book and turn it into a positive confirms that the market sentiment has
indeed shifted its focus from what it was prior to the month of October. To be
sure there were some Fed districts reporting expanding growth.

STOCK INDICES

OVERNIGHT CHANGE to 4:15 AM: S&P -520,
NIKKEI -100, FTSE +55
— The initial overnight
equity market action is mixed with the Nikkei tracking lower and Europe
initially starting out firm, but giving back some of the gains. It would seem
that the net effect of the favorable earnings reports of the last 24 hours has
simply served to countervail negative macroeconomic reports. In other words,
companies are meeting or beating severely downgraded projections and the stock
market is happy with that, regardless of the ongoing fear toward the recovery
pace.

FOREIGN EXCHANGE

DOLLAR: The dollar didn’t buy into the stock market spin off the Fed Beige book,
but it has to be finding some support off the theme that the US might cut rates.
The productivity comments from Greenspan probably firm up support for the dollar
as the trade gets an assurance that any weakening in the US economy would be
met with action from the US Fed. However, there would not seem to be a reason
for the dollar to move away from the middle of an extending consolidation
pattern. There is a slight upward bias in the dollar, but again the trade is just
not prepared to make a major investment in the dollar until the macroeconomic
recovery begins to show some staying power. From the dialogue in the Fed release
Wednesday, we have to think that recent optimism toward the recovery is injured
slightly and that could be an excuse to push the dollar down a little in the
near term. Near-term support in the dollar is seen at 107.90.

EURO: The euro isn’t a winner or loser in the information released this week, but
the trade seems to favor the dollar and therefore we would not be surprised to
see the euro slide, with the yen and Canadian capturing the benefit of weakness
in the dollar. We would have thought that the German CPI reading would lift the
euro considering the initial forecasts on that reading. In other words, the euro
isn’t taking potentially beneficial numbers and getting a lift. Therefore we
expect the euro to slide toward support of 96.72. If by chance, the US numbers
today are strong, that could speed the decline in the euro.

YEN: The yen likes the interest rate cut spin seen from the US and will continue
to consolidation despite a weaker equity market overnight. There were
suggestions overnight from the BOJ that they have not ruled out a near-term
easing, and that is also supporting the yen. As long as the NPL issue maintains
a background status, the yen probably tries to climb to near-term resistance.
Near-term resistance comes in at 81.00.

SWISS: We have to judge the anxiety meter to be falling and that the Swiss is
looking to fall to near-term chart support of 66.00.

POUND: We still think that the pound is in a downward adjustment, as the recent
numbers have disappointed the trade and the technicals are shifting into the
bear camp. A decline to 153.50 is expected before the close Friday.

OVERNIGHT CHANGE to 4:15 AM: GLD -0.80,
SLV -0.7, PLAT
+3.00, CP +.45;
London Gold
Fix $313.40, +$1.75; LME Copper Warehouse stks 853,425 tns, -800 tns;
Comex Gold
stocks 1.946, +103,441 oz; COMEX Silver stocks 108.0 ml oz, +600,795 oz; OVERNIGHT:
The equity market recovery Wednesday caused Asian gold to decline.

GOLD: The gold market sagged because the stock market managed to shake off the
negative influence of a “sluggish” Federal Reserve Beige Book. While yesterday
it seemed like the UN negotiations over Iraq were reaching an impasse, the White
House has confirmed that they are still at a critical phase. Therefore, the
whole war/no war issue might be determined very soon.

SILVER: We still see the silver as vulnerable, given its lofty proximity to what
is thought to be consolidation support. We still see the $4.40 level as a
critical pivot point, but that level could become resistance in the coming two
sessions. A moderate increase in Comex silver stocks overnight applies slight
pressure to the price action this morning.

PLATINUM: We have to think platinum was undermined by the “Fed Beige Book”, as
it showed a slump in car sales and generally left a negative tone in the
marketplace. The fact that the stock market quickly shifted focus by hoping for
a rate cut probably provides some support to platinum. We see no reason for
platinum to fall below near-term technical chart support of $569 in the January.

COPPER: The copper market is holding ground well after the slightly negative Fed
Beige book and the overnight slide in the Nikkei. However, the copper market
might be latching onto the idea that the weak Fed Beige Book will spark a rate
cut by the Fed. Asian copper prices were higher overnight because of the US
stock market gain, which proves that the US outlook is more important than the
Japanese outlook when it comes to copper prices.

CRUDE COMPLEX

OVERNIGHT CHG to 4:15 AM: CRUDE +24, HEAT
+47, UNGA +38,
NGAS +33 — The DOE report
showed a larger crude oil stock build than the API, but that reading was offset
by a much bigger DOE decline in unleaded stocks than was reported in the API. In
other words, tightness in crude is being repaired, while the tightness in
unleaded is being extended.

NATURAL GAS

The natural gas market certainly got mileage out of the fact that colder weather
showed up again in the forecast. The trade is also expecting the weekly
injection reading this morning to be extremely small and that might send a
signal that the beginning of the heating season is coming early.