Pausing After Rally
Futures are set to open Thursday’s session lower,
which some expected after yesterday’s massive reflex rally.
AOL-Time Warner’s
(
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PowerRating) revelation that the
SEC is questioning its accounting practices in the form of an inquiry is
weighing on the market. In addition, the June Durable Goods number coming in
weaker than expected is another element working against the bull before the
bell.
Thursday’s pre-opening
outlook:
INTEREST RATES
OVERNIGHT
CHANGE to
4:15
AM: BONDS -6
The bond market had an extremely supportive economic rug pulled out from under
it Wednesday. The equity market recovery prompted the profit-taking in bonds,
which more than likely had reached an excessively
near-term overbought status around the highs Wednesday. Overnight, international
equity markets didn’t really follow the
markets lead with massive gains and that could take some of the selling pressure
off bonds.
STOCK INDICES
OVERNIGHT
CHANGE to
4:15 AM
S&P+50;
NIKKEI -17; FTSE +159 The market is certainly looking to the positives now, which
is a significant change of attitude. Supposedly, the market cheered the arrests
of some alleged corporate thieves and then took heart from institutional buying.
For the time being, the market feels better about itself, with a large
contingent expecting to see some extended short covering.
FOREIGN EXCHANGE
Dollar: The mysteries of
whether the Dollar was driving
stocks,
or the stocks were driving the Dollar, is solved. In the end, it would appear
that the two markets are not tracking each other as much as many thought. With
the Dollar gapping down overnight and the early indications for a firmer
stock market opening, it is clear that Dollar players are still concerned about
economic pace. There will be a huge slate of economic information, most of which
is expected to post slightly progressive readings. Therefore, the Dollar has to
have as expected, or better, from the numbers just to avoid a quick return to
the recent lows. We think that intervention was supporting the Dollar early this
week and now that confidence has returned to the
that support is being withheld. Therefore, the downtrend in the Dollar resumes.
There should be some hesitancy at the 104-12 low and possibly some support at
105.38.
EURO:
Even if prospects look better in the
money still favors the Euro in the near term. In order to see the Euro resume
recent downside, US numbers have to come in very strong, as the trend is up in
the Euro. For the Euro to be higher in the face of weakness in the
Ifo readings, it is clear
buyers are in control. The Ifo
was below expectations in
with some concerns, that the recovery might have been delayed. Therefore, under
negative macroeconomic news, the Euro still climbs!
YEN: The
Yen is undermined by a softer retail sales reading for June, but is supported by
news that June auto exports rose by 10%. Seeing a retail sales decline of 3.7%
should stem some of the aggressive buying of the Yen in the near term,
especially if the view toward the
remains slightly positive. Aggressive traders might get short at 86.20.
SWISS:
The Swiss remains poised to rally, but conditions are not as bullish as they were
at the end of the week. In fact, traders might get short at 69.16 with a tight
stop at 69.44.
POUND:
June retail sales in the
declined by 0.7%, but supposedly something distorted the numbers. In any regard,
the uptrend in the Pound allows the trade to ignore the fact that
sales patterns are softer than those seen in the
In other words, other factors are driving the Pound up. The Pound could fall
toward support of 155.00 before a major decision is made.
CANADIAN:
The Canadian rejected the massive washout, as it should have. A simple return to
normal might allow the Canadian to return to the 65 to 66 trading range. Big
volume on the break indicates a desire to buy value
in the Canadian around 63.50. Fresh longs should require closes to remain above
63.45.
METALS
OVERNIGHT CHANGE to 4:15 AM:
GLD -1.30; SLV +1.5; PLAT +6.00; CP +50; London Gold Fix $310.25 -$2.35; LME
Copper Warehouse
stks
875,325 tns N.A. tns; Come
Gold stocks 1.926 -32; 408 oz COMEX Silver stocks 107.7 ml oz +600; 570 oz
OVERNIGHT: Japanese traders were seen buying gold for the second day in a
ro
GOLD:
While there might be some bottom fishing in gold, it would seem that the charts
are pointed downward. We have to think that the small spec and fund position is
still moderately long and vulnerable. However, the Dollar gapped lower overnight
and that could begin to foster some support for gold, even though gold managed
to rally, early this week during a Dollar rally.
SILVER:
Because silver managed to hold above the June low of 4.80, there would not
appear to be as much chart weakness, as is being seen in gold. However, open
interest in silver is very high and the small spec and fund position is probably
still overly long and vulnerable. Silver might need help from US reports, which
are plentiful this morning.
PLATINUM:
The hook up action overnight, highlights the macro economic tie platinum has to
the stock market. After all, the break in platinum of the last 20 trading days
came mostly because of deteriorating demand fears. We only saw a $4 to $6 break
in platinum off the Russian supply rumors. Therefore, a near term bounce is
possible but will only extend above resistance of $529 unless the stock market
performance creates optimistic demand attitudes. +
COPPER:
We think the copper market becomes a mini S&P contract over the coming sessions,
as improved attitudes on Wall Street certainly underpins copper prices. The
massive washout in copper yesterday, probably
represented double dip recession pricing, so traders should document that
“sold-out†low. However, copper would appear to have an uphill battle ahead with
significant overhead resistance on the charts and a slack demand period ahead in
CRUDE COMPLEX
OVERNIGHT
CHG to 4:15 AM :CRUDE +8 ,HEAT+25 ,UNGA+37
The energy complex might be lifted today by the mere presence of improved macro
economic sentiment, even though prices were not significantly negatively
impacted by the slide in macro economic sentiment over the past month. It is
also clear from the action in the unleaded market, that the mere threat of a
refinery problem, is capable of driving prices,
regardless of what the equity market is doing at the time.
NATURAL GAS
Expectations for the weekly gas inventories report call for a 45 to 75
bcf injection and that is partially offset by a
better macro economic look and talk of heat rebuilding in the
However, debate on the weather front is extensive with forecasters more confused
than convinced.
|
Today’s Program Numbers |
| Buy | Sell | Fair Value |
2.57 |
-1.92 | .80 |
|
Today’s Futures Pivots |
|
S&P |
Nasdaq |
|
R2 |
896.67 |
|
R2 |
1006 |
|
R1 |
870.33 |
|
R1 |
979 |
|
Pivot |
821.67 |
|
Pivot |
926 |
|
S1 |
795.33 |
|
S1 |
899 |
|
S2 |
746.67 |
|
S2 |
846 |