War Worries Hamper The Open
INTEREST RATES
OVERNIGHT CHANGE to
4:15 AM
BONDS +4
— While action in the copper market would seem to suggest that the world economy
is coming around, the stock market and the press are unwilling to temper their
concerns toward the uneven economic recovery. Furthermore, with most
economists expecting to see a moderately soft
housing starts reading today, the bias should remain up. Therefore, bonds
maintain a positive track, but the upside momentum isn’t expected to be that
impressive.
STOCK INDICES
OVERNIGHT CHANGE to
4:15 AM
S&P -60, NIKKEI +94,
FTSE -17Â — Evidently the earnings reports this week have not been
positive enough to alter a slight bearish tilt in general market sentiment.
The stock market initially seemed to respond positively to Greenspan
commentary Tuesday. However, because the Chairman clearly suggested that
capital spending was still apparently locked down,
few longs were willing to hold positions into the close.
FOREIGN
EXCHANGE
DOLLAR: The
dollar quietly
repelled away from the recent low, as there has been at least some doubt cast
on the Euro zone recovery. We also think that continued compliance by
is also causing some recent dollar sellers to exit their positions. However,
with US economic numbers today there could be a little backslide in the dollar early. In the long run, one has to think that the passage of the
Homeland Security bill and moves by the US to put terrorism insurance in
place give the dollar an edge over Europe. If and when the March Dollar Index
reaches up to 107.10, that might be a place to consider getting short. In the
mean time, expect more stepwise gains to be posted in the dollar.
EURO:
Seeing the euro fall below 99.67 could project a failure all the way down to
99.13. Even US Fed members are undermining sentiment in the euro, with
McDonough citing a lack of productivity in the euro as a reason why its
recovery might be slow. Even the Fed Chairman suggested that “rigid” policy in
the Euro zone is hindering the ability to grow. Therefore, the euro falls from
favor and profit-taking is seen.
YEN:
With the BOJ downgrading their economy for the first time since early this
year, the yen is expected to come under attack. Apparently the yen was not
supported by the fact that Japanese bank stocks recovered smartly overnight.
We also think that adverse comments from the Chairman of the US Federal
Reserve toward Japanese policy are causing the yen to slide today. Near-term
targeting the yen is seen down at 81.32 basis the
December contract.
SWISS:
As
continues to claim total compliance with the UN, the flight-to-quality crowd
is slowly exiting longs in the Swiss. Near-term downside targeting in the
Swiss is seen at 67.95.
POUND:
Despite decent lending patterns in the
the pound is lower because of waning hopes for a BOE rate cut. Some in the
trade are suggesting that the pound is falling because of recent US numbers,
but we don’t see that as being the case. Since the pound mounted huge gains
off the October lows, it’s understandable that the
pound sees a moderately large profit-taking wave. Near term targeting in the
pound is now 67.87.
CANADIAN: The 63.00 price level continues to be a critical pivot point but
with the US dollar turning higher, maybe the Canadian will find some long
interest. In looking at the charts, it is clear that the Canadian has had a
positive correlation with the dollar since the late October period.
METALS
OVERNIGHT CHANGE to 4:15
AM: GLD +0.30, SLV -0.2,
PLAT +2.00; London Gold Fix $319.00, -$.80;
LME Copper
Warehouse
stks
864,075 tons, -3,400 tons;Â Comex Gold stocks 1.99 ml,
Unchanged; COMEX Silver stocks 108.0 ml oz, -5 ounces; OVERNIGHT: Asian buying
offset by Australian buying prices level with New York.
GOLD: A
moderately strong reversal off the lows in the dollar yesterday has to be
slightly undermining to the gold market today. Gold took the muted CPI reading
Tuesday without much response and that suggests that longs are in because of
war and economic concerns and not because of inflation. Therefore, the
direction of the stock market will remain critical to the gold market on a
daily basis.
SILVER:
A rounded top formation around this week’s high is giving off the impression
that silver is primed to slide. While we continue to hold the view that silver
is undervalued in the big picture, we also realize that the market is having
trouble finding a near-term focus. With the chart
patterns weak, another retest of the bottom of the uptrend channel support
level is possible down at 454.8 (basis the May contract).
PLATINUM: A couple days of slack world equity market action has temporarily
derailed the bull wave in the platinum. With open interest reaching the
highest level since the August high, we have to think that the market is
primed for a little profit-taking slide. A logical correction target in
January platinum is 588. Â
COPPER:
An upside breakout is projected in the overnight action, with both the
and
markets seeing strong buying. Therefore, commercial users are evidently seeing
enough physical demand to rationalize paying up for copper. LME stocks
continue to tumble, reversing the large periodic rises seen last week and that
simply removes a layer of resistance from the copper action.
CRUDE COMPLEX
OVERNIGHT CHG to
4:15 AM
CRUDE +20,
HEAT +48, UNGA +44 –Â The energy complex
continued to maintain a positive posture Tuesday despite dialogue from
that could be seen as bearish. Supposedly,
will meet the 30-day deadline that requires them to fully disclose in writing
a complete list of chemical, biological and nuclear weapons.
NATURAL GAS
Firm
price action failed to follow through Tuesday, as the weather is basically
moderating and the regular energy complex isn’t providing that much direct
support either. Some forecasts have the gas inventory reading Thursday morning
posting a draw of 20 to 38 bcf, while others
expect a small injection.