Finding A Trade In A Flat Market
INTEREST
RATES
OVERNIGHT
CHANGE to  4:15 AM :BONDS +2
The economic report slate today is rather insignificant compared to Tuesday but
when one looks at the action thrown off by the numbers, it is clear that the
Treasuries are not tracking the numbers. Unless expectations for the reports
Tuesday were really too high, it would seem like the Treasuries were discounting
the reports and dredging up the idea that the job sector remains a problem.
Others might suggest that the bonds factored a good set of numbers at least an
hour before durables were released and when the report barely reached
expectations, the shorts decided to take profits.
STOCK
INDICES
OVERNIGHT
CHANGE to 4:15 AM :S&P-140 DOW -13Â NIKKEI
-23 FTSE +25Â While the stock market managed to right the ship late in the
session Tuesday, it is clear that the market isn’t jumping at the chance to put
a bullish spin on the pace of the economic recovery. In other words, stock
prices aren’t cheap enough to attract significant buying, or the economy isn’t
strong enough to rationalize paying up for stocks at current levels. While Sears
posted better than expected sales readings and strong home appliance sales, the
market simply isn’t enticed into action.
FOREIGN
EXCHANGE
EURO:
Apparently the trade took comments from a BOJ official to mean that the BOJ is a
little concerned that the euro slide could eventually make it harder for the
central bank to keep the Yen from rising. In other words, the Euro manages to
get support in a round about way. In fact, the Japanese seem to be indicating a
point in the Euro that they would not like to see violated and that tempers the
selling interest in the Euro for the near term. We see the September Euro
holding above the recent consolidation support of 108.30 until the point where
US numbers make another big statement and then it might be possible to see the
Euro slide to lower levels. In the near term, expect a minor bounce to
resistance of 109.41.
YEN:
We are not sure if the trade is going to take the BOJ comments about the
Euro/Yen situation to mean anything directly toward the yen but that could mean
a change in the intervention efforts of the BOJ. However, we do think that the
Yen has lost its upside momentum and unless the Dollar violates support, the Yen
is probably a sale at 85.28, with a near term objective of 84.90.Â
SWISS:
With the Swiss managing to climb above consolidation resistance, the action
would seem to be a little more than simple technical short covering. In fact, we
would not be surprised to see a follow through to 71.30 basis the September.
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POUND:
Trend line resistance looks to come in today at 157.34 but with very little
economic report direction, we don’t expect the Pound to be able to shut off a
return of the selling seen for most of the month of August. CANADIAN DOLLAR:
Apparently the Canadian failed at resistance and is now headed down to the
bottom of the recent consolidation around 70.77. However, because the Canadian
seems to be in sync with the Dollar again, that gives hope that the Canadian
will manage to respect chart support.
METALS
GOLD:
From reading the overnight news from Asia it is clear that gold traders there
are aware of the overly long positioning of the market. It is also clear that
Asian traders are concerned that recent gains in the Dollar have been
consolidated, which means that traders can’t simply discount the Dollar gains.
 While the threat of violence in the Middle East is threatening to
escalate, there is no way to tell when that might happen and when that influence
might support gold prices.
SILVER:
The silver chart continues to coil and the coiling gives off the impression that
prices are vulnerable. The breakout range in the December silver comes in at
$5.052 and $4.972. However, in the near term with the outlook toward the economy
slack, we just can’t get a good feeling about the risk and reward of being long
silver from current levels.
PLATINUM:
The platinum market bounced off the up trend channel support line and with the
US stock market managing to put a positive spin on conditions late in the
session Tuesday, we have to give the bulls a slight edge in the near term trade
action. Â
The
Chinese copper market was down overnight but that action was probably just a
reaction to the surprise liquidation in the US action COPPER: Tuesday. The
copper market closed before the US stock market managed to right the ship
yesterday and the early weakness in the equity market was certainly behind the
liquidation in copper. However, the copper market still seems to be expensive
within the range and until the December contract falls back to chart support of
78.95 we can’t feel good about the risk and reward relationship.
CRUDE
COMPLEX
OVERNIGHT
CHG to    4:15 AM Â
:CRUDE -4Â Â ,HEAT-9Â Â
,UNGA-96Â The energy market managed to hold up near the recent highs
in the action Tuesday despite a little profit taking by weak handed longs
unwilling to risk the weekly inventory reports. While one would largely expect
the inventory readings to be supportive, the market has possibly factored in a
pretty bullish set of numbers.
NATURAL
GAS
The
expiration of the September natural gas contract might be responsible for
pulling the plug out from under the market. However, as mentioned in the regular
energy complex, we look forward to stronger economic influences on natural gas
demand and could end up seeing one of the colder winters of the last 4 years.