Futures Find A Bid From Oversold Condition
INTEREST RATES
OVERNIGHT
CHANGE to
4:15 AM
BONDS
-2 — The bond market forged another new high for the move Monday, despite an
empty economic report slate. Therefore, the gains Monday are directly
attributable to rate cut comments from the Fed. With anxiety rising sharply
toward the Japanese stock market and the
equity market hardly any better off, one can assume that bonds will maintain a
positive bias.
STOCK INDICES
OVERNIGHT
CHANGE to 4:15 AM: S&P +110,
DOW +8, NIKKEI
-179, FTSE -13 — It goes without saying
that the stock market rarely turns aggressively higher off the type of
performance currently being posted. It is also apparent that negative issues are
coming out of the woodwork. In addition to the bankruptcy rumors on American
Airlines, it would seem that the
has already been effectively blocked from following through on an attack of
FOREIGN EXCHANGE
DOLLAR: The Dollar is getting a bounce because the UN position is
preventing the
from attacking. In other words, the
has been effectively blocked from an attack and therefore shorts in the Dollar
see less reward for remaining short. We also think that most Dollar shorts
expected massive profits and now that the
has been pulled into the UN diplomatic paralysis that potential is mitigated.
The world will be more upset with the
than it is with
if the
violates the UN charter with an attack. However, if the
doesn’t attack in the short term, the odds of that type of move should wane with
each passing day. However, once the technical short covering bounce has run its
course, US economics hardly look to provide the Dollar with an additional
incentive to rally. In fact, we see US numbers worsening significantly,
especially if the Geopolitical headwinds continue to blow well into late spring.
On a rally to 98.29 in the March Dollar look to get short. Those trading the
June Dollar should look to get short on a rally to 98.71.
EURO: The Euro continues to hold around the
contract high zone but we have to suggest that the bulls are at risk of giving
up some gains, unless the
forges forward with an attack. With German vehicle registrations showing no sign
of recovery, the economy pace of the Euro zone is still suspect and therefore
hardly looks to foster additional buying of the euro around contract highs.
Corrective targeting in the Euro is seen at 110.00 or 108.75 depending on how
formal the delay in the war really becomes.
YEN: We continue to be surprised that the
Yen has managed to hold around the recent highs, especially considering the
negative dialogue being thrown off by Japanese officials. However, we suspect
that the trade is still riding the Pacific Rimn as
an effective way to stay out of the UN/Iraq confrontation. Therefore, economics
appear to have little to do with the valuation of the Yen in the near term. Near
term support in the Yen comes in at 85.25.
SWISS: A major down range overnight was
rejected, as some speculators rejected the no war tilt and suggested that the
might forge ahead with an unsanctioned attack. While the Swiss might post
additional gains, we have to think that the risk and reward from being long
around today’s highs is unattractive.
POUND: Following a surprise gain in January
manufacturing figures from the
and some compromising dialogue from Tony Blair, the trade is no longer lumping
the Pound tightly into the Dollar category. Critical support is 159.52 and
resistance is seen at 160.34 but no clear trend is detected.
CANADIAN: We suspect that the Canadian is
vulnerable to a slight correction as the
appears ready to extend its March 17th deadline and that could reduce the flight
to quality status of the Canadian. However, the Canadian economy remains head
and shoulders above the
economy and corrections in the Canadian should be bought. Near term support in
the March Canadian is 68.09, June at 67.77.
METALS
OVERNIGHT CHANGE to 4:15 AM:
GLD -1.60, SLV
-0.5, PLAT +1.10,
CP +20; London Gold Fix $353.15,
+$.05; LME Copper Warehouse
stks
841,200 ton, -2,375 tns;
Comex Gold stocks 2.31 ml, -1,575 oz;
COMEX Silver stks
110.4 ml oz, -969 oz; OVERNIGHT: A decidedly more bearish tone seemed to creep
in Tokyo and Sydney
GOLD: We have to think that the gold market
slid off its highs Monday because it appeared as if another delay in the war was
being fostered by indications that the
might not even seek a vote and by the fact that a number of swing votes are
suggesting they will vote no. Other countries are apparently going to abstain
from the vote, which means that the
is really looking at long odds. Certainly weakness in stocks and the Dollar
provide gold with a measure of support, but without the imminent war threat, the
bull case is at least temporarily wounded.
SILVER: Without support from gold and the
sagging macro economic condition, silver also becomes vulnerable. Trend line
support in the May silver comes in down at $4.588 and we would expect the silver
to slide toward that level quickly, if near term support is breached at $4.655.
In fact, with American airlines seeking bankruptcy financing and Japanese
officials expressing significant concern over Japanese equity market weakness,
we can’t help but think that deflation will control the near term direction of
the silver market.
PLATINUM: The platinum market would appear
to be out of sync with the rest of the metals as it continues to hold firm
despite sagging macro economic conditions and a potential delay in the war
timing. We would not be surprised to see the April platinum slide toward support
of $692.With nearby prices holding above $704 we just can’t rationalize holding
longs or adding longs considering that support is $12 under current prices.
COPPER: A delay in the war probably won’t
provide much long incentive, as the macro economic concern is pretty high. In
fact, one might want to monitor conditions in
as an equity market debacle in that country could kill the golden goose of
anticipated Asian demand. It would seem that 75.40 will provide some support to
May copper, but a quick decline to lower support of 74.95 would not be
surprising.
CRUDE COMPLEX
OVERNIGHT
CHG to
AM
CRUDE -39,
HEAT -52, UNGA -82 — We have to
think that the energy complex was somewhat overbought Monday or was prompted to
take profits by the idea that another delay in the war timing was in the cards.
From the OPEC meeting today it would seem that they still fully expect a war to
unfold.
NATURAL GAS
We get
the sense that the May natural gas market could easily correct to $5.85 and
possibly to $5.50, if the regular energy complex manages a 2-day correction. Two
and three day corrections in the natural gas have been uncommon, with the
biggest correction since December being 4 days down.