Futures Find A Bid From Oversold Condition
METALS
GOLD:
Slightly weaker Dollar action (the Dollar is starting its third down session in
a row) should be supportive to gold, especially since the Japanese were noted
buyers in the overnight action. We are not sure if the sloppy equity market
action helps gold, but a lower stock market might help to undermine the Dollar.
Both gold and silver showed signs of support yesterday and that could have come
off the string slightly improved
US
economic
numbers.
SILVER:
The September silver continues to build a consolidation around the $4.705 to
$4.645 range. We would have expected the macro economic information yesterday to
have provided more long interest to the silver market but the weakness in the
US
equity
market countervailed the bull interest. We have to think that the technicals in
silver have been balanced by the July correction and therefore aggressive
traders could be buyers of a dip to $4.64 but traders will have to risk that
position to $4.51.
PLATINUM:
Overnight the platinum market rose to within striking distance of the old high,
but then failed significantly. While the trade is a little thin to attach too
much emphasis on the overnight action, it would not be a positive development
for platinum to slide back below $677. We just can’t discount the lofty
historical price level of platinum and the lack of an apparent driving
fundamental force. Â
COPPER:
London and Shanghai copper prices were lower overnight, despite another
favorable overnight LME stocks decline, Shanghai copper stocks rose by +3,411
tons and that could discourage the Chinese from buying copper in the near term.
Furthermore, with the international equity markets weak and choppy, the copper
market apparently isn’t able to benefit from the recent improvement in US
economic numbers. It would seem that copper is attempting to hold above “close
in†support of 78.00 but if the stock market comes under pressure and or the
outlook toward the global recovery worsens, copper probably won’t hold above
chart support.
CRUDE
COMPLEX
OVERNIGHT
CHG to  4:18 AM Â
:CRUDE +4Â Â ,HEAT+15Â
,UNGA+18 Â The energy complex was lucky to have garnered support off
a US refinery glitch Thursday afternoon, as the inventory information Wednesday
seemed to have injured the bull camp. However, with the bounce effort Thursday,
the bull camp shows they still have a little control over the daily price
action.
NATURAL
GAS
With the
weekly injection in natural gas coming in at 93 bcf and expectations calling for
a 80 to 110 bcf build, the market was due a short covering bounce. The annual
shortage is now running at 22% below year ago levels with the producing regions
coming with the biggest deficit reading.
INTEREST
RATES
OVERNIGHT
CHANGE to  4:18 AM :BONDS +0
The Treasury market showed a little resolve Thursday when it managed to avoid
intense selling off the bearish sweep of favorable economic readings on the US
economy. Maybe the market is attempting to build a layer of support but that
attempt could be primarily the result of weakness in the equity market. In other
words, the Treasury market needs all the help it can get to keep the selling to
a minimum.
STOCK
INDICES
OVERNIGHT
CHANGE to 4:18 AM:S&P+190 DOW +10 NIKKEI +20 FTSE +16Â Maybe the
Microsoft earnings report was enough to get the stock market to improve its near
term attitude. Certainly the market was overly pessimistic this week, but it was
also partially disappointed by earnings reports and slack economic reports from
early in the week. However, toward the end of the week, US economic numbers
improved and the Microsoft earnings report dialogue might have created the basis
for a week ending short covering bounce.
FOREIGN
EXCHANGE
Dollar:
The Dollar is doing well to have avoided a bigger washout, as the information
mid week appeared to be enough to completely end the Dollar’s attempt to
rally. However, as the week has progressed the
US
economy
has posted some favorable economic numbers and the Microsoft earnings are
certainly a supportive issue for the Dollar.Â
In the end, the Forex trade has been slightly put off by the
disappointment in the totality of the earnings reports and that keeps some would
be Dollar buyers on the sidelines. Near term support in the Dollar comes in at
96.83 and then again at 96.13. In order to turn the near term trend up in the
Dollar, it will have to manage a trade above 97.46 this morning. The
Michigan
sentiment numbers this morning are generally expected to support the Dollar but
probably won’t be as important as the direction of the
US
equity
market.
EURO:Â
The Euro just couldn’t climb back above critical resistance of 112.50
but it would seem that the sellers are not as intense as they were early in the
week. The French posted a favorable trade surplus reading overnight but that is
only a minor issue supporting the bull case. Considering the tight ranges and
the lack of a theme in
Europe
it is
possible that the
US
numbers
this morning are the most critical issue of the day for the Euro. We have to
think that the path of least resistance is down in the Euro but that ranges will
narrow slightly.
YEN:
The Yen would seem to be entrenched in a downward pattern with support seen at
84.00 and then again down at 83.89. As it stands, this morning the technicals in
the Yen suggest that more downside is needed before there is enough of an
oversold status to call for a bottoming in the Yen. The tone in
Japan
remains
upbeat as buyers were snapping up values in the equity market overnight and that
should allow the recent trend in the Yen to continue.
SWISS:
The corrective bounce this week appears to have run its course and we would now
expect the Swiss to resume tracking toward the March lows down around 71.55. The
Swiss rally came almost exclusively at the hands of the weakness in the
US
equity
market and therefore Swiss traders should keep a very close eye on the
US
equity
market action this morning. In order for the Swiss to resume the slide, the
September S&P might have to mount a run to 985.30.
POUND:
With decent leadership for retail stocks in the
UK
overnight, it would seem that the marketS attitude toward the
UK
economy
is improving and that might serve to extend the recent consolidation and
eventually produce a bottom in the currency. However, it would be very negative
for the Pound to slide back below 158.40 and certainly to get anywhere near this
weeks low of 157.86. In fact, if the Pound is going to bottom it needs to show
some upside action today.
CANADIAN:
We hold little hope for the bulls in the Canadian. With US economic numbers and
US corporate earnings saving the Dollar, the Canadian remains under pressure.
Furthermore, the Canadian has violated enough technical levels that more
significant long term liquidation is to be expected. In fact, we now see 70.00
as a target.