Futures Indicate A Strong Open
INTEREST RATES
OVERNIGHT
CHANGE to
AM
BONDS
-13 — The bond market continues to be caught between opposing views. On one
hand, the market is seeing consistent evidence from the regularly scheduled
economic reports that the
economy is STILL very weak but that is being offset by better than expected
corporate earnings reports. Considering that equity prices have posted
solid gains this week, its understandable that
Treasury prices have been partially undermined.
STOCK INDICES
OVERNIGHT
CHANGE to
4:15 AM
S&P
+640, DOW +53,
NIKKEI +40, FTSE -7 — The
overnight action has the market gapping higher and that comes expressly off
favorable earnings reports from Microsoft and Intel. As we see the improvement
in the high tech sector, we become even more surprised that the stock market
hasn’t rallied more aggressively in the last 10 sessions. In other words, we
would have expected the stock market to roar on the
celebrations and now we would expect the market to rally on the macro economic
improvement.
FOREIGN EXCHANGE
DOLLAR: The Dollar continues to miss out on the improved conditions
being seen in the equity market. With several countries warning the
about its threats against
it’s clear that the world still doesn’t get the concept of enforcement in
international relationships. Even with
openly violating the UN sanctions (with a pipeline into
the world chooses to side with the Syrian position. Therefore, it’s clear that
the Dollar is going to remain out of favor, even with improving economic
prospects. Countervailing the positive benefit seen in the
equity market, are favorable Euro zone economic readings this morning.
Therefore, the Dollar looks to fall toward chart support of 99.30, as the 99.85
level doesn’t appear to be able to hold up the market.
EURO: With the Euro making an upside
breakout overnight, it is clear that the bull camp is still in control.
Overnight the Euro zone posted favorable Industrial production readings with a
+0.3% gain and that contrasts with the 0.5% decline in the
Therefore, the Euro would seem to have justification to move even higher in the
consolidation. However, until the Euro rises and closes above 108.42 we will not
consider the trend to be up.
YEN: The fact that the Yen isn’t rising
along with the Euro, means that the Yen is no longer in favor. We continue to
see the SARS issue as a negative to the Japanese economy and with the war issue
no longer providing flight to quality buying of the Yen,
it is without a theme to drive prices up. However, we don’t see a theme to drive
the Yen out below near term chart support around 83.00.
SWISS: The Swiss is showing some correlation
with the Euro, but only after a significant upside breakout in the Euro. We
suspect that the Swiss will be dragged higher but
heavy resistance is seen up around 72.75. We are inclined to become a seller of
the Swiss at 72.75.
POUND: A critical level was regained
overnight and that could project a rise to 157.70. A rise in
housing prices in April, confirms that its economy is still capable of expansion
and with the weight of the war removed, one should not be surprised to see the
Pound make an upward bid.
CANADIAN: As is usually the case, seeing
higher interest rates has a habit of tempering the bullishness toward an
economy. However, we suspect that the Canadian will continue the pattern of
gains seen since late December, with the higher rate issue possibly becoming a
supportive issue. After all the interests rate differential is an important
consideration. Near term support comes in now at 68.54, with the next up side
target at 69.55.
METALS
OVERNIGHT CHANGE to 4:15 AM:
GLD -0.50, SLV
-0.3, PLAT +3.90,
CP +30; London Gold Fix $323.85,
+$.15; LME Copper Warehouse
stks
791,975 ton, Unchanged; Comex
Gold stocks 2.383 ml, Unchanged; COMEX
Silver stks 107.9 ml oz, -1,002 oz;
OVERNIGHT: Ongoing gold weakness is possibly tied to better equity
mkt action.
GOLD: Given the slack action in the gold
since the high last week, it is clear that war and flight to quality longs
continue to bail out. However, because the Dollar has generally remained weak,
we doubt that gold has the momentum to violate chart support down around $320.
With a series of better than expected US corporate earnings reports,
countervailing the weak
economic numbers released Tuesday, the gold market is basically left without a
clear trend.
SILVER: The up trend pattern in the silver
continues, with near term support coming in at $4.517 today. In fact, in the
early overnight action the silver market actually violated the channel support
and might be in for a minor correction. We would become a buyer on a break in
the July contract to 4.465.
PLATINUM: Coiling in the platinum market
suggests that it is not as closely tied to the macro economic ebb and flow as
silver and copper and that is disappointing to the bull camp. We suspect that
platinum will eventually respond with higher prices, if the stock market can
consistently rise but traders should remember that platinum is already trading
at very expensive historical levels.
COPPER: The copper market managed an
impressive breakout up yesterday and that probably comes from spec traders
anticipating a benefit from the equity market performance. Supposedly, the Asian
trade was selling into the breakout, which is something that could temper the
upside thrust. After all,
is a huge demand market for copper and might be considered the primary influence
on copper prices for the last year.
CRUDE COMPLEX
OVERNIGHT
CHG to 4:15 AM: CRUDE -7,
HEAT +11, UNGA
+2 — The energy complex maintained a positive track Tuesday despite the fears
of a possible build in weekly inventory readings this morning. Expectations for
the weekly API/DOE crude stocks were for a build of 1.3 to 2.5 million barrels.
NATURAL GAS
The rise
in natural gas has to bring the small spec long to a record level, but it would
appear that the market is content to play off the annual deficit and not off
concerns future tightness. We have to think that the slightly improved macro
economic outlook is also providing some of the upside action in natural gas.