Futures Indicate A Strong Open
INTEREST RATES
OVERNIGHT
CHANGE to
AM
BONDS
-15 — Like a number of other markets the Treasuries are anticipating an end to
the war. If there is a near term end to the war, that at least creates the
impression that the economy will improve. While some suggest that the period
following the war will present a false dawn, one has to concede that ending the
war does take the pressure off consumer sentiment.
STOCK INDICES
OVERNIGHT
CHANGE to 4:15 AM: S&P +800,
DOW +61, NIKKEI
+83, FTSE +40 — Unfortunately the stock
market isn’t going to make it easy for those that want to get long, as it is
already factoring a quick end to the war. The fact that the worst part of the
battle is still ahead and that coalition forces have just moved inside the
"red-line" (the point where experts suspect that chemical weapons could be
employed) means that risk and reward for the bull camp is rising in unison. In
the background, US economic stats continue to fall away, suggesting that not
ending the war quickly will surely bring about major problems for the
economy.
FOREIGN EXCHANGE
DOLLAR: The Dollar is simply getting the benefit of the doubt on the
duration of the war. It is also possible that long-term shorts in the Dollar are
simply banking profits rather than be forced to give back significant profits on
wild volatility swings. While most of the
economic reports this week have been very weak, it should be noted that the
Challenger layoff report did not show more layoffs in March when compared to
February. The Dollar is already showing a rather large overnight range with an
upward bias. While a strong rally in the Dollar would seem to be a speculation
that the end of the war will go very quickly, we would have to play the long
side as opposed to the short side in the coming sessions. However, to turn the
trend up the June Dollar would have to rise above 102.07 and that is an unlikely
event in the very near term. If suicide bombers have an effect on the end game,
or chemical weapons are used that could temporarily smash the Dollar, so beware
of sudden prices shifts ahead.
EURO: A massive failed auction rally
overnight would seem to project a slide in the Euro to 106.41. We suspect that
the harsh tone of the EU toward the war, will begin to temper, as they attempt
to position for the reconstruction of
In the near term the Euro should continue to see some flight to quality value
come out of prices but at this point we do not expect a slide all the way down
to the March lows of 104.70.
YEN: A critical moving average turns down
today if the Yen falls below 83.99 and that level would appear to be the mid
point of the coming trading range. Negative sentiment thrown off by the
tankan survey and a temporary reversal of the flight
to quality buying pattern last week could mean that the Yen falls all the way
down to 83.40.
SWISS: A double top and an aggressive
rotation away from flight to quality means that the Swiss is in for some
aggressively declines in the coming sessions. Near term downside targeting is
seen at 72.00.
POUND: A short-term up trend in the Pound
should extend as the coalition success lifts the Pound and the Dollar. Near term
resistance is seen at 158.26 while support should be firm down at 156.02.
CANADIAN: Unfortunately for the long-term
trend players, the Canadian will have to see a moderate correction off flight to
quality liquidation, before the strength of the Canadian economy manages to
right the ship. Therefore we suspect that a correction to 67.00 is possible.
Maybe the June Canadian will see a slide all the way down to 66.56.
METALS
OVERNIGHT CHANGE to
4:15 AM
GLD
-3.50,
SLV -3.2, PLAT +3.90;
Gold Fix $330.25, -$5.40; LME Copper
Warehouse stks 812,125 ton, -825
tns;
Comex Gold stocks 2.383 ml, +855 oz;
COMEX Silver stks 108.5 ml oz, -169,383
oz; OVERNIGHT: Residual from Saddam’s failure to show Tuesday results in
selling.
GOLD: The gold is already seeing traders
exiting positions ahead of what appears to be the end of the war. Even with
coalition forces just now crossing into the "red-zone" (where chemical weapons
might be used) it would appear that gold isn’t going to be supported. It is
always hard for the gold market to see widespread flight to quality buying when
the stock market is rising aggressively and that looks to be the case in the
action today.
SILVER: A failure on the charts in July
silver looks to project liquidation down to the $4.375 level but with the last
COT report showing only a minimal small spec and fund long,
its possible that the market manages to hold above the March lows, even
into the news that the war has ended. In fact, if there is a liquidation wave
off the end of the war, we would like to be a buyer of that slide as a return to
normal could mean more silver demand is to be seen off an improvement in high
tech and communication business. In order to turn the trend back up, the July
silver would need to regain $4.51 on a close basis.
PLATINUM: We suspect that platinum will find
a bottom quicker off the hope for revived physical demand than either gold or
silver. Therefore, we would become a buyer of $619 if given the chance in the
coming sessions. Significant liquidation in open interest in platinum would
suggest that the market could make a solid technical bottom with only a minor
slide in prices. Since the high of $684, open interest has declined from 9,202
to 6,429 and that should have resulted in the overbought condition being
tempered significantly.
COPPER: Considering that Chinese copper
prices were higher overnight and global equity prices are stronger, we have to
see copper with an upward bias today. The Chinese trade was seen buying the
market after the market climbed above critical resistance on the charts.
Apparently the theme that the war is coming to an end is going to fuel long
interest in copper.
CRUDE COMPLEX
OVERNIGHT
CHG to 4:15 AM: CRUDE -109,
HEAT -199, UNGA
-263 — The fact that Saddam didn’t show up on Iraqi TV to address the nation
yesterday seemed to send a message that he was no longer in control. Considering
that the stock market seemed to think that the war was coming to an end, we
understand the long liquidation seen Tuesday.
NATURAL GAS
The
market managed to mount a minor gain Tuesday, as reports of lingering cold
weather in the East supported prices. Apparently the natural gas market expects
the weekly inventory readings on Thursday, to show a draw and that helped the
natural gas market to avoid the same type of losses seen in the regular energy
complex Tuesday.