Futures Indicate Stronger Open
METALS
GOLD:
The gold market probably comes into the week net spec long around 80,000
contracts which, means the market is still vulnerable. With the Dollar
maintaining last weeks up side breakout, the pressure should remain on gold.
However, last week there seemed to be some suggestion that Central banks in
Asia
were
showing some long interest and that could serve to prevent a wholesale
liquidation.
SILVER:
The silver chart looks extremely vulnerable with a large number of lows
clustered around $4.51. In fact, those that are long the silver should exit
before the market rolls over down in sympathy with the gold market. If $4.50
support fails to hold, the market might not find additional support until the
$4.47 to $4.44 level.
PLATINUM:
If it were not for the strong recovery off the lows last week, we would be
concerned about October platinum rolling over down. In fact, a series of closes
around $653.9 seems to be a critical pivot point for the platinum market this
week. It seems like the platinum market is tired, given the pattern of lower
lows in the last week. Near term downside targeting in the October platinum is
seen this week at $638.Â
COPPER:
The best thing that could happen to copper, is too see a war averted and for
consumer and investing sentiment to consistently improve. The copper now sees
solid support around 69.00 and with a decent
US
industrial production reading this morning we may forge a solid bottom above
68.00.
CRUDE
COMPLEX
OVERNIGHT
CHG to Â
4:15 AM
 Â
:CRUDE +6Â Â ,HEAT-6Â Â
,UNGA+15 Â The energy complex comes into the session this week
following a pattern of higher lows and with a pretty wide $3.00 June trading
range. The weather looks to be heating up, the economy is trying to improve, and
the net spec long in crude oil and unleaded is extremely moderated for this time
of the year.
NATURAL
GAS
The
natural gas market took a well deserved bashing last week, off the record
injection reading and that probably lowered the net spec long position in
natural gas to 10,000 contracts. In other words, the natural gas doesn’t have a
big spec long, sitting in position, in hopes of hot weather or hurricanes.
INTEREST
RATES
OVERNIGHT
CHANGE to Â
4:15 AM
:BONDS +13Â
A pattern of lower lows and lower highs pretty much defines the playing
field in Treasuries. While the economic numbers haven’t been that stellar, the
Treasuries are apparently looking ahead to an eventual recovery. In fact, the
bonds and notes are probably not even breaking off the idea that the economy is
getting better, they are probably breaking off the idea that the market has come
to the end of a long term bull market.
STOCK
INDICES
OVERNIGHT
CHANGE toÂ
4:15 AM
:S&P+510
DOW +47 NIKKEI -20.9 FTSE +14Â The stock market appears poised to start the
week out on a positive note. If the market can finish today’s session strong
it will have one of the best quarterly performance in years. Therefore, the
market has the advantage of a “bullish buzzâ€.
FOREIGN
EXCHANGE
DOLLAR:
The Dollar comes into the week in about the same posture as it ended last week
and that should favor the bull camp. With the ECB officials suggesting that the
Euro zone has room to cut interest rates, the market might assume that the ECB
is a little concerned about the pace of the Euro zone economy. It should be
noted that the Dollar did manage to climb above a critical moving average last
week and that could begin to prompt longer term technical short covering. With
open interest in the Dollar falling sharply since the June 13th date, it is
clear that the gains in the Dollar have been mostly fueled by short covering. In
other words, we are not sure how many traders are interested in the Dollar for
fresh positions. In the end, the Dollar deserved some type of exhale from an
extended period of declines. In the near term, the Dollar looks set to climb
toward the critical 96.00 level. US economic stats today and the potential for
pre-holiday euphoria means that the Dollar has a potential to rally and could
rally aggressively if the early
US
stock
market gains gather momentum. There is the sense in the Foreign exchange markets
that recovery prospects in the
US
are
better than in the Euro zone and that type of thinking could end up pulling in
fresh buyers to the Dollar.
EURO:
It doesn’t seem like the overnight talk about a rate cut in the Euro zone is
altering the down trend in the Euro. Right now, the Euro is simply out of favor
and set to continue its liquidation. The next downside support in the Euro comes
in at 113.33 and then again at 112.70. Euro zone economic sentiment readings
came in at 98.2 versus 98.1 in May and that is why the ECB is hinting at the
ability to cut rates if necessary. The slack numbers from the Euro zone is
exactly why the trade thinks recovery prospects are better in the
US
!
YEN:
We continue to think that favorable global equity market action and optimism in
the
US
is
allowing the Yen to slide. In other words, as long as the world continues to
talk recovery (slow or otherwise) the Yen is allowed to drift lower. Near term
downside support in the Yen comes in at 83.34.
SWISS:
The Swiss has now returned to the April consolidation range but the bottom of
that range extends all the way down to 71.55. Therefore the Swiss might have
significant additional downside potential. In order to really pound the Swiss,
the
US
needs
to see a pre-holiday euphoric buying binge in the stock market.
POUND:
With reports that the
UK
housing
market is slowing and the chart damage seen last week, the bias has to be down
in the Pound. However, it would also seem like the overnight low of 163.70
formed a quasi double bottom. Recovery attempts in the September Pound should be
limited by the bottom of the old consolidation at 164.80.
CANADIAN:
The trend remains up in the Canadian but the gains in the US Dollar are serving
to undermine the momentum in the Canadian. We have to think that the Canadian
will see a set back to support of 73.20 but then the market will find support
and return to last weeks highs.