Futures Indicate Stronger Open

• August 18, 2003
• Brice Wightman

INTEREST
RATES

OVERNIGHT
CHANGE to   4:15 AM :BONDS +9
It would seem that some of the downside momentum is coming out of Treasuries,
especially when one considers the price response to the US numbers out last
Friday. It would seem that the trend is still down and that the net impact off
the blackout is only going to be minimal on the recovery process. We look to the
highs of August 13th and 14th (106-12) as critical resistance in September bonds
with a commensurate level coming in at 111-26 in the September notes.

STOCK
INDICES

OVERNIGHT
CHANGE to 4:15 AM:S&P+110 DOW +9 NIKKEI +169 FTSE +15 The stock market
seemed to be on the way to a higher opening today, with the Nikkei soaring 169
points but since the close of the Japanese stock market, the Press has reported
an earthquake in Japan. With the weekend bombing of a Northern Iraq pipeline, it
is possible that rising gasoline prices will dampen sentiment even further.
However, the market seems to be remaining generally upbeat on the economy, even
though macro economic reports from France and the Euro zone this morning are a
little disappointing.

FOREIGN
EXCHANGE

Dollar:
The US Dollar continues to be the best of the worst, as the economic
differential continues to shift in favor of the US recovery. Over the weekend
the Press was really playing up the fact that Germany, France and the Euro zone
appear to be slipping back into a recession. With the US numbers released last
Friday showing some strength, about the only thing capable of tripping up the
Dollar would be another power problem on the East Coast. It bears noting that
another peak power day could create the chance of another problem. In the
absence of a headline event, the Dollar appears poised to run even more than we
would have expected. Apparently the European trade is going to allow the Dollar
to rise sharply against the Euro and with a number of critical resistance levels
violated, in the Dollar it is possible that aggressive stop loss buying might
unfold. Next critical resistance in the Dollar comes in at 97.26 and then again
up at 97.72. The trend is apparently up in the Dollar.

EURO:
As mentioned before, the European trade has down graded its view of the recovery
pace and that has apparently allowed the trade to press the short side of the
Euro. Near term downside targeting in the Euro is 111.21 and then again down at
110.93. In short, the Euro economy can’t get any respect and now the trade is
willing to attack the Euro.

YEN:
After the Nikkei closed firm on the session and at some critical new highs,
there were reports of an earthquake and that could also result in a surprise
flow of money back toward the country. Keep in mind, the BOJ has been
undertaking a massive intervention, in which they were moving money out of the
Yen. Initially, the earthquake issue seems to be a negative, with the Yen
possible headed back down toward the late July consolidation. The late July
consolidation comes in at 83.64 to 83.00.

SWISS:
With the Euro under attack and almost no economic buzz being thrown off by the
Swiss, it is no surprise that the currency is in a full scale technical
breakdown. Near term downside targeting comes in down at 72.18 and then again
down at 71.81.

 

POUND:
Given that the UK economy was already in doubt, the overnight failure on the
charts would seem to project a series of declines toward a lower trading range
of 158.76 to 158.00. CANADIAN DOLLAR: So far, the strength in the Dollar
hasn’t resulted in a failure in the Canadian. However, as long as the
September Canadian holds above 71.54 the market might be able to maintain a
slight upward bias. In order to build a bull case, the Sept needs a high this
week of 72.60.

METALS

OVERNIGHT
CHANGE to 4:15 AM:GLD-1.40 ,SLV+2.3  ,PLAT+2.50,
CP +45 London Gold Fix $361.30 -$2.00 LME Copper Warehouse stks 630,850 tns
+300 tns Comex Gold stks 2.74 ml oz Unchanged Comex Silver stks 104.9 ml
Unchanged OVERNIGHT: Minor downward pressure in Asia with mostly a technical
focus.

GOLD:
While the gold market is weaker in Asian and under some technical liquidation in
the early US action, we would think that news from the gold share market will
lend some support to prices. Over the weekend stories from the British media
suggest that other key gold players might enter the bidding for Ashanti. The
latest offering for Ashanti topped 1.4 billion but we would think that Barrick
and Placer Dome would make sure that the eventual bidder doesn’t get away with
a bargain.

SILVER:
The net spec and fund long in silver enters the week a little longer than the
COT report reading last week of 73,000 contracts. Unlike gold, the silver market
has slid toward technical chart support with that $4.91 level becoming very
important support. Position traders should remain long silver but should be
committed to holding positions to at least $4.82.

PLATINUM:
The platinum market once again throws off light commercial and small spec
selling and appears poised to run to new contract highs. Apparently, the bidding
up of gold shares is prompting buyers to move into platinum. Considering such
thin conditions one can’t rule out a rally to $730 in the October contract.
 

COMMITMENT
OF TRADERS ANALYSIS – FUTURES & OPTIONS 
August 05 – August12, 2003

              
LARGE SPEC         
COMMERCIAL          
NON-REPORTABLE

                
NET                 
NET                  
NET

     
      POSITION  
NET CH    POSITION   
NET CH    POSITION  
NET CH

SILVER         
46407    -5913     
-73389      3775      
26981     2138

COPPER         
30383    -4059     
-40026      6906       
9643    -2847

GOLD           
64458     8346    
-105870     -9395      
41412     1049

PLATINUM        
5444      243      
-6210      -226        
766      -17

 

Even
with Chinese copper prices ending slightly higher, we have to think that the
bears have a slight edge in copper. With the COPPER: blackout causing some minor
recovery concerns for the US, France thought to be falling back into recession
and exchange stocks of copper on the rise, we have to favor the bear camp in
copper. Last week brought the biggest weekly stock rebuilding in many months and
that can’t be ignored with the concerns for the European recovery pace.

CRUDE
COMPLEX

OVERNIGHT
CHG to   4:15 AM  
:CRUDE +31  ,HEAT+128
,UNGA+33  Just as we feared the Iraq-Turkey pipeline was shut down due to a
fire that was supposedly caused by sabotage. Early estimates call for the
pipeline to take a week to repair but the fire will have to be extinguished
before the repairs to start.

NATURAL
GAS

It would
look like October natural gas could headed back down to the July consolidation
lows, unless the heat event for the end of August entrenches. While there is a
forecast for 100 degrees in Des Moines the question is duration is key to
natural gas.