Futures Point To A Flat Open
INTEREST RATES
OVERNIGHT
CHANGE to  4:53 AM :BONDS +5 The Treasury market continues to avoid what we
would call an all out liquidation and we are not sure why that is the case.
Maybe some stubborn longs are hoping that the monthly payroll report out Friday
morning will highlight the lingering jobs problem and maybe Japanese central
bank buying is supporting Treasuries. It should also be noted that volume has
really declined and therefore it is possible that moderately small amounts of
concentrated buying are serving to discourage prices from falling.
STOCK INDICES
OVERNIGHT
CHANGE to 4:53 AM:S&P+160 DOW +12 NIKKEI +288 FTSE +3Â The macro economic
progression is such that prices deserve to run sharply higher but for some
reason the market continues to be off balance. While there is certainly nothing
wrong with new contract highs and new highs for the year, the market should have
been able to drive higher and close right on the highs. Maybe the mutual fund
flap is undercutting sentiment, as the corporate scandals did in the late 2002
and early 2003 time frame.
FOREIGN EXCHANGE
EURO: The
euro has also come to a critical junction on the charts, with what appears to be
a double low around 114.15. With another ECB member talking up significant
recovery in the EU in the months ahead, the recent sellers of the Euro are
becoming a little less interested in pressing the short side. Furthermore, we
think that the US numbers today could foster a temporary bounce in the Euro.
However, one should expect a major trend decision to unfold prior to the close
Friday. In fact, if the US posts a non farm payroll gain in excess of 70,000,
that could propel the Euro down toward the mid September consolidation of
112.00.
YEN:
After a holiday, the Nikkei has come out swinging with a moderately sharp gain.
In fact, it would seem that the Yen is poised to run straight back to the 92.00
level. Favorable auto sales readings would seem to give the bull camp an
additional incentive to buy the Yen today.
SWISS:
The Swiss would appear to be headed back down to 73.00 to 72.00 range, but there
could be significant support garnered around 73.00 before the Swiss falls into
that old trading zone.
POUND: We
are a little surprised that the trade turned on the Pound, in the face of the
Dollar strength. In fact we would have expected the Pound to hold up better than
the Euro or the Swiss, which suggests that the action yesterday in the Pound was
technically motivated. In order words, the Pound was more overbought
technically, so it suffered the most aggressive profit taking. We suspect that
the overnight probe down will be a critical low and that the Pound will now try
to work back into the mid October consolidation.
CANADIAN
DOLLAR: The Canadian might have a little further to fall before a critical low
is forged. Near term downside targeting comes in down at 74.27 but we can’t rule
out a slide to 74.00 later this week.
METALS
GOLD: The
gold market failed significantly Monday and more than likely saw extensive stop
loss selling by small specs and the funds. The Press also reported some selling
by dealers and that is discouraging for would-be bulls, as that shows a lack of
faith in the bull market. Some have suggested that the big gains in the stock
market contributed to the washout, as investors thought that equities offered
more opportunity than gold.
SILVER: A
massive increase in COMEX silver stocks of 2.7 million ounces, brings the total
to 118.2 million ounces or the highest level since late 1997! Fortunately for
silver bulls, the silver market really hasn’t been driven much by physical
supply and demand considerations, or prices could be thrust back to the October
lows around $4.80 off the inventory news. As it stands, the influence from the
gold market is negative and the market is holding an overly long fund and small
spec position. Eventually one would expect silver to benefit from the same macro
economic fundamentals that have driven copper prices sharply higher.
PLATINUM:
The platinum market stood up against the precious metals liquidation wash Monday
but still managed to close below a critical trend line. Today the January
contract will have another critical pivot point down at $738.4. Â
Chinese
prices were weak overnight mostly following the London action. With exchange
stocks still posting declines and the COPPER: outlook for the economy improving
by the day, one would think that the macro economic case for more gains in
copper is strengthening, instead of deteriorating. Certainly high prices can
discourage physical buying and that could make the 94.50 level a psychological
top, at least until a fresh bullish incentive is thrown at the market.
CRUDE COMPLEX
OVERNIGHT
CHG to    4:53 AM  :CRUDE -22 ,HEAT-45 ,UNGAS-33 The energy complex saw a
couple negative issues surface Monday, the most damaging of which were
suggestions from Venezuela that they would not be in favor of any additional
production cuts. The Saudi Oil Minister suggested that it was too early to even
discuss the action that could be taken in the December 4th OPEC meeting.
NATURAL GAS
As we
feared, the natural gas market failed to hold recent gains and now it appears
that prices are poised to fall back to last weeks lows. In fact, with the
weakness in the regular energy complex, fears of more injections and warm
weather in the East we would not be surprised to see a return to the January
lows around$4.86.