Futures Point To A Flat Open

INTEREST RATES

The Treasury market comes into the action today
in a conflicted posture. From an intermediate perspective the market is oversold
but from a day-to-day perspective prices have managed to climb 1 full point off
the recent low. We also see the market as vulnerable to the initial claims
reading today, as expectations call for a 15,000 to 20,000 decline in claims.

STOCK INDICES

While the stock market finally reacted to
favorable earnings, we still don’t get the sense that the bull camp has been
fully rewarded for the progression in the economy. However, it would seem like
the good news/bad news conundrum will continue, as investors haven’t become
confident enough to accept higher interest rates. Therefore, the pace of the
economy, jobs growth and corporate earnings need to raise the sentiment bar high
enough, to overcome the fear that an adjustment in interest rates will derail,
or slow the recovery.

DOW

Besides the 10,268 level, the Dow seems to have little support on the charts
until 10,238. Fresh longs in the June Dow might have to risk positions to
10,179, so adjust long entry points accordingly. A traders’ buy is seen at
10,269 whereas a position buy is suggested down at 10,219.

S&P

Critical moving average support comes in down at 1118.95 and we have to wonder
if the S&P can expect as much help from earnings as was seen yesterday.
Aggressive traders might buy the June S&P at 1114.30 today, while position
traders should hope for a big range down reversal and a long entry point of
1101.

FOREIGN EXCHANGE

US DOLLAR

The Dollar continues to grind away to the upside but
is showing periodic overbought status. In other words, the Dollar is fighting
its way higher and is being called into question on almost every potential
shortfall in the numbers. Given the Dollar discount (the negative geopolitical
baggage) the US Dollar needs to see the rate hike issue remain a high
probability and it also needs to see the US economy remain strong. In other
words, Dollar bulls need a perfect storm of fundamental developments to continue
the rise. It would seem that the June Dollar is headed above the 92.00 level but
that track would be dealt a serious blow if the initial claims fail to live up
to some rather lofty expectations. The Dollar would regain the 200-day moving
average with a rise above 91.98 today and 91.96 on Friday morning. The trend is
up even if it lacks the convincing style of the downtrend pattern of the prior 3
years.

EURO

The Euro zone posted somewhat decent economic
numbers overnight and that might serve to mitigate the selling pressure. With
February industrial orders rising by +0.5% and the prior months numbers revised
upward, there isn’t as much negative sentiment aimed at the Euro but the trend
would still seem to be pointing down. Surprisingly the June Euro has managed to
climb back above the 200-day moving average after falling below that level
yesterday. Keep in mind, many commodity funds are fond of long term moving
average analysis.

YEN

The Yen encounters the 200-day moving average at
91.00 today and it should be noted that the Yen is moderately oversold from a
short-term perspective. On days where the market thinks the Chinese are
posturing for a rate hike, that has seemed to lend support to the Yen.
Therefore, we expect a minor bounce in the Yen to 92.00.

^next^

SWISS

A near term bounce in the Swiss might simply be a
chance to get short at a better level. Traders should hope to sell the June
Swiss at 76.60 with a downside objective of 75.36.

BRITISH POUND

UK borrowing for March was pretty much as expected
and that doesn’t offer up enough news to alter the down trend pattern in the
Pound. Certainly the Pound will bounce if the US numbers this morning fail to
reach expectations. Look to sell the June Pound at 175.83 with an objective of
173.85.

CANADIAN DOLLAR

The Canadian is oversold but probably not done going
down. However, seeing the June Canadian manage a weekly close back above 73.36
would be a very impressive technical signal. Those that sold the Sept Canadian
futures and bought 3 Sept Canadian calls should be banking short futures
profits.

METALS

OVERNIGHT

London A.M. Gold Fix $391.35 -$2.40 LME
COPPER STOCKS 159,575 -725 tons COMEX Gold stocks 4.02 ml +17,993 oz Comex
Silver stocks 123.0 ml +428,133 oz

GOLD

The extensive washout since the April high has
certainly pared the record spec and fund long but the question is, will the $390
level be seen as solid support, or will the market need to slide to $385. With
the Dollar clearly showing signs of an up trend, we suspect that a vast number
of the weak Dollar longs have exited positions. We also think that a large
number of the economic anxiety longs have moved to the sidelines.

SILVER

Trend line support in the silver comes in at $6.10
but the magnitude of the recent losses has to rupture the speculative tilt,
especially since the market violated the 100-day moving average and could
violate the 200-day moving average with a slide below $5.85. The best would-be
bulls can hope for, is that the market is quickly moving toward a spec and fund
balance. Like gold, the silver needs a fresh focus and it would not appear like
the trade is ready to accept rapid economic growth or inflation as the
dominating theme.

PLATINUM

Fortunately the platinum market has already seen a
significant decline in open interest on the recent break, or even more
aggressive losses could have been seen. The problem with platinum is that prices
are so high historically, that one can hardly argue against an extensive
profit-taking slide. The Chinese market is still concerned about tightening by
the Chinese government and that serves to undermine demand expectations in
platinum.

COPPER

The copper market is really digging deep for
potential negatives, as the trade is fearful of both US and Chinese rate hikes.
Reports of increased production at BHP Billiton, simply keeps sentiment
undermined and vulnerable to even more selling. Critical support in the July
copper comes in at 120.80 and 120.20 and unless the outlook for the global
economy improves, we have to leave the edge with the bear camp.

CRUDE COMPLEX

The energy complex saw a mixed set of readings
from the weekly inventory reports on Wednesday. While a decline in crude stocks
at the API of 3.1 million barrels could have been considered very bullish (the
trade was expecting a moderately large build) the fact that gasoline stocks
finally managed to rise, took some of the bull tilt out of the weekly report. We
also think that the sharp rise in the refinery operating rate was a big
negative, as that hits right at the heart of the gasoline shortage issue.

NATURAL GAS

The Natural gas market really performed impressively
Wednesday as it managed to bounce in the face of overt weakness in crude oil.
Perhaps even more surprising is that natural gas prices rose, despite the
general expectation that US inventory levels of natural gas are set to show
another build today. The early expectations call for an injection of 20 to 45
bcf and a build at the upper end of the range would seem to be a pretty bearish
development.