Futures Point To A Flat Open

INTEREST RATES

We continue to think that Treasury prices are
balancing their technicals with the minor upside action of the last two sessions
and that eventually a lower trading range will be unfold. However, demand for US
Treasury supply gave some support to prices yesterday and it would seem that
strong demand for inflation adjusted bonds today, will provide a similar impact.
Considering that investors stepped up for the Note auction yesterday, we have to
think that the bear camp is disheartened, as one would expect investors to show
tepid interest under the apparent broad based change that supposedly took place
off the most recent payroll report.

STOCK INDICES

The stock market is showing a lack of bullish
resolve and from the lackluster Alcoa earnings kick-off, it would not seem like
the market is poised to mount an aggressive run higher. However, there continues
to a general bullish tilt, with prices showing early weakness yesterday but in
the end the market closed within relative proximity to recent highs. MGM
dividend talk boosted sentiment slightly, as did a Kerr-McGee buyout
announcement of Westport Resources.

DOW

While the fundamental tilt in the Dow over the last 24 hours hasn’t been
spectacular, the technical setup seems to be bullish, as prices have stayed
right on the recent highs and look to start the session out today at the highest
level since March 8th! About the only thing discouraging about the Dow, is that
volume doesn’t seem to be rising along with prices. In the near term we have to
think that prices are headed to 10,600 and eventually 10,653, perhaps by the
close Thursday afternoon!

S&P

The bias is up and with the June S&P pulling back from the recent highs and
finding some consolidation support down around 1141.10, we have to favor the
bull camp. In fact, with a coming pre-holiday (potential) rally window ahead, we
would not be surprised to see the June S&P manage a trade above 1153 in the
coming 48-hour trading window.

FOREIGN EXCHANGE

US DOLLAR

About the most positive development for the Dollar
this week has been that prices have managed to hold above the 40 day moving
average. With the Dollar sliding in the face of supportive US economic
information and weak Euro zone information, we are really disappointing in the
Dollar performance this week. Overnight it would seem that Euro zone exports
rose sharply in the most recent report and that would seem to keep the pressure
on the Dollar. While some in the trade might watch the import price readings
today, we doubt that the Dollar will get much of a charge out of the US figures
today. Since the Dollar failed to respond consistently to the latest payroll
report, we are tempering our bullishness and respecting the Dollar’s ability to
slide back into the 88.00 to 89.00 trading range. It is apparently not time for
the Dollar to come out of the last four month consolidation but the fundamental
picture would still seem to favor an upside move when the time is right.

EURO

Dialogue from the ECB overnight seems to be
countervailing, as significantly higher export totals overshadow the news that a
number of EU members are due to get debt warnings. Germany also posted some
slightly disappointing February Manufacturing orders readings with a +0.3% gain.
Therefore, given recent numbers it would not seem like the ECB is poised to cut
interest rates and that gives the Euro an upward potential. However, the upside
potential is limited and the Euro still remains mired in a downtrend pattern.

YEN

The Yen managed to recoil aggressively away from the
probe down Tuesday and now seems ready to return to the February highs of 95.42.
Sharply rising open interest shows that the bulls really moved into the Yen on
the break off the April highs and that is a major positive from the technical
front.

^next^

SWISS

Like the Euro, the Swiss seems to have temporary
capacity to rally but in the end the Swiss can’t seem to get out of a slight
downtrend pattern. The trend remains down in the Swiss until the 78.39 level is
regained.

BRITISH POUND

The Pound managed a new high for the move overnight,
but then failed to hold those levels. A critical moving average line would be
violated in the June Pound, with a slide back below 181.17.

CANADIAN DOLLAR

Solid support under the Canadian should discourage a
roll over down, but we are not sure the June Canadian has the ability to get
above over head resistance up at 76.56.

METALS

OVERNIGHT

London A.M. Gold Fix $419.25 -$.70 LME
COPPER STOCKS 176,600 -2,525 tons COMEX Gold stocks 3.78 ml -636 oz Comex Silver
stocks 122.1 ml -38,430 oz

GOLD

A minor upward bias continues but significant
overhead resistance is seen up at $423.4 and then again at $425. In order for
the gold market to go on a fresh sprint higher, it could take a decline in the
Dollar below the overnight low of 88.86. However, the Dollar doesn’t appear to
have a clear-cut trend, which might be necessary to get gold into a more defined
trading pattern.

SILVER

While gold might have stalled in a consolidation
pattern, the silver market continues to show a bullish setup. The pattern of
higher lows in silver and the consistent interest by the funds seems to be more
than enough to keep the bias pointing upward. In fact, with the silver market
showing little expansion in volume and seeing open interest figures holding
below the March 19th high level, we don’t even think that the market is overdone
from a short-term technical basis.

PLATINUM

We doubt that the overnight slide in platinum prices
is directly related to the news that a Canadian palladium producer managed to
increase 1st quarter output by 55%, but that type of news is important with
platinum prices banking heavily on ongoing supply tightness. In fact, if a
number of smaller Platinum Group metals producers increase production, one would
suspect that some type of output gain is to be expected from Russia in the
future. Critical technical support in Apr platinum comes in down at 888.2 and
below there support comes in down at 875

COPPER

We think the copper market has posted some very
disappointing fundamental action of late and with the breakout down on the
charts early this week, even the technical picture is deteriorating. However,
one still has to respect the bull market in copper, especially since stocks
continue to tighten and the Dollar has shown some recent weakness. Chinese
copper prices were down sharply possibly following weak action in other markets
and possibly hinting at slack demand inside China.

CRUDE COMPLEX

The energy complex finished the session Tuesday
in strong fashion despite the potential for some slightly negative weekly
inventory readings this morning. Expectations for the weekly inventory reports
call for a build of 3 to 5 million barrels, which could put the US crude stocks
total within vicinity of 300 million barrels. We suspect that the energy complex
has been getting some support from increased violence patterns in Iraq.

NATURAL GAS

The natural gas market continues to show surprising
strength and is doing so without the persistent support of crude oil. Some
traders suggest that natural gas is seeing strength from the below normal
temperature forecast but so far natural gas hasn’t shown the usual correlation
to weather. In fact, natural gas prices have been showing little correlation to
most of the usual fundamental impacts.