Futures Point To A Flat Open
INTEREST RATES
OVERNIGHT
CHANGE to  4:15 AM :BONDS -3 Treasury prices fell back down to the bottom of
the recent consolidation and would seem to have some type of significant support
above the 108-00 level. We think there has been a preponderance of negative
economic information since last Thursday and with the equity markets trying to
mount some gains, the bulls should be feeling the heat in the Treasury market.
However, the market has surprised the trade with rallies in the face of
typically bearish information and that alone seems to be keeping a number of
bulls in position.
STOCK INDICES
OVERNIGHT
CHANGE to  4:15 AM:S&P-100 DOW -11 NIKKEI -43 FTSE +8 While this market lacks
the strong upward thrust capacity that many traders would like to see, it
remains very much a bull market. Certainly the fear that the economy won’t be
able to sustain aggressive growth is another issue discouraging aggressive
buying but we would have to think that a 6.1% gain in the advance GDP would be a
big enough number to pull in a wave of fresh buyers. Traders must take a good
look at the weekly initial claims and ongoing claims readings this morning, as a
significant improvement in that area could serve to take the lid off the market
and allow prices to reach new highs.
FOREIGN EXCHANGE
EURO:
With the Euro zone seeing inflation readings come in below targets, it would
seem that the economy remains very weak, or at least weaker than the US economy
and that means the Euro simply won’t get as much of a lift off a weak Dollar as
the Swiss, Pound, Yen and Canadian. We suspect that the 116.45 level is a very
solid support point but that the Euro might have trouble rising above near term
resistance of 117.39.
YEN: The
BOJ really has to be fretting over the prospect that US lawmakers might decide
to sanction some type of action to accelerate the upside in the Yen. Also adding
to the upward tilt in the Yen, were favorable auto production readings for
September and a rise in exports. One has to assume that the trend is up in the
Yen, until something significant happens. Perhaps the only thing capable of
stopping the sharp rise in the Yen would be the idea that the US economy is
recovering much faster than many realize.
SWISS:
Like the Euro, we suspect that support at 75.19 is very strong in the Swiss.
However, the Swiss also looks to have significant resistance up at 75.81 and
with US numbers expected to be strong early, we might have to see some weakness
before the Swiss attempts to move higher.
POUND:
The trend in the Pound remains well defined and unless the US produces numbers
that are off the map, the Pound should only see a minor correction before
heading higher in the afternoon action. Also consumer confidence readings from
the UK were unchanged and that certainly sets up the chance for a minor
corrective slide before buyers come for the Pound again.
CANADIAN
DOLLAR: Some might call the action in the Canadian a broadening top but we
suggest that the market is simply consolidating recent gains and might have
forged a solid support zone around 76.00. However, we can’t rule out a temporary
slide back down to chart support of 75.51, before another rally starts.
METALS
GOLD:
More bank buying from China provided gold an additional lift after the
international markets played catch-up to the strong US action on Wednesday. The
gold market continues to see evidence of gold production from several large
miners but we just don’t think that prices are impacted by minor changes in
physical supply. For the record, South Africa’s Gold Fields 1st quarter 2004
production was unchanged, while other key producers had trouble matching prior
production figures.
SILVER:
Since the funds are the main driving force behind the silver action and gold is
showing such favorable leadership, we have to think that December silver is
primed for a run to $5.33. While silver isn’t exactly trading off macro economic
indications, one would expect an ultra strong GDP reading to be beneficial to
prices. One might even take the Phelps Dodge news of continued restrained copper
production as a slight positive, as silver is a by-product of copper production.
PLATINUM:
Dow Jones pegs the highs this morning in platinum to be 23-year highs and with
supply simply not meeting demand, there is really nothing to stop the current
pulse higher. As we suggested early in the week, even numbered $800 pricing is
seen. Â
Chinese
prices ended sharply higher in a run that doesn’t appear to have much
relationship to supply and demand factors. In COPPER: other words, the Chinese
need copper and copper concentrates and considering the declining Dollar, the US
market would seem to be the cheapest place to get the supply. The news from
Phelps Dodge that they were not ready to return to full production was certainly
an ignition for the current wave up.
CRUDE COMPLEX
OVERNIGHT
CHG to    4:15 AM  :CRUDE -35 ,HEAT-77 ,UNGAS-89 The energy complex started
the session out very firm Wednesday but then seemed to fade significantly
following the release of the weekly inventory readings. In a slightly negative
story, the Iraqi Oil Minister suggested that he will begin to work toward
restarting oil exports through the Iraqi-Saudi pipeline.
NATURAL GAS
We see
the range of expectations for the weekly inventory report to be fairly negative
for prices. Furthermore, with the regular energy complex softening Wednesday
there could be spillover weakness in the natural gas today.