Futures Point To A Flat Open
9/16/2004
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INTEREST RATES
The Treasury market is apparently having second
thoughts about forging an upside breakout and we have to think that some of the
New York State manufacturing data on Wednesday caught the bull camp by surprise.
While the New York state data could be considered a second tier number, the
magnitude of some of the gains was significant enough to get the attention of
the market and that in turn prompted some long profit taking. With the initial
claims readings this morning expected to jump back up significantly, we suspect
that December bonds will find support quickly around 111-02, while December
Notes should find support around the 112-05 level.
STOCK INDICES
The stock market has corrected significantly from
the recent highs, but at this hour it would not seem like the market has cause
to aggressively push prices downward. However, we suspect that the residual of
the hurricane issue will keep the market somewhat off balance. Traders should
also keep in mind that the expiration process could prompt a volatility event
and with the negative COKE information yesterday and firm energy prices one
would have to leave the favor with the bear camp.
DOW
In the near term, we see more downside action ahead but we doubt that the
December Dow will fall all the way to the first retracement point off the August
to September rally, which is pegged at 10,129. However, it might easy for the
December Dow to slide to even number support of 10,200 early in the session
today. The best argument for lower prices is that the market lacks a catalyst to
turn existing sentiment around.
S&P
While we suspect that the December S&P will find support at 1120, we have to
give the edge to the bear camp. In fact, we doubt that the scheduled numbers
today have the ability to turn sentiment. On the other hand, it is possible that
the market has been under undue pressure from the hurricane and that pressure
could begin to abate. Unfortunately, just seeing the negative pressure abate,
doesn’t mean that buyers are going to move right back into the market. Until
there is a specific bullish catalyst, assume that the market has a weak down
trend pattern in place.
FOREIGN EXCHANGE
US DOLLAR
The Dollar comes into the session 30 points below
the recent high and in need of another fundamental boost from the scheduled
numbers. Early in the session, we suspect that the Dollar could see some
pressure from the ongoing concern off hurricane Ivan but that influence should
quickly begin to wane. While the rally yesterday in the Dollar was quite
impressive and probably throws off some potential bears from a technical
perspective, it will take additional better than expected economic readings to
facilitate a trade against the pre-existing downtrend. The initial claims
reading today looks to undermine the Dollar, while some in the trade are holding
out hopes that the Philly Fed readings will provide a surprise similar to the
New York Fed readings on Wednesday. In the near term, critical resistance is
seen at 89.47 and the bias for the day would seem to be pointing down.
EURO
The euro zone charts continue to limit the currency
on the upside. Economic readings also continue to limit the upside in the Euro.
Overnight the Euro saw August CPI figures rise +0.2% and that is a much stronger
inflation reading than was seen from the US but that is hardly cause to bid the
Euro up. While the Euro might have seen some support off US hurricane concerns,
that minimal benefit should disappear today. We really don’t see the December
Euro managing a rise above 122, but we wouldn’t be surprised to see the Euro
slide to close in support of 121.22.
YEN
The Yen continues to waffle within a trading range
but seems to have a minor upward tilt in prices. Near term resistance is seen at
92.10 but a critical pivot point is violated with a rise above 91.87.
SWISS
We are not sure that the Swiss deserves to trade
lower, unless the US gets a strong number today. Therefore, expect support at
78.65 to hold unless there is a surprise event.
BRITISH POUND
August UK retail sales came in with a +0.6% gain and
that is relatively a good number considering the negative attitude toward the
Pound over the last month. With the Pound on the rise today, we suspect that
more gains will be seen, but a rise above heavy overhead resistance around
178.20 is unlikely.
CANADIAN DOLLAR
While the Canadian is making a strong recovery bid
this morning, the recent chart pattern is bearish and open interest is sitting
at extremely high levels, one might expect significant volatility. The path of
least resistance is up but the risk to longs could be quite significant.
METALS
OVERNIGHT
London Gold Fix $404.40 -$.40 LME COPPER
STOCKS 102,850 mt tons -800 tons COMEX Gold stocks 4.883 ml +50 oz COMEX Silver
stocks 110.0 ml -243,321 oz
GOLD
The gold market tired to ignore the rise in the
Dollar yesterday but as the Dollar gains became more significant the pressure
began to impact prices. However, overnight the Dollar has pulled back nearly 30
points off the Wednesday high and that has begun to put some support under gold.
Apparently some in the trade are putting a favorable spin on the Gold Fields
price projections for gold by suggesting that the relatively high low price
projection from GFMS, should help gold find solid support around the $390 level.
SILVER
While it seems like silver is attempting to breakout
of the recent consolidation to the upside, the recent range has been extremely
tight and volume has been very low. It is impressive that silver was able to
rise in the face of moderately large US stock market losses, strength in the
Dollar and a generally weaker gold market. The market still has a critical pivot
point at $6.28, resistance at $6.325 and might be considered to be in a failure
mode if prices fall back below $6.10.
PLATINUM
While October platinum did manage to peak out above
the $850 level overnight, it has fallen back within the 825 to 850
consolidation. While platinum does have an upward bias, we are not sure that the
macro economic outlook is favorable enough to carry platinum back up toward the
$875 resistance level.
COPPER
Chinese copper prices were very strong again
overnight and were again boosted by talk of tight supplies. Overnight the
Chinese indicated that they saw copper concentrate imports increase by 4% on the
January through August time frame and that should facilitate the Chinese
tightness theme. Therefore, it is not surprising to see US copper sitting right
on an upside breakout point.
CRUDE COMPLEX
The energy market started out weak on Wednesday
but then started to firm as hurricane Ivan drew closer to the Coast. However, it
is still apparent that the bull camp no longer has total control as prices fell
back off the high yesterday right into the teeth of the storm. The weekly
inventory readings were supportive of prices, as US crude stocks at the API
declined by 2.3 million barrels, while the DOE crude stocks showed a massive
decline of 7.1 million barrels.
NATURAL GAS
It is clear from recent price action that natural
gas doesn’t see the same threat to supply off the hurricane, as the crude oil
market does. Therefore the liquidation track looks to resume. However, in order
for natural gas prices to fall aggressively, the regular energy complex will
have to be trading sideways or lower.