Futures Point To A Flat Open
12/31/2004
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INTEREST RATES
The bull camp was kicked into action yesterday,
as the Chicago purchasing managers report rekindled concerns of disjointed
growth patterns in the Midwest. Despite the fact that the Chicago Purchasing
managers report has led other regional areas with stronger growth, the market
took the numbers to heart. It is also possible the economic data combined with
year end short covering incentives, to boost prices sharply.
STOCK INDICES
While the short term trend is up, the stock
market comes into the session confronted by a number of minor negatives. In
addition to a slightly negative technical tilt from the new high probe that
failed to hold yesterday, the market is also confronted with a vulnerable
Dollar. Given the most recent readings on the economy, it is clear that the bear
camp has some fodder, but it is also not a given that the bears will be able to
control the market today.
DOW
The March Dow comes into the session this morning with the worst chart setup of
the week and with the Dow more than likely sitting with a new record fund long,
the odds of a profit taking setback are high. In fact, unless the bulls can
control early and put the bears off balance, we suspect that a slide back below
10,800 is in the cards. Below the 10,800 level, the March Dow has little support
until 10,763, as the gains from December 20th to December 22nd were quick
aggressive and compacted and that usually leaves little in the way of support on
the charts.
S&P
As suggested before, the trend in the S&P remains up, but the failure to regain
1217.10 early in the action today might shift control over the market to the
bear camp. Critical support comes in at 1212.90 and then again down at 1207.80.
The S&P managed the biggest gain of all the classic index readings, and
therefore, there is certainly an incentive to bank profits, especially if the
market fails to show continued upside momentum in the early action.
FOREIGN EXCHANGE
US DOLLAR
The Dollar seems to be headed to new lows in the
action today! In addition to the nearly conclusive bearish sentiment toward the
Dollar in the professional realm, the Dollar also carries the additional baggage
today of the slack US economic readings released yesterday. With almost no fresh
news due out today, the market probably finds it easy to press the Dollar. Some
traders might even think that they have a free shot at the Dollar, thinking that
the Central Banks are unlikely to be ready to act today, with Europe already on
holiday. With the Dollar decline against the Euro this morning, it is pretty
clear that the markets are not focused on macro economic information, as the
Euro zone produced some patently negative information overnight. In the near
term, traders should expect a new low in the Dollar but the market might
surprise, with a short covering rally right into the close, because of the odds
of intervention before the resumption of US trade next week, could scare out
some fresh shorts.
EURO
While the Euro hasn’t posted a new high for the move
in the early going, we suspect it will at some point in the coming hours.
However, France posted a loss of 19,000 jobs in the most recent monthly payroll
report and that comes on expectations of only a 5,000 job loss. In other words,
one of the critical economies in the euro zone isn’t even showing positive
growth, but yet the trade is ultimately interested in placing money in that
region! Critical support in the March Euro is seen at 136.43 and then again down
at 136.28. Near term resistance comes in at 136.72 and 136.87.
YEN
An impressive breakout up overnight would seem to
quickly project the Yen back to the December highs. While this space doesn’t
offer the ability to elaborate on the subject, we suspect that the Yen is
benefiting from the Chinese currency peg issue and possibly because of recent
suggestions that Japan is reaping huge benefits from trade with China. Near term
upside targeting comes in at 98.50.
SWISS
Like the Euro, the Swiss is poised for new contract
highs but we detect a slight hesitation on the part of the bull camp and that
could be the result of intervention fears. We still think that the Swiss will
reach new highs today, but we also would be on the look-out for a sharp profit
taking close, as traders protect against a Monday morning central bank
intervention.
BRITISH POUND
Our opinion remains unchanged on the Pound, the
coiling or massive broadening top formation seems to signal a major top and we
will remain bearish until the Pound manages two closes above 193.25.
CANADIAN DOLLAR
We can’t deny the impressive nature of the Canadian
rally off the December lows, but one should note that the Canadian failed to
take out the.618 retracement level of 83.32 and that is sign that the trend
hasn’t shifted back to the upside. However, the bulls have a strong case and
traders should probably limit short side exposure to long put premium.
METALS
OVERNIGHT
London Gold Fix $435.15 -$6.10 LME COPPER
STOCKS 49,375 metric tons -875 tons COMEX Gold stocks 5.795 ml +3,472 oz COMEX
SILVER stocks 103.5 ml -653,298 oz
GOLD
Market Closed for Holiday.
SILVER
Market Closed for Holiday.
PLATINUM
Market Closed for Holiday.
COPPER
Market Closed for Holiday.
CRUDE COMPLEX
Market Closed for holiday.
NATURAL GAS
Market Closed for Holiday.