Futures Point To A Flat Opening
INTEREST RATES
OVERNIGHT
CHANGE to
4:15 AM
BONDS
-1 — The bond market remains poised to breakout to the upside but once again it
would appear to have limited upside momentum. Certainly
hotter than expected PPI readings will give some buyers pause, especially with
another reading on inflation due out this morning. With deflation still a
concern among some economists we have to think that inflation is relegated to a
secondary status, but if the economy gathers steam, that could make downside
action in bonds much larger than most traders realize.
STOCK INDICES
OVERNIGHT
CHANGE to
4:15 AM
S&P
-180, DOW -13, FTSE
-10, NIKKEI -137 — The chart action
overnight suggests that the market is set to decline. It would seem that the
is slowly removing all the physical barriers to an attack and might even be
gaining some additional coalition support. However, we are not sure the docket
today offers up much in the way of "big negative" issues to cause the market to
come under intense selling pressure.
FOREIGN EXCHANGE
DOLLAR: Given that the US Administration is working toward war
without distraction (it supposedly paid 8 billion to
to use its bases) we expect the Dollar to return directly to the February low
and possible post a new contract low next week. The fact that US numbers have
been soft all week long combined with the fact that the
had hotter than expected inflation readings should leave the Dollar under
pressure. In fact, the
is saying they have enough troops in the
to attack and the Commander of Operations is publicly saying the
will attack even without a UN authorization. In other words, the US
Administration is pulling out all the stops, to let
know it has few alternatives. Because the
war stance continues to be unpopular, weekend war protests are expected to
become violent and that could also pressures the Dollar. Near term targeting in
the March Dollar is seen down at 99.05.
EURO: The Press is making headlines out of
the number of weeks that the Euro has gained against the Dollar and that should
fuel a continued flight to quality pattern in the Euro. However, the pattern of
lower highs in the Euro, shows that the coming rally
might not be as aggressive as the rally posted in early January. With French GDP
readings coming in as expected, there really isn’t too much macro economic
differential being factored into the Euro. A critical pivot point breakout to
the upside, takes place today on a trade above 108.47. A failure below 107.63
would really upset the early bullish pattern and discourage would-be buyers.
YEN: It would appear that the Yen is lined
up for more flight to quality buying next week but we are not sure if it will
gather significant long interest today. The METI released unimpressive Industry
activity readings last night and that partially detracts from the bullish tilt
in the Yen. However, money is flowing to the Yen and we expect to see a retest
of the January highs sometime next week. Money is wise to leave
and the
for the
SWISS: The Swiss is also primed to breakout
to the upside but we are not convinced that the breakout will come today.
Initial resistance is seen at 74.00 and we predict a return to the February
highs early next week.
POUND: With the Pound not following the lead
of the Euro, it is clear that the Pound is becoming more like the Dollar. With
the war timing in the near term horizon, the Pound can no longer disassociate
itself with the geopolitical negatives hammering the Dollar. We expect massive
demonstrations in the
over the weekend and that should keep the Pound close to a downside breakout on
the charts. However, we are not entirely convinced that the Pound will fall
below the February lows next week.
CANADIAN: If the pressure on the Dollar
becomes extreme the Canadian isn’t far enough away to avoid some light pressure,
or at least some restraint of the recent bull track. Therefore, we suggest that
longs in the Canadian stay long, but seek some put coverage for the coming two
weeks action. Traders might be long the Canadian, short a 67.50 June call and
long a June 65.50 put.
METALS
OVERNIGHT CHANGE to 4:15 AM:
GLD +1.60, SLV
-0.7, PLAT +1.00;
London Gold Fix $354.50, +$2.50; LME Copper
Warehouse
stks
824,900 ton, -7775 tns;
Comex Gold stocks 2.263 ml, -6,077 oz;
COMEX Silver stks
108.0 ml oz, +394,537 oz; OVERNIGHT: Minor gains possibly from physical and
jewelry buyers in Singapore
GOLD: The bias remains up but the April
contract failed to get above the Thursday highs in the overnight action. We have
seen a moderate decline open interest since the February high (from 245,682
contracts down to 194,980) and that should have balanced the overbought
technical condition enough to leave the market capable of a recovery rally in
the weeks ahead. However, as we mentioned yesterday, we
think that the market will exhaust itself quickly, mostly because the bull case
is almost 90% focused on the war issue.
SILVER: As we suggested yesterday, the
silver has also seen its technical positioned balanced and that should make the
recent lows pretty solid. However, one should not be surprised to see the May
silver drop back below $4.60, as the upcoming gold rally doesn’t seem to be have
the same amount of hype, as the December and January rally. We detected a slight
weakening in the CRB Index this week and that is certainly a function of a fear
of deflation and slowing US numbers.
PLATINUM: The platinum market has
temporarily lost its bullish drive and that could be because the Russian quota
news disappointed some traders, who have been used to long delays and
uncertainty on the Russian export issue. However, keep in mind that platinum
easily has the most bullish fundamentals in the metals complex. The only problem
with platinum is that prices are very expensive and it might be difficult to
determine if prices should be dramatically higher.
COPPER:
copper warehouse stocks increased by a massive 11,779 tons, which should be a
little damaging to a market that has thought all week that the Chinese market is
the salvation to all
demand concerns. While seeing stocks rise doesn’t downgrade the demand potential
from
it is a wakeup call that copper will have to pay attention to the
economy. Overnight
copper prices ended up higher, most likely because LME action was higher.
CRUDE COMPLEX
OVERNIGHT
CHG to 4:15 AM: CRUDE +40,
HEAT +147, UNGA +72,
N-GAS +21 — While the energy complex
weakened Thursday off the news that US and Turkish negotiations had broken down
over the use bases in that country it appears that the issue was resolved
overnight. If the
wasn’t allowed to use Turkish bases it would have taken a substantial amount of
time to re-deploy troops and equipment away from the Northern borders of
and
down into
NATURAL GAS
The
weekly EIA inventory report shocked the market with a massive draw of 203
bcf. The natural gas market continues to be
technically overbought and possibly within striking distance of a historically
long, small spec and fund position.