Futures Point To A Flat Opening
METALS
OVERNIGHT
CHANGE to Â
4:15 AM
:GLD+0.20
,SLV+2.5Â ,PLAT+10.30 Â London
Gold Fix $365.30 unch LME Copper Warehouse stks
730,725 tns -5,425 tns Comex
Gold stoc 2.471 +2,206 oz COMEX Silver stocks 106.2
ml oz +66,747 oz OVERNIGHT: Muted trade in Asian markets as many players were
out of pocke
GOLD:
The Dollar is slightly higher today suggesting that the bulls will be slightly
put off again in the action today. With the ECB expected to cut rates Thursday
morning, it’s possible that the Dollar remains strong for at least another
session. The most positive thing that can be said about the gold market action
of the last five sessions, is that the market has
managed to consolidate despite damage on the charts.
SILVER:
As mentioned in the gold comment, silver is no longer the patsy in the metals
complex. In fact, considering the volatility in the COMEX silver stocks figures,
it would seem that something is going on in the physical area. While it is
premature to assume that physical demand for silver is set to improve (along
with the stock market action) we wouldn’t be against it.
PLATINUM:
Make no mistake about it the platinum market has shut off the selling that has
dominated since the May high. Apparently there is a good combination of
investment and physical demand interest but given the concern for the auto
industry we are just not comfortable buying platinum at $662 and $82 above the
2003 lows. Furthermore, platinum is $251 above the 2001 lows. The trend is up
but fundamentals are not clear enough to chase prices. Â
COPPER:
A consolidation around the recent high, coincided
with the resurgence of talk hinting at increased production by the majors.
However, it might be premature to think about production increases, as copper
prices almost 200 points below the levels seen in January and February and the
producers didn’t seem inclined to raise production with those prices. Since the
macro economic euphoria seen last week has dissipated recently, some of the fire
has gone out of the bull case.
CRUDE
COMPLEX
OVERNIGHT
CHG to Â
4:15 AM
 Â
:CRUDE -12Â
,HEAT-29Â ,UNGA-39 Â Despite
some early profit taking the energy complex managed to right the ship Tuesday
and close within close proximity to the recent highs. The market appeared to be
primed to take some long profits ahead of the weekly inventory reports, but the
market quickly shut off that mentality and managed to forge a slightly higher
close.
NATURAL
GAS
One has
to be impressed with the natural gas market, as it has discounted partially
bearish weather and remained within striking distance of the highs. We really
don’t see much in the way of a temperature warm up and that means we could end
up seeing very muted cooling demand for the beginning
of the season.
INTEREST
RATES
OVERNIGHT
CHANGE to Â
4:15 AM
:BONDS
+5 The translation of Greenspan comments yesterday are highly varied but mostly
considered bullish. The idea that the Fed might move to cut rates in the next
meeting (or do some other stimulative move) was
simply too much for Treasuries, which were down moderately from recent highs
around the lows Tuesday. The fact that the Fed tossed a new term at the market
with the “corrosive deflation” comment means that the bull case has a
new rallying cry.
STOCK
INDICES
OVERNIGHT
CHANGE to
4:15 AM
:S&P+150
DOW +17 NIKKEI -6.6 FTSE +10 Â The early talk (which has been pretty
ineffective in predicting the trend for the day) would seem to be tilting toward
the bear camp. The fact that a European automaker was downgraded seems to have
created a wave of concern toward Ford and GM this morning. Yesterday Ford Motor
found that the incentive programs were no longer providing a cushion against the
slow economy and that rekindles concern toward the recovery.
FOREIGN
EXCHANGE
DOLLAR:
For the time being, the Dollar longs have a “get out of jail free
card”. In other words, as long as the ECB rate cut threat is present, the
market seems to be unable to rekindle selling interest in the Dollar. However,
the comments from Greenspan and the concern for the
US
auto
industry is certainly cause to consider moving money away from both the Euro and
the Dollar. With a major European automaker being aggressively downgraded it
would seem that the “off” currencies like the Yen, Pound and Canadian
might pick up favor when and if the Dollar support dissipates, following the ECB
meeting Thursday morning. In the mean time, trend trades should probably
consider buying a soon to expire (2 days) June 93 Dollar puts for 14 ticks, as
that might be a nice lottery play. The service sector readings due out from the
US
today
could provide a temporary lift for the Dollar but again we are of a mind to fade
coming rallies in the Dollar.
EURO:
The US Fed President wasn’t too concerned about European deflation but the talk
toward the European economy isn’t that favorable this morning. In fact, if the
market is going to assume that a rate cut is a negative to the Euro, we suspect
that more weakness will be seen into mid session Thursday morning. In our mind,
we would be prepared to buy the Euro down around 116.46 but we would want to see
what the market reaction is to the ECB decision before we bought the currency.
YEN:
We get the sense that the Yen might be ready to find support, especially since
the
US
and
Euro look to be mired in renewed economic concern. In fact, the G8 meeting
continues to discuss whether or not
Germany
is
getting into the same deflationary spiral as
Japan
and
that has to improve the standing of the Yen. However, the Yen can only rise
sharply if the Dollar manages a breakout below 93.13.
SWISS:
Our projection for a near term low in the Swiss is 75.73, but that type of price
could be a very good “buy”. Traders entering into long Swiss positions
might have to risk the position to at least 75.15.
POUND:
We are not sure if the political flap over Iraqi weapons intelligence is going
to undermine the Pound but it is clear that key areas on the charts were
violated early this week. However, the ability to recover back above 162.90 is
impressive and might suggest a bottoming.
CANADIAN:
The Canadian isn’t confused about its trend. In fact, with the currency
competition non-existent, the Canadian might once again be considered the most
bullish market with the most upside potential.