Futures Point To A Flat Opening
INTEREST
RATES
OVERNIGHT
CHANGE to  4:15 AM :BONDS -2
The Treasury market was given a boost Monday by comments from one of the largest
bond fund managers, who suggested that long term rates had risen too far. Since
the bullish comments come on the heels of disappointing non-farm payroll
readings they seem to carry more weight. While the economic report slate isn’t
that significant and the stock market managed to mount a partially impressive
recovery yesterday, the Treasuries would still seem to be poised for even more,
minor short covering gains ahead.
STOCK
INDICES
OVERNIGHT
CHANGE to 4:15 AM:S&P-30Â DOW -4
NIKKEI -70 FTSE +14Â The earnings news for the stock market Monday was
mixed, which makes the recovery bounce off the lows all the more impressive.
Technically the stock market managed a classical reversal Monday with the big
range down move and the subsequent recovery off that pulse down. While the US
factory orders report was good on Monday, the stock market doesn’t seem poised
to throw money at the long side of the market.
FOREIGN
EXCHANGE
EURO:
Seeing the Euro and the Swiss mustering the biggest gains against the Dollar in
recent action is a change of pace for the market and could hint at more gains
ahead for the Euro. However, the Euro zone released the highest Jobless rate
since November of 1999 overnight and that has undermined the bull track.
Countervailing the deterioration in the European jobs sector, were favorable
July PMI readings but the market is aware that the unemployment rate in the Euro
zone is the largest of the big economies! Therefore, the macro economic
condition simply gets in the way of the Euros ability to rally. Solid resistance
is seen at 113.63.Â
YEN:
A series of lows around 83.00 would seem to hint at solid support but when one
realizes that the BOJ is interested in pushing the Yen lower, one has to doubt
the veracity of 83.00 as support. A sharp rise in household spending in Japan,
is really an important distinction, as that area has been a trouble spot for the
Japanese economy. Therefore the groundwork would seem to be set for a failure of
the Yen below 83.00.
SWISS:
Since the Euro zone posted some negative numbers the Swiss might be in line for
more gains than expected. For the Swiss to rally it will have to see the Dollar
fall on its own accord, as the trade won’t rush into the Swiss unless it is
rushing away from the Dollar.
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POUND:
UK manufacturing output rose +0.2% and that reading was a little below
expectations. It would seem that the September Pound has solid resistance at
161.10 and that the market is prepared to settle into a 161.20 to 160.00 trading
range. CANADIAN DOLLAR: The C$ made a very poor technical trade overnight and
with the Canadian falling in the face of a weaker Dollar, that is a very bad
sign. Near term targeting is now seen down at 70.30. In fact, we are not too
sure that the Canadian will be able to avoid a new low for the move!
METALS
GOLD:
The gold market managed to move higher Monday even before the US stock market
managed to recover and that means the market recovered on its own volition. It
is also possible that the consistent declines in the US Dollar sparked the short
covering move in gold. In order to turn the short-term trend back up the
December gold contract would have to climb back above the 40 day moving average
of $353.4.
SILVER:
Open interest in silver is still really high and that suggests that the market
is still vulnerable to stop loss selling. Considering that silver hasn’t
liquidated open interest, we have to think that the market remains significantly
long in the small spec and fund category. It should be a little disappointing to
silver bulls that the market finished lower, in the face of good factory order
readings and a recovery in the stock market.
PLATINUM:
A pattern of lower lows and the inability to bounce along with the equity market
highlights a market without a driving force. In the last COT report it was clear
that platinum was carrying a rather large long position for an inactive market.
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COPPER:
With open interest very high in copper and prices still holding 645 points above
the July lows, prices remain vulnerable. With the US equity market recovering
Monday around mid session, the copper market showed almost no interest in
charging higher. There continues to labor issues in Chile and talk from Chilean
officials that the slump in the copper market is ending.
CRUDE
COMPLEX
OVERNIGHT
CHG to   4:15 AM Â
:CRUDE +0Â Â ,HEAT+39Â
,UNGA+58 Â Apparently the energy complex had second thoughts about
the recent gains, as a number of longs ran for the exits Monday. With the trade
picking up on the idea that the US might be in talks with the UN on a rebuilding
program for Iraq, it is possible that the trade expects animosity toward the
rebuilding process to be reduced if the US begins to delegate authority over
Iraq.
NATURAL
GAS
We have
to think that the weakness in the regular energy complex weighed on the natural
gas market Monday. In fact, traders that got long January natural gas recently,
should not risk those positions beyond the recent consolidation low support of
$5.25.