Futures Point To A Flat Opening
INTEREST
RATES
OVERNIGHT
CHANGE to  4:15 AM :BONDS -5
It would seem that the second wave of the auction promoted some confidence in
the bull camp, even if the US stock market managed to forge a recovery off the
lows Wednesday. The expectations for the initial claims report are mixed with
most expecting a 7,000 increase in claims, but we wouldn’t be surprised to see
the claims decline. Given the corrective posture in Treasuries and the potential
for a strong final leg of the Auctions today, it will take a “strong†set of
numbers to halt the minor upward crawl.
STOCK
INDICES
OVERNIGHT
CHANGE to  4:15 AM:S&P-170
DOW -8 NIKKEI -58 FTSE +5Â The stock market did manage to recoil away from
some pretty vulnerable technical levels Wednesday, but the fundamental and
technical setup isn’t that inspiring for the bull camp. Certainly, the upward
revisions in 2nd quarter earnings and sales for Wal-Mart improves the equation
this morning, but for some reason the Street just isn’t primed to throw money
at the long side. We are not sure if the Treasury Auctions are distracting
investors, or if the economic outlook is simply leaving investors on the
sidelines.
FOREIGN
EXCHANGE
EURO:
German Industrial production readings were basically below expectations but with
the ECB recently suggesting downside risks in their economy are declining, one
would not see the scope for rate cut talk. The euro would seem to have solid
resistance above the current trade, off a downtrend line and because of the mid
July consolidation. Therefore, traders might have to buy the September Euro
below 112.80, or remain on the sidelines.
YEN:
The Nikkei fell for the 4th straight day and that is something the Index has
avoided for quite a while. Most suggest that the recovery view is being
overplayed and that the correction in stocks is a normal undertaking that says
nothing about the direction of the Japanese economy. The trade is also made
aware of the amount of money the BOJ spent in the April through June period to
keep the Yen down but for some reason that seems to be a limiting force in the
Yen. Resistance remains solid at 83.64 and we assume that the trend in the Yen
is down unless the Dollar falls below 95.81.
SWISS:
The Swiss made a partially negative trade overnight on the charts and with the
Euro unable to garner a dominating bullish buzz, we doubt that the Swiss will be
able to mount much of a run. Resistance in the Swiss comes in at 74.40.
Â
POUND:
The Pound appears to be in a coiling pattern and with the BOE leaving rates
unchanged this morning, the currency will continue to lack a dominating theme.
One might assume that the big trend is down, but that the recovery bounce off
the July low is not to be dismissed. We have to think that the Pound is a sell,
especially on a bounce to 161.02. CANADIAN DOLLAR: The chart pattern continues
to suggest a failure is ahead in the Canadian. However, the Canadian is so cheap
relative to longer term history, that it is really difficult to press this
currency on the short side. Aggressive traders might buy the September down at
70.76 and use a tight stop of 70.40 on a close basis.Â
METALS
GOLD:
As mentioned before the Asian trade thinks the gold market is exclusively
focused on the Dollar but it certainly wouldn’t hurt the gold to see the stock
market rise consistently and attitudes toward the recovery improve markedly.
Chinese spot gold was lower on hedge selling and that indicates little fresh
speculative long interest in that market. Apparently a noted gold company
official predicted at a gold conference, that gold prices would rise to $450 an
ounce and it appeared that he based that forecast on an end to the Bullion Sales
Pact.
SILVER:
Another minor decline in COMEX silver stocks is slightly supportive but it must
hold above support at $4.91 in order to avoid a mild stop loss selling threat.
Open interest continues to decline a little reducing the overbought status of
the market. It would certainly help silver to see the stock market get onto a
consistently firmer track and for the US economic numbers to be strong enough to
hint at an improvement in physical demand.
PLATINUM:
A pattern of higher highs seems to point up in the platinum market. Talk about
slightly higher output from an African producer is a minor negative but the bias
of the market is up for the near term. Â
The
Chinese copper market was down slightly and analysts in London are still wary of
the copper market because of its COPPER: short term overbought status. Macro
economic information and the direction of the US equity market continue to be
the most critical impact on the market. As long as the macro look remains
partially supportive, we suspect that September copper will remain above the
80.00 pivot zone.
CRUDE
COMPLEX
OVERNIGHT
CHG to   4:15 AM Â
:CRUDE +26Â ,HEAT+70Â
,UNGA+73 Â The energy complex soared higher on the opening Wednesday
and then managed a slight additional gain into the weekly inventory reports.
However, even after an apparently bullish decline in API gasoline stocks, the
market saw a massive failure.
NATURAL
GAS
The fact
that natural gas showed almost no weakening off the reversal in the regular
energy complex Wednesday is quite a bullish surprise for natural gas. In
Wednesday the EIA suggested that the average wellhead price for natural gas
would be roughly $5 but that a cold winter could put prices above $6.00.