Futures Point To A Flat Opening
INTEREST RATES
OVERNIGHT
CHANGE to
AM
BONDS +2 — While the end of the war isn’t
officially in place, we should be close enough to the end of the war, for the
market to anticipate an improvement in sentiment. However, with Wall Street
denying the euphoria potential off Iraq, in favor of renewed earnings concerns,
it is clear that the bull camp in bonds still has a bit of control over prices.
In our opinion, seeing poor earnings reports should be no different than seeing
poor economic reports, which the bonds have been discounting consistently for
almost a month.
STOCK INDICES
OVERNIGHT
CHANGE to
4:15 AM
S&P +160, DOW
+10, NIKKEI -77,
FTSE -10 — The market is simply in a bear posture when it discounts
euphoric images from
in favor of earnings concerns. While one should not fight the tape, we think
that market is wrong in thinking that the rebuilding phase of the
campaign is as perilous as the fighting. Certainly the fighting isn’t over, but
we would have to think that anxiety levels are declining and that some of the
geopolitical headwinds are being eliminated.
FOREIGN EXCHANGE
DOLLAR: The Dollar continues to be out of favor, even though the
Russians and French might soon be exposed as close economic partners with
Saddam. With rumors circulating that something sinister was going on between
and
we suspect that the negative focus toward the
might be diverted. In other words, once its becomes clear that those opposed to
the war held that position to protect oil interests, maybe there won’t be as
many attacks on the US stance. In the near term, the failure to see the Dollar
rally off the
euphoria on Wednesday is a pretty telling sign. Furthermore, with the
economy souring and Wall Street unable to put on a happy face, it is clear that
few buyers will surface for the Dollar unless something significant changes in
the headlines. Therefore, while we expect the Dollar to respect support of
100.00, we do expect it to test that level.
EURO: Euro zone numbers this morning show
that the economy in
was almost showing negative growth toward the end of last year. With the
additional slowing this spring, we have to think that the Euro zone is flirting
with recession. However, in the short term that outlook doesn’t appear to
discourage the buyers from pushing the Euro toward resistance of 108.00. We
don’t know why the market likes the Euro, but its best not to fight the near
term trend. A reversal takes place with a trade back below 106.58.
YEN: The Yen is simply stuck in a
consolidation zone. The market can’t decide if money should move to the
and the Yen, because of the SARS threat and it can’t decide it if needs to get
away from the
Therefore, expect the Yen to waffle in a range bound by 83.29 and 84.18.
SWISS: We still don’t get the sense that
coming conditions will be cause for flight to quality buying of the Swiss.
Therefore, on a rally to 72.69 become a seller, looking for the bottom of the
range down at 71.82.
POUND: We still think the Pound is going to
get a benefit from being the diplomatic voice of reason, between the
and
In fact, considering the sharp rise off the recent low, the Pound looks to forge
a rally to 156.80.
CANADIAN: The chart really looks good in the
Canadian. We suspect that an upside breakout will be seen before the end of the
week, especially if the
outlook remains cloudy. However, considering the distance to support on the
charts, the longs should prepare to weather volatility.
METALS
OVERNIGHT CHANGE to
4:15 AM
GLD -0.30, SLV
-0.8, PLAT +0.40,
CP +40;
Gold Fix $325.10, +$1.00; LME Copper
Warehouse stks 800,275 ton, -1,450 tns;
Comex Gold stocks 2.379 ml, -643 oz; COMEX
Silver stks 107.0 ml oz, -100 oz; OVERNIGHT: With the Dollar
remaining weak, the Japanese were buying gold.
GOLD: While outside market action looks to
be a little less supportive to gold today, we would not rule out an attempt to
return to the late March consolidation up at $328 to $332. However, in order for
the gold to reverse the downtrend pattern in effect since the February high, the
June gold would need to close above $331.1. Weaker Euro zone growth for the 4th
quarter might undermine the gold market, especially with global stock markets
performing poorly following the spectacle in
yesterday.
SILVER: With silver 14 cents above the April
low, the trade remains bullishly biased but there would seem to be significant
overhead resistance for the market around $4.52. If the stock market can’t show
some positive progression today, we would suggest that traders consider taking a
profit on long July positions from $4.37. In other words, aggressive longs might
look to bank profits on a rally to $4.49 today and then look to re-enter the
long side on a correction to $4.40.
PLATINUM: A double top around $622 might
serve as temporary resistance with a correction back to $610.5 possible in the
coming sessions. As in the other metals markets the mention of recession is a
negative for platinum. Some might suggest that $600 is a solid fundamental price
zone but platinum needs to see the global economy begin to show improvement
quickly once the drag of the war is finally removed.
COPPER: The copper market appears to be
suffering from lackluster economic views and certainly from the SARS issue. We
continue to think that copper has already forged a critical bottom around the
April lows and that the market will eventually claw its way toward the February
and March consolidation lows up around 75.00. What the market doesn’t seem to be
considering is that LME copper stocks have declined significantly and that hints
at a more bullish posture than the market is currently factoring.
CRUDE COMPLEX
OVERNIGHT
CHG to 4:15 AM: CRUDE -48,
HEAT -76, UNGA -146 — With the
results from the weekly inventory reports showing a decline in US crude stocks,
the issue of tightness continues to be a factor that will support prices. In our
opinion, the refinery operating rate jumped significantly and that serves to
countervail the decline in crude stocks.
NATURAL GAS
With the
regular energy complex providing bullish direction to the natural gas market, it
has managed to climb to the upside breakout point on the charts. We also have to
think that natural gas prices were given an added boost by the lingering cold
weather the