Futures Point To A Flat Opening

• August 25, 2003
• Brice Wightman

INTEREST
RATES

OVERNIGHT
CHANGE to   4:15 AM :BONDS +6
The chart pattern in the Bonds is actually starting to look fairly bullish, with
prices recoiling off the August low and forging what appears to be a rounded
bottom. We must also suggest that the progression of economic numbers hasn’t
exactly been that impressive. In fact, last week the market saw two more reports
that confirm ongoing problems in the employment sector.

STOCK
INDICES

OVERNIGHT
CHANGE to 4:15 AM:S&P-160 DOW -6 NIKKEI -4.5 FTSE CLOSED Conditions
aren’t such that we would expect stocks to easily return to last week’s highs.
However, we are pleasantly surprised that the COT report showed a much more
mitigated small spec long position than we expected in the Dow and the S&P
readings. Furthermore, with the market generally down since the COT report was
measured, we have to think that the technical condition has been balanced even
further.

FOREIGN
EXCHANGE

Dollar:
It would seem that the Dollar will continue to get the benefit of the doubt on
its recovery speed but with a heavy slate of US economic numbers due out this
week, it would be very damaging for the Dollar not to get strong readings. As it
stands, the September Dollar should find support at the critical pivot point of
98.70 but could see some stop loss selling with a trade below 98.63. It would
not seem like the US equity market is going to provide much assistance to the
Dollar early in the week, but a hot housing reading this morning could certainly
kick the Dollar into an upward pattern.

EURO:
The net shake of the economic information released last week, leaves the Euro in
a vulnerable position but only if the US can keep the heat on with stronger than
expected reports. A bomb blast in India might be seen as a little more negative
to the Euro than to the Dollar, but that tilt comes because of the recent trend
on the charts. We get the sense that the Euro found some critical support last
week around the lows and that it will take some significant news to get the Euro
back below those levels (108.30). Inflation numbers from Germany were mostly
muted, which might be considered slightly supportive considering that some
traders might have expected figures that hinted at deflation!

YEN:
We see the Yen with upside capacity this week, as the Dollar strength looks to
be tempered and the Euro is simply trying to shut off last weeks selling
pressure. Therefore, the Yen might simply win by default. Adding to the upside
in the Yen are poor domestic readings in the form of supermarket sales. However,
because Japan managed to post a strong gain in their trade surplus, the weak
internal numbers are discounted. We also have to think that the BOJ is already
moving to dampen the rise in the Yen. Critical resistance is seen at 85.30.

SWISS:
An extreme oversold status is about the only thing standing in the way of more
Swiss losses. In fact, even the weakest of US economic numbers this week could
rekindle the downside in the Swiss.

 

POUND:
For aggressive traders the Pound might have already forged a critical bottom on
the charts. However, we have to think that the Pound is still slightly
undermined by economic readings from last week and that the Dollar will have to
slide in order to see the Pound come up and away from the recent lows. It will
take a rise above critical pivot point resistance of 157.76 to get stop loss
buying in motion. CANADIAN DOLLAR: The pattern of higher lows, gives the
Canadian the look of a market that has bottomed. However, in order to confirm a
low, a trade back above 71.69 is needed this week.

METALS

OVERNIGHT
CHANGE to   4:15 AM:GLD+0.90
,SLV+0.3,PLAT-3.80, CP Unch London Gold Fix $360.75 NA Holiday LME Copper
Warehouse stks 629,400 tns Holiday Comex Gold stocks 2.732 ml oz -4,786 oz 
Comex Silver stks 106.4 ml -52  oz OVERNIGHT:Sideways
trade was seen in Asian gold as Dollar fears deterred buying!

GOLD:
Gold prices are mixed but without the leadership of the London market today
prices might initially be subdued. Chinese gold prices were basically unchanged
and the Dollar is lacking a clear-cut direction. Therefore, the overnight news
yields to the bearish COT report that was released after the close Friday.

SILVER:
The pattern of lower highs in the silver market combines with the ongoing overly
long small spec long position, to make silver a very vulnerable market. Go with
a breakout of the $5.05 to $4.94 range (basis the December contract) but our
short-term preference would be to be short from levels above $5.04. We just
don’t get the feeling that the macro economic outlook is set to improve so much,
that more longs are suddenly going to become interested in silver, especially
considering the large percentage of small spec and fund players already in
position.

PLATINUM:
A major breakdown of trend line support should catch the overly long position
and possibly spark significant stop loss selling. Near term downside objective
off a normal capital break is $686 but a decline to $673 is certainly possible.

certainly
possible. COMMITMENT OF TRADERS ANALYSIS – FUTURES & OPTIONS 
Aug 12-Aug 19 2003

  
            LARGE
SPEC         
COMMERCIAL          
NON-REPORTABLE

                
NET                 
NET                  
NET

           
POSITION   NET CH   
POSITION    NET CH   
POSITION   NET CH

SILVER         
43875    -2532     
-76269     -2880      
32394     5413

COPPER         
30167     -216     
-40923      -897      
10755     1112

GOLD           
88742    24284    
-131080    -25210      
42338      926

PLATINUM        
5673      229      
-6271      
-61        
598     -168

 

Chinese
copper prices were lower overnight with the trade reporting only lackluster
physical demand for copper. The weekly COT COPPER: report showed a net spec long
of 40,000 contracts, which is probably understated considering minor gains
posted following the mark off of the report. The economic report slate this week
is a little more active than last week and the copper market will need to see
some upbeat information to add to the gains forged since the mid month lows.

CRUDE
COMPLEX

OVERNIGHT
CHG to    4:15 AM  
:CRUDE +7   ,HEAT+4  
,UNGA+198 The energy complex seemed to bank some long profits in the
action Friday, as the market was extensively overbought from both short-term
technical and medium term technical parameters. The market might also have been
influenced by the OPEC news agency suggestions that various OPEC members will
seek quota realignment in the September OPEC meeting.

NATURAL
GAS

The
market expects the heat to return to a large portion of the US this week and
that will be an absolute necessity to fuel prices to even higher levels. In
other words, the hot weather is already factored into prices and with October
natural gas prices holding $.67 above the August lows the bulls need constant
support for their position.