Futures Point To A Flat Opening
INTEREST
RATES
OVERNIGHT
CHANGE to 4:15 AM :BONDS -23 We have to think that the aggressive downside
action in the bonds overnight is at least partially the result of the overbought
condition the market reached Wednesday. Certainly the sharp rise in equity
prices throws off a countervailing wave of economic optimism but we are a little
surprised that the trade could set back prices so aggressively into the weekly
initial claims and monthly unemployment report. Considering the 1-point
overnight decline it is possible that a 12,000 to 14,000 gain in initial claims,
sparks a decent bounce in prices.
STOCK
INDICES
OVERNIGHT
CHANGE to 4:15 AM:S&P-140 DOW -12 NIKKEI +232 FTSE +31Â The stock market
might have received uncommon buying interest from the beginning of quarter
allocation, but that alone can’t explain the type of rise seen Wednesday. It
would seem as if Wall Street is seeing different numbers than what the
economists are seeing, as some Press outlets suggested that buyers see the basis
for increasing corporate profits and of all things, increased manufacturing
activity. Unless the improvement in manufacturing activity has taken place in
the last 2-3 days, we have to think the evidence of such an improvement is
mostly anecdotal.
FOREIGN
EXCHANGE
EURO:
While the euro is significantly overbought from a short term technical
perspective, there would not seem to be a reason to think that the fundamental
condition is changing and that a top is in place. In fact, with Euro zone PPI
coming in up +0.2% and the ECB recently suggesting that inflation is holding
above its target level, one might even think rates could be hiked in the Euro
zone. A rate hike might actually push money toward the Euro zone!
YEN:
The BOJ is openly admitting to intervention efforts, as if to discourage the
speculative trade from buying the Yen. At least in the near term, the strategy
is helping the Yen hold under the recent highs. While it is unlikely that the US
is helping to control the rate of climb in the Yen it is possible and that is
why the Yen has been temporarily turned off from a new high for the move. Near
term support at 89.62 should hold and aggressive buyers could be buyers of that
level.
SWISS:
Short-term technicals are signaling a slight overdone status and a correction to
75.52 shouldn’t be ruled out. Trend line support in the Swiss doesn’t come in
until 75.41.
POUND:
Unless the US macro economic information today is a surprise, we doubt that the
Pound will be deterred from making further gains. Short-term techs are certainly
in sell mode and therefore the early action in the Pound must hold above 165.36
to keep the bulls fully in charge.
CANADIAN
DOLLAR: The Canadian just can’t seem to muster a clean upside breakout and now
short-term technicals have shifted into a sell mode and a retest of support down
at 73.39 is possible today. Trend line support and a level the market must hold,
comes in at 73.32.Â
METALS
GOLD:
The gold market has certainly been able to fashion a pattern of higher lows
since the low last week, but when one considers the magnitude of the Dollar
declines, required to fuel a $6 gold rally, it is a little discouraging.
Short-term technicals are in a weak sell position and it isn’t exactly clear
what kind of impact the stock market action is having on gold. While we continue
to fear a negative impact on gold off the deteriorating pattern in the US
economy, the strength in the equity market is serving to countervail “disinflationary”
sentiment.
SILVER:
Short-term technicals in silver are still pointing down. A pattern of lower
highs would seem to confirm the bearish track. We would have expected silver to
garner some support from the exceptionally strong US equity market action
Wednesday, but the market didn’t show hardly any positive correlation.
PLATINUM:
Short-term technicals are in a buy mode and that buy mode would seem to have at
least another couple sessions of upside. Certainly the platinum market was
benefited by the favorable action in the US equity market Wednesday. If the US
economy weren’t in doubt the platinum market would easily be trading into new
high ground. Â
The
sharp rise in the US equity market yesterday apparently helped copper discount
the dismal economic information flowing from the US. COPPER: We also think that
the Chinese returned from a recent holiday and decided to pick up some value,
especially with Chinese copper prices close to the last two weeks lows. While
exchange stocks continue to decline consistently, it would appear that the
outlook toward the US recovery is deteriorating.
CRUDE
COMPLEX
OVERNIGHT
CHG to    4:15 AM Â
:CRUDE +6Â Â ,HEAT+14Â
,UNGAS-40Â One can hardly discount the price action in crude, as the
market seems to be capable of pushing prices even higher in the days ahead.
Regardless of the motivation, the energy complex seems to be fully under the
control of the bull camp.
NATURAL
GAS
With
expectations for a triple digit injection this morning, we fear that natural gas
prices will continue to test support on the charts. Certainly the regular energy
complex and cold temperatures are providing some support, but the weekend
promises a warm up and that could combine with the inventory report to muster
enough selling pressure to put the January contract into a new contract lows.