Futures Point To A Flat Opening
METALS
GOLD:
We continue to see gold under performing silver and platinum in the near term,
as gold can’t seem to keep its focus on a single issue. Last week it seemed like
the gold was being pressured because of competition from the equities market but
over the last two sessions, with equities very weak, gold showed almost no
response. In fact, it would seem that sentiment toward the equity market is a
little more negative than many expected and that could mean more uncertainty
toward the recovery.
SILVER:
Even Asian silver showed a slight corrective tilt and that weaker view might be
accentuated by further weakness in
US
equity
prices. With the Nikkei down sharply, the demand driven benefactors, silver,
platinum and copper might all see a little profit taking. The silver market is
certainly overbought and could see a nominal correction to near term support of
$4.735.
platinum
and copper might all see a little profit taking. The silver market is certainly
overbought and could see a nominal correction to near term support of $4.735. If
the silver market is able to trade straight through the equity market weakness
and the slight downgrade in global recovery hopes, then it is really an
impressive bull market. However, we think it’s likely that September silver will
fall to even lower chart support levels down around $4.70 before the technicals
are balanced and the fundamental case gets itself back together. PLATINUM: A new
high for the move overnight in the October contract is very impressive,
especially after the weak Asian equity price action overnight. While the trend
might be up in platinum prices we just can’t recommend a buy, with prices at or
above $670 an ounce! In fact, a well-timed statement from Russian officials,
regarding the elimination of red tape, could cause platinum to fall $80 to $90
Dollars.Â
COPPER:
London and Shanghai copper prices were lower, after those markets saw buying
interest dry up around their daily highs. Shanghai copper stocks increased by
slightly more than 1,700 tons, which is another negative. With the Nikkei coming
under a heavy liquidation tilt and the outlook toward the
US
recovery
becoming more suspect, copper might be vulnerable to profit taking and outright
selling.
CRUDE
COMPLEX
OVERNIGHT
CHG to Â
4:15 AM
 Â
:CRUDE -9Â Â ,HEAT-24Â
,UNGA+19 Â The energy complex suggested that hurricane Claudette was
responsible for the gains in prices Thursday but we don’t buy into that theme,
because the storm appeared to be weakening. It is also possible that energy
prices managed to find support off the political jousting between the
US
and
Iran
but more than likely seeing
prices climb above chart resistance, simply instilled confidence in the bull
camp.
NATURAL
GAS
An 111
bcf weekly working storage injection combined with a slight lowering of temps
next week to sink prices aggressively on Thursday. Furthermore, natural gas
prices might have seen a little deflationary pressure off the Congressional
focus on the natural gas market.
INTEREST
RATES
OVERNIGHT
CHANGE to Â
4:15 AM
:BONDS -8 We are really quite
surprised that Treasuries have managed so little upside despite the backslide in
economic sentiment. In fact, considering the overt weakness in equity prices and
the rather disappointing corporate earnings reports, we would have expected
bonds and notes to post some type of short covering effort. We suggest that the
outlook on the economy is deteriorating slightly, as the initial and ongoing
claims highlighted softening Thursday morning, as did the Chicago Fed Midwest
manufacturing survey.
STOCK
INDICES
OVERNIGHT
CHANGE to 4:15 AM:S&P+260 DOW
+32 NIKKEI -320 FTSE +20Â We have to think that the market remains
vulnerable to more liquidation but that the liquidation pace will be determined
by the personality of earnings reports. Therefore, one might expect to see
casual selling but not panic selling. One thing would seem to be clear and that
is the market currently lacks a sense of optimism.
FOREIGN
EXCHANGE
DOLLAR:
We are not sure how long the Dollar can continue to ignore the slackening view
toward the
US
recovery, nor are we sure that the Dollar can ignore a more significant slide in
US equity prices. However, it would seem that the trade is willing to give the
Dollar the benefit of the doubt and that support off the charts at 95.65 might
be respected. In other words, if the US PPI gives even the slightest hint of
deflation, that could quickly undermine the Dollar and send it back toward the
late June consolidation zone of 94.41 to 95.65. So far, weakness in the
US
equity
market hasn’t been severe enough to really pull down the Dollar but traders need
to begin watching for that type of development.
EURO:
Favorable Euro zone economic numbers (auto registrations +2.9%) were
countervailed by sharply rising French inflation readings overnight.
Furthermore, the Euro appears to have come under pressure following interviews
with Schroeder. In other words, EU officials are getting in the way of more
gains in the Euro. Therefore it is possible that the September Euro slides
toward support of 112.36 but it won’t manage that decline if the
US
numbers
are weak, or the
US
stock
market sees heavy selling today.
YEN:
The Nikkei was down 320 points overnight but that doesn’t appear to have
impacted the yen significantly. The Nikkei decline is discounted because the May
Japanese Industrial output was revised upward and the outlook for the economy is
getting better as each week passes. Therefore, we suspect that the path of least
resistance is up in the Yen, even with the intervention threat looming over the
market.
SWISS:
Even with the Dollar choppy, US stocks soft and the outlook for the
US
economy
suspect, the Swiss has managed to look really bad this week. Therefore, one
can’t argue against a decline to near term support of 72.64.
POUND:
Apparently
UK
stocks
didn’t get a lift from the recent rate cut. However, the currency seems to have
found a bottom after some rather aggressive early July selling. In other words,
the September Pound probably found decent support and has rejected the sub
1.62-price action.
CANADIAN:
We think the Canadian bottomed with the overnight action. In fact, since the
outlook toward the
US
is
being tempered and the
US
stock
market is vulnerable, we think the September Canadian might see a temporary
bounce to 72.65. However, in order to put the C$ back into an up trend pattern,
something more significant will be needed.