Futures Point To A Higher Open
INTEREST RATES
12/26 OVERNIGHT CHANGE to 04:26 AM:BONDS NA The
bond market comes into the session with the fundamental tilt in its favor. Not
only were the economic reports Wednesday mostly supportive, but the residual
from the mad cow situation continues to create concern for various US
Industries. While late holiday sales could still manage to put a more positive
spin on current economic conditions, that would seem to be unlikely when one
considers weak durable goods figures released last week and the fact that weekly
chain store sales reportedly fell in each of the first three weeks of December.
STOCK INDICES
12/26 OVRNIGHT CHG to 04:26 AM:S&P +100, DOW na,
NIKKEI +52, FTSE+13 The international markets seem to have a slightly positive
bias this morning but the question becomes, can the US market overcome the
negative residual of mad cow and the canceling of several flights to the US on
Christmas Eve? One has to be impressed with the overall performance of the
equity market over the last 5 sessions, as it has basically discounted a series
of potentially ruinous developments. While the increased terrorism threat and
mad cow are nothing to take lightly, our biggest concern is the weakening of US
economic numbers over the past few sessions. While it is possible that post
Christmas sales spark a wave of activity, we have yet to hear a glowing
assessment of the entire holiday shopping period.
DOW
Because the existing trend is up, we have to give the edge to the bull camp but
the majority of the fundamentals presented to the market today, would seem to be
negative. The Dow has continued to show a much more consistent upward track than
other Indices and that could mean only a minimal correction in the coming two
sessions. Even if a correction unfolds we expect that support will be found
quickly. Critical support garnered from the action Wednesday, in the March Dow
futures, comes in today at 10,244 but the market might manage to hold up at a
slightly higher pivot point of 10,261. In order to throw off the corrective
tilt, the Dow will need to regain 10,292 in the first hour of trade.
S&P
The March S&P encounters a critical pivot point at 1089.90 today, with lower
support targeted at 1088.80 and then again down at 1086.90. We really see
nothing to knock the market down hard today but our gut suggests that the market
has been mostly supported by favorable holiday sentiment and that a letdown is
possible, unless the market manages to post moderately higher action in the
first two hours of trade today. In order to turn off bearish sentiment off a
lower opening, the March S&P will have to see a trade back above 1093.60. Please
note that Wall Mart will release some sales figures before the opening this
morning and that could be a critical trend setter for the session. Also note
that the stock market has another early closing today!
FOREIGN EXCHANGE
US DOLLAR
We suspect that macro economic information will
continue to contribute the selling in the Dollar. While it is possible that BOJ
intervention will stem the slide in the Dollar, it would seem like the trade is
content to press the Dollar. If fact, following the recent attempt to
consolidate, we suspect that the Dollar balanced its technical condition and is
now capable of driving sharply lower over time. The mad cow issue certainly
contributes to the weakness in the Dollar and unless the Wal-mart news this
morning gives the trade something positive on the US retail season, we have to
think that the down trend in the Dollar will dominate. It should be noted that
the trade is watching key levels in the Yen for signs that the BOJ will
intervene and if the bank doesn’t step in, many expect an upside breakout in the
Yen, which would almost certainly translate into a sharp decline in the Dollar.
Since there will be no economic information released today, the Dollar will be
mostly guided by the trend and the direction of the US stock market.
EURO
We see no reason why the Euro won’t continue to
rally, as it has very few negatives and probably benefits from the US mad cow
situation. Furthermore, recent Al-qaida interest seems to be focused toward the
US and that leaves the Euro with a partial flight to quality standing.
Therefore, look for the Euro to rise to 125.10 unless the BOJ steps in to
support the Dollar. However, a failure to hold above 124.10 this morning, would
be a surprisingly negative development for the Euro.
YEN
Overnight the trade is targeting the 105 level as a
line in the sand, with respect to intervention but it would seem like the MOF is
soliciting the BOJ to provide financing for future interventions. Therefore, the
Japanese are showing their desire to manage the exchange rate, but at the same
time they can’t hide the fact that the cost is becoming a huge barrier. In other
words, the market might be getting the sense that the BOJ will fight the Yen
strength, but may have to give ground consistently just to stay in the game. In
short, intervention might slow the upside, but the trend and the fundamental
tilt is probably too strong to be denied. In other words, the Yen looks to be
building to an upside breakout of the December consolidation pattern.
SWISS
A major range up Wednesday, leaves the Swiss poised
for an upside breakout. In fact, unless the Swiss manages to fall back below
79.88 the trend should be considered up! The Swiss is also in solid position to
pick up flight to quality buying from the terrorism and mad cow developments.
BRITISH POUND
The Pound also comes in to the session today with a
positive setup on the charts. In fact, as long as the Pound manages to hold
above 176.26, one can hardly argue against additional upside action. Apparently
the world doesn’t get the sense that the UK is a specific target in the most
recent terrorism threat.
CANADIAN DOLLAR
The Canadian would seem to be headed to the top of
the old consolidation up at 76.88. It is possible that the recent negative
development for the US Dollar off the mad cow situation, translate into a slight
benefit to the Canadian. In any regard, the ultra weak action in the US Dollar
from the action Wednesday, has to leave the near term trend pointing up in the
Canadian. Near term support is 76.03.
METALS
OVERNIGHT
GLD+1.20, SLV+4.50, PLAT+19.70 London
A.M. Gold fix $410.80 +$1.20 LME COPPER STKS 437,550 tons -3,125 tons COMEX Gold
stocks 3.06 ml -643 oz Comex Silver stocks 123.0 ml oz -1.204 ml oz
GOLD
MARKET CLOSED FOR HOLIDAY . . .
SILVER
MARKET CLOSED FOR HOLIDAY . . .
PLATINUM
MARKET CLOSED FOR HOLIDAY . . .
COPPER
MARKET CLOSED FOR HOLIDAY . . .
CRUDE COMPLEX
12/26 OVERNIGHT CHG to 04:26 AM:CRUDE+91,
HEAT+188, UNGAS+235 MARKETS CLOSED DUE TO HOLIDAY API/DOE Crude Oil Stks Est -1
to -2 ml bls Actual change API +3.7 ML DOE +1.7 ML API/DOE Distillate Stks Est
-1 ml to +1 bls Actual chge API -2.4 ML DOE -2.3 ML API/DOE Gasoline Stks Est +1
ml to +2 ml bls Act change API -869K DOE +600K API/DOE Ref Operating Rate Est
+.2 to +.3 API 91.2 Prev 92.6 DOE 91.6 Prev 92.0% . . .
NATURAL GAS
MARKET CLOSED DUE TO HOLIDAY. . .