Futures Point To A Lower Open

INTEREST RATES

OVERNIGHT CHANGE to 04:20 AM:BONDS+11 The bull camp retains the edge, as the
Turkish bombing seemed to provide a lift to prices. In other words, the bonds
are showing buying interest off anything that is remotely linked to slowing in
the economy. However, the bulls are fortunate this morning, as the market was
on the ropes yesterday afternoon.

STOCK INDICES

OVERNIGHT CHANGE to 04:20 AM:$-22, YEN+13, SF+37, CA+21, EU+37 

Dollar:
Make no mistake about it, the Dollar managed to get a series of beneficial
developments in the action Wednesday. While housing numbers were helpful, the
most important support for the Dollar came from the sharp rise in US equity
prices and the favorable Fed commentary. However, in order to turn the Dollar
away from the “existing” downtrend pattern, the outlook for the US economy
will have to be much improved.

FOREIGN
EXCHANGE

Dollar: Make no mistake
about it, the Dollar managed to get a series of beneficial developments in the
action Wednesday. While housing numbers were helpful, the most important
support for the Dollar came from the sharp rise in US equity prices and the
favorable Fed commentary. However, in order to turn the Dollar away from the
“existing” downtrend pattern, the outlook for the US economy will have to be
much improved. While the chain of events from Wednesday was impressive, that
pattern will have to be extended without fail through the US claims reports.
In other words, the Dollar bulls need headline improvement in the claims, in
order to alter the trend. We still think that aggressive traders should be
sellers of the December Dollar Index on rallies to 91.02, using a tight stop
at 91.39.

EURO:
The Euro will have a critical pivot point at 118.65 this morning. In our
opinion, the Euro has an early test of the bull case but will more than likely
be able to sustain the recent upside pattern. However, one should take good US
claims and a higher US equity market as a sign that risk is rising to the
longs. Critical resistance today comes in up at 119.36.

YEN:
According to trade figures, the soaring Yen has yet to smash into Japanese
export activity and that more than anything seems to favor the bull camp. In
other words, the BOJ isn’t exactly forced to stop the Yen rise at all costs.
However, since the Yen has recently corrected, it is possible that a key
bottom has formed but in order for a near term low to hold, the whole trade
war issue with China must calm down. Aggressive traders could buy the Yen at
91.75 and risk the position to a tight stop at 91.29.

SWISS:
We see the Swiss having a critical pivot point today at 76.48. However, it
would not seem like the Swiss bulls are in great number, possibly because the
US economy is showing some signs of life. Be careful with existing longs, as
the US numbers today present a critical junction.

POUND:
Apparently the potential political protests threats are not going to hinder
the Pound. Furthermore, it would also seem like the Pound is poised to
breakout to new high ground.

CANADIAN DOLLAR: A pattern of lower highs in the Canadian is disappointing but
with the US economy trying to show itself in the last 24 hours, it is clear
that the Canadian is fighting a little resistance. Therefore, we can’t rule
out a temporary dip to 76.33.

METALS

OVERNIGHT CHANGE to 04:20
AM:GLD+1.60, SLV+2.50, PLAT+1.00 London A.M. Gold fix $395.75 -$1.40 LME
COPPER STKS 485,800 tons -3,050 tons COMEX Gold stocks 2.963 ml Unchanged
Comex Silver stocks 120.5 ml oz Unchanged OVERNIGHT: Extremely quiet action in
Asia with neither side dominating the trade

GOLD:
While the Asian market action was very calm overnight, the early US action
would seem to be firming, possibly because of the Turkish suicide bombings. It
is also likely that the 26-tick decline in the Dollar Index is also adding to
the supportive tilt in gold in the early going. Chinese gold prices were
weaker and many traders in the Asian markets were suggesting that buyers might
only surface in greater numbers if gold prices declined by $7-$8 an ounce.

SILVER:
It would appear that both gold and silver are getting support off the Turkish
bombing but it is not clear whether silver will be able to sustain the gains
without persistent leadership from gold. We do think that March silver needs
to hold above critical support at $5.275 to avoid stop loss selling and
general long liquidation. From the volume and open interest patterns it
doesn’t appear that silver is seeing expanded trade interest on rallies and
that detracts from the bull case.

PLATINUM: After the aggressive correction early in the week, the platinum
market seems to be right back into the old “well-defined” up trend channel. It
should also be noted that the platinum market saw heavy volume around the lows
this week and that confirms this market has reserve buying capacity,
especially when the market offers a price discount. Trend line support today
is $755.5 basis Jan.  

With
Chinese copper prices limit down overnight, it is pretty clear that lower
prices are not attracting fresh buying interest. While exchange stocks
continue to decline in London and the macro economic impact was positive
COPPER: yesterday, the market showed almost no interest is turning off the
bear track. Even in the face of supportive US economic fundamentals (housing
starts) the copper market showed almost no long side interest and that shows
that the market is at least temporarily wounded.

CRUDE COMPLEX

OVERNIGHT CHG to 04:20 AM:CRUDE+6, HEAT-35, UNGAS-32 We take the weekly
inventory numbers to be “not bullish” and that is why prices faded. In other
words, energy prices were partially pent up for a bullish report but didn’t
get the numbers necessary to add to the upside.

NATURAL GAS

The
natural gas market faded as we expected and remains vulnerable from a
technical perspective. We would feel much more confident in picking a bottom,
if the small spec long position weren’t so large, especially with inventory
numbers due in this morning.