Futures Point To A Mixed Open
INTEREST RATES
02/10 OVERNIGHT CHANGE to 04:10 AM:BONDS+8
Apparently the Treasury market is unfazed by the favorable US economic readings
released Monday and that is because many traders think that intervention buying
is carrying the Treasuries. With the BOJ thought to be aggressively limiting the
upside in the Yen, in the wake of the G7 meeting, residual US Treasury buying is
expected to be a fixture in the coming sessions. With another Fed Manufacturing
Index this morning (from the Richmond Fed) one might expect a minor but
temporary limiting of gains, but the real focus of the market is soon expected
to turn toward the Fed testimony scheduled for Wednesday.
STOCK INDICES
02/10 OVRNIGHT CHG to 04:10 AM:S&P-70, DOW-8,
NIKKEI -37TSE-21 While the broad market is showing signs of weakening the Dow
and S&P are not showing noticeable overnight weakness. Viacom earnings overnight
were soft, while Marriott and UBS showed better than expected earnings. It would
seem that BP shares were providing a negative drag on stocks in Europe and that
could end up setting a slightly negative tone for the US opening.
DOW
Critical support comes in today at 10,549 and if the market can discount the
Dollar slide and feed off the Richmond Fed report, the market tilt could shift
back into positive ground. In summary, there is no reason why the Dow can’t
bulldog its way through near term uncertainty and climb back toward the late
January consolidation up around 10,640.
S&P
A pattern of higher lows, might usher the S&P to higher levels even if the near
term slate of news lacks substance. Like the Dow, we think that the March S&P
can manage a return to the late January consolidation that was bound by 1141.30
and 1149.30. However, a failure takes place with a slide back below 1137.70. It
should also be noted that short term technical indicators are giving buy signals
this morning, but gains could be step wise and lacking in volume.
FOREIGN EXCHANGE
US DOLLAR
With the decline below the January 23rd low, the
Dollar now looks to target the January 13th and 14th lows of 85.53 and 85.54. It
seems that the G7 meeting only addressed the pace of the Dollar decline and not
the actual decline in the Dollar. We would have expected the Dollar to garner
some support off the US numbers released Monday and possibly off the anticipated
commentary from the Fed Chairman, but right now the track in the Dollar is down
and will not be altered without something significant. Short term technical
indicators remain in sell modes and it would seem that the Dollar is primed to
slide to the January lows, where things will become a bit more exciting from an
intervention perspective. Right now, the BOJ would seem to be the only entity
primed to support the Dollar and therefore, more Dollar losses are expected.
EURO
A new high for the move in the Euro this morning
seems to point to a return to the January high of 128.75. Apparently the market
is not concerned with the G7 warning and is moving to test what little resolve
the G7 might have with respect to currency volatility. Overnight a key official
suggested that he disapproved of short term action in the currency markets and
that would seem to facilitate more gains in the Euro. In fact, the market thinks
that the Euro can continue to rise and will not encounter intervention unless
the rate of gain in the euro is excessive. Therefore, the path of least
resistance is up.
YEN
The tide of weakness in the Dollar is once again
pressing in on the BOJ. In fact, until the Dollar falls below the January lows,
we hardly expect the BOJ to get any help from other G7 members. Therefore, the
Yen looks to return to the break out point on the charts above the 95.00 level.
However, unless the BOJ backs away, we doubt that a driving upside breakout will
be seen. Therefore, with a Japanese National holiday ahead, it might be possible
that an upside breakout takes place in the absence of the BOJ.
^next^
SWISS
Considering the upside breakout overnight, the Swiss
would seem to be headed to the January highs of 82.49.
BRITISH POUND
Evidence that UK exports to the US are rising
sharply, would seem to discount the negative influence of the rising Pound on
the UK economy and that in turn facilitates more gains in the Pound. Therefore,
the Pound is launched into the stratosphere toward long term resistance of 190.
CANADIAN DOLLAR
The Dollar is becoming weak enough that sellers are
losing their interest in the Canadian. However, comments on the pace of the
Canadian recovery Monday undermine the bounce potential in the Canadian.
Therefore, a light upward bias will continue until the Dollar finds some level
of support on the charts and then the Canadian will see the current light buying
pattern die out.
METALS
OVERNIGHT
GLD+2.30, SLV+2.70, PLAT+1.80 London A.M.
Gold Fix $408.35 +$1.65 LME COPPER STOCKS 336,325 -4,975 tons COMEX Gold stocks
3.367 ml -386 oz Comex Silver stocks 124.2 ml -71,434 oz
GOLD
With the Dollar falling to the lowest level since
January 14th the gold market is given an additional buying boost. In fact,
seeing the Dollar fall below 85.54 could give gold an even further boost.
Already the gold market has managed a breakout to the upside and with the trend
in the Dollar pointing down the bias in gold is expect to remain up.
SILVER
The silver comes into the session today right on an
upside breakout point on the charts and surprisingly hanging up near the recent
high. In the past, the silver hasn’t been able to return to a spike high so fast
and that is indicative of stubborn long interest. However, the funds have a
strong interest in silver and that seems to leave the near term bias pointing up
right alongside gold.
PLATINUM
There is apparently no stopping the entrenched trend
in platinum. Even after poor auto sales readings and a disappointing US payroll,
the market returns to the bull posture. The market just doesn’t think that
production areas outside of Russia can make up the shortfall in platinum.
COPPER
Copper prices have fallen back to close the recent
gap up trade and would seem to be headed to chart support of 116.55. In fact,
copper prices have softened despite fundamental support from the ICSG forecast
of a 421,000 ton deficit in the January through November 2003 time frame.
Apparently the world logged a 63,000 ton deficit in the month of November alone.
CRUDE COMPLEX
The early spin off the OPEC meeting is a focus on
compliance with some OPEC members using harsh language against the violators.
However, as the OPEC meeting got underway at 5:00 central time one might expect
to see major headlines impacting prices right into the pit opening. Late
breaking indications seem to project an OPEC cut to be effective April 1st and
that is a fresh bullish element.
NATURAL GAS
Whatever bullish support has been provided by the
recent cold, should begin to drip out of the natural gas market over the coming
sessions, especially if the regular energy complex comes quietly through the
OPEC meeting. The April contract continues to hold within the recent
consolidation but real solid support isn’t seen until $5.08, with near term
resistance pegged at $5.43. Overt weakness in February gas might contribute to
near term selling and while the market is already building toward a healthy draw
for this coming Thursday, the draw probably won’t be enough to significantly
change the annual stocks surplus.