Futures Point To A Slightly Stronger Open
METALS
GOLD:
The large net spec long camp has to be feeling the heat, with gold prices
showing additional weakness this morning. With the Dollar reaching a one-month
high against the Euro the pressure should remain on gold prices. The next
critical pivot point in the August gold is seen at $356.2.
SILVER:
A couple sharp increases in COMEX silver stocks has put inventories back above
107 million ounces and with gold showing more weakness today, it would seem that
silver is headed toward chart support of $450. More than likely the silver will
drift below $450 but if the market fails to hold above $4.485 a complete washout
to $4.40 would be possible. Apparently
silver isn’t even benefited by the idea that the world economy is improving!
PLATINUM: We are really surprised that platinum hasn’t gotten a lift off the
improved outlook for the Asian economy, as Japanese jewelry demand has
historically been a critical impact on platinum prices.
PLATINUM:
We are really surprised that platinum hasn’t gotten a lift off the improved
outlook for the Asian economy, as Japanese jewelry demand has historically been
a critical impact on platinum prices. Until platinum comes out of a $660 to $640
range we don’t have an opinion on the trend. It would seem that platinum is
slightly more vulnerable to a break than it is to a sharp rally. Â
COPPER:
While Chinese copper prices were higher overnight, the US copper market early
action shows weakness. A large Finnish metals company warned of first half
losses because of slack demand for stainless steel, copper and zinc and that is
a sign that the world economy is still soft.Â
A slide to 77.75 in the September copper would not be that surprising,
especially with the
US
economic
information this morning expected to reconfirm a listless jobs situation in the
US
.
CRUDE
COMPLEX
OVERNIGHT
CHG to  4:15 AM   :CRUDE
-37Â ,HEAT-139 ,UNGA-87 Â Some
traders might be shocked that energy prices faded as aggressively as they did
off the weekly inventory readings, but considering that OPEC failed to alter the
supply situation last week, the market can assume that some rebuilding of supply
is set to take place. We have to think that crude oil prices above $30 a barrel
were a little expensive unless there is some anxiety issue in the Middle East,
or some political uncertainly associated with a key oil producer.
NATURAL
GAS
Expectations
for the upcoming inventory reading call for another big injection. Furthermore,
the trade is already tallying up the potential demand loss off the cool start to
the summer cooling season and that simply doesn’t fit well with an overly large
spec long position and perceptions that supply is starting to rebuild at a more
aggressive pace.
INTEREST
RATES
OVERNIGHT
CHANGE to  4:15 AM :BONDS -17
Certainly the bonds and notes deserved some selling considering the persistent
improvement in the macro economic outlook but we have to wonder if the market
isn’t a little ahead of itself. With initial claims expected to highlight
ongoing softness in the Job market and the leading indicator report probably
showing minimal growth projections, we might see the sellers lose their appetite
after another pulse down. Traders should keep in mind that when a market shoots
aggressively higher it can sometime surprise the trade with the magnitude of its
corrections against the trend! We would be pretty interested in selling a 1/2 to
3/4 point rallies in bonds or notess as we think that the odds of a long term
top unfolding have improved significantly.
STOCK
INDICES
OVERNIGHT
CHANGE to 4:15 AM:S&P+120 DOW +12 NIKKEI +17 FTSE -17Â The stock market
would seem to be poised for more gains but the market might need a little help
from the US numbers this morning. Just to get a sense of the building global
optimism, it should be noted that the Nikkei has risen in 15 of the last 19
sessions. The Japanese economy was expected to remain mired in a spiraling
deflationary cycle, so it is pretty impressive that stock prices in that country
have come alive.
FOREIGN
EXCHANGE
DOLLAR:
The fact that the cash Dollar made a one-month high against the Euro this
morning doesn’t seem like a big deal, but it is when one considers the recent
extreme negative tilt toward the Dollar around the June 16th low. It would seem
that the
US
recovery is getting some respect and it would also seem that the trade is
skeptical of the Euro zone recovery capacity. However, until the September
Dollar manages to make a one-month high against the Index of currencies, we are
not ready to call an end to the downtrend. In fact, even if the September Dollar
closes above 94.55 that doesn’t necessarily mean that prospects in the
US
are set
to improve dramatically and that money will flow aggressively toward the
greenback. In looking forward to the
US
numbers
this morning we suspect that the numbers will foster more minor Dollar gains.
EURO:
The Euro is already into a downside breakout on the charts, as it managed the
lowest trade since May 16th in the early action today. Apparently slack demand
for Euro zone bonds highlights the shifting sentiment in the marketplace. In
fact, given the
US
numbers
today, we would not be surprised to see the September Euro temporarily fall
below 115.00.
YEN:
The charts suggest that the Yen is headed down toward chart support of 84.00 and
that makes the BOJ very happy. The BOJ also noted an increase in net foreign
bond investments and that signals confidence in the economy. We suspect that
more losses will be seen in the Yen today.
SWISS:
A major technical failure in the Swiss projects a slide to at least 74.69 and
possibly to 74.31 in the near term.
POUND:
Softening in
UK
economic readings this morning combine with the bad chart action, to point the
currency down. In fact, the Industrial orders and output readings really catch
the Pound in a bad position on the charts. Near term targeting is seen at
165.26.
CANADIAN:
The only thing keeping the Canadian from a massive slide, is that many
currencies are weak against the Dollar. As it stands, the Canadian is probably
primed for a correction of the same magnitude seen in early June, when the
currency lost 160 ticks in three sessions!