Futures Point To A Slightly Stronger Open
INTEREST
RATES
OVERNIGHT
CHANGE to  4:15 AM :BONDS -3
The Treasury market action Thursday and overnight is simply quite impressive.
When one considers that the numbers Thursday were patently bearish and
surprising to the market, it is shocking that prices finished the session strong
and seem to be poised to add to those gains again today. The bulls might suggest
that the Durable goods report was supportive and the initial and ongoing claims
reports can be explained away as volatile and unreliable.
STOCK
INDICES
OVERNIGHT
CHANGE to 4:15 AM:S&P+210 DOW +24Â NIKKEI
+8.4 FTSE -33Â From the technical perspective it would seem that the bear
track remains in position, coming into the session this morning. Yesterday the
stock market was simply saved by the slightly better than expected string of US
numbers. However, in retrospect it would seem that the numbers were suspect and
not that impressive.
FOREIGN
EXCHANGE
EURO:
Like the Dollar, the Euro has consolidated and appears to be looking for a major
trend decision. Also like the Dollar, the Euro has seen a minor increase in open
interest but not nearly as significant as in the Dollar. From the action
yesterday, it is clear that the Euro is seeing competition from interest in the
Swiss and the Pound. In other words, the travails of the Dollar won’t totally
translate into massive Euro gains. Trend line support in the Euro comes in today
at 113.78, while an upside breakout takes place with a rise above 115.00.
YEN:
So far the veiled threats from the BOJ seem to have halted the sharp rise in the
Yen. The Press is trumpeting the fact that the Yen is set to post the biggest
2-week gain ever and that in of itself highlights an extensive overbought
technical status. A BOJ Governor reiterated the banks interest in keeping the
Yen exchange rate from hurting the recovery and the intervention threat alone is
enough in the action today, to give temporary control to the bear camp. We don’t
see the December Yen holding below 88.93 unless intervention is simply head and
shoulders above anything seen in the past.
SWISS:
The Swiss might be the currency of favor in the coming weeks, as it is
relatively less overbought than either the Pound or the Euro. Furthermore, the
Swiss doesn’t carry as big of a burden economically, as the Euro zone or the UK.
Therefore we favor the Swiss against the Dollar over all other currencies. Near
term targeting is seen at 75.10.Â
POUND:
While momentum appears to be waning, the up trend does not look to be ending.
However, the rate of gain in the Pound since the September low is quite brisk
and therefore the Pound might be the most technically vulnerable currency. On a
correction to 163.80 get long the December Pound.
CANADIAN
DOLLAR: The Canadian is simply without direction and might be caught in a range
bound by 73.32 and 74.20. Near term, we see the path of least resistance to be
to the downside, with an eventual low possible down at 73.00.
METALS
GOLD:
The gold market seemed to sag off the recovery in the US equity market Thursday,
but we have to think that the gold market got a little ahead of itself and end
of quarter profit-taking was simply too attractive. However, overnight in the
face of non-descript Dollar action, the gold market looks to remain weak,
especially with the overnight Swiss National Bank 2004 gold sales announcement.
While the Swiss National Bank gold sales program is well documented, it has to
hurt sentiment to see the actual amount of gold being sold by the bank since May
of 2000.
SILVER:
Like the gold market, silver is bordering on a critical chart failure, with a
trade below 519.5 possibly catching a number of weak handed longs in bad
positions. Open interest has come down and the silver market really hasn’t seen
heavy volume since the late August period and that would seem to mitigate the
propensity for major technical failures. Longs should consider using stops below
$5.175 on a close basis.
PLATINUM:
The platinum market has seen an increase in volume on the September rally and
only a minor rise in open interest since mid month and that should leave the
market only slightly vulnerable in the event that the rally fails. However, we
continue to think that the platinum market has the best fundamental setup of all
the metals but that it could have the most significant upside potential. On the
other hand, platinum could also exhibit the most significant back and forth
price volatility. Â
Shanghai
copper stocks decline 11,791 tons in a positive development for a market that
needs a little fundamental lift. There is little COPPER: doubt that the copper
market is being well supported on the charts but the big question is can the
market find enough evidence to justify an upside breakout. The price action this
week in copper shows that prices aren’t hostage to the ebb and flow of the world
equity markets, nor are they captive to the ebb and flow of the US Dollar.
CRUDE
COMPLEX
OVERNIGHT
CHG to    4:15 AM Â
:CRUDE -15Â ,HEAT-29Â
,UNGAS+40Â We are not sure if the bullish residual from the OPEC
decision caused the rally Thursday, or reports of political problems in
Venezuela sparked the rally. Apparently Venezuelan troops fired tear gas on
ex-oil workers, as the government was attempting to evict workers from
subsidized housing.
NATURAL
GAS
After
expectations for the weekly injection report called for 80 to 105 bcf injection,
the 100 bcf build favored the bear camp. We also have to think that forecasts
for more seasonal temperatures in the coming week favors the bear camp.