Futures Point To A Slightly Weaker Open
INTEREST
RATES
OVERNIGHT
CHANGE to  4:15 AM :BONDS +7
The bond market wasn’t sure which way to interpret the FOMC meeting results,
with the Fed suggesting that employment remains a problem, but that consumer
spending seems to be improving. In the end, the Treasury market did manage to
sustain the 4-5 point gains posted off the August low and with most of those
gains fostered by fears of the job sector, we see the bulls maintaining control
over the market in the near term. In fact, until the market gets beyond the
weekly initial claims report on Thursday morning, one might not be well served
to press the short side of the market.
STOCK
INDICES
OVERNIGHT
CHANGE to 4:15 AM:S&P+40Â
DOW +13Â NIKKEI +103 FTSE +27Â The
stock market certainly got a distinct lift from the Fed dialogue, which was
evidently enough to pull money in off the sidelines. Since it is not wise to
fight the trend, it doesn’t make sense to stand in the way of the bull tilt.
However, if the market gets another run today it could be considered to be at a
near term technical and fundamental wall.
FOREIGN
EXCHANGE
EURO:
With Euro zone CPI readings for August coming in +0.2% it is clear that the
severe deflation threat is no longer an issue. After the massive partly
unexplainable decline in the Euro Tuesday, we have to suggest that short-term
players be long the Euro for at least the coming 48 hours. We see the US claims
reading Thursday morning providing even further lift to the Euro. Those that get
long the December Euro at 111.60 should not risk the position further than
111.20.
YEN:
Another strong session in the Nikkei leaves the bulls partially in control of
the action in the Yen. Furthermore, with July Japanese Industrial output up
+0.5% yesterday, there would seem to be economic support for the bull camp in
the Yen. However, the market is close to chart resistance and the BOJ threat
certainly causes many would be longs to stay on the sidelines at current levels.
Therefore, more gains are expected but they should be limited in scope.
SWISS:
the double bottom at 71.88 is enough technical evidence of a bottom to buy the
Swiss looking for a rise to 73.10. However, given the potential for tight
trading ranges, would-be longs should attempt to buy dips to 72.30.
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POUND:
The talk from the BOE alone would seem to foster an upside run in the Pound, as
they suggested their economy is strong enough to say that the need for lower
rates is going away and the prospect of higher rates is growing. In fact, the
recent BOE minutes suggested that the last stimulus might have been too much. We
see a run to at least 159.78. CANADIAN DOLLAR: While the Canadian posted a very
bad technical trade overnight, it would seem that the inadvertent US Dollar
rally has run its course and that might take some of the pressure off the
Canadian. We are still willing to bet on a key low but wouldn’t risk Dec longs
below 72.20.
METALS
GOLD:
While the gold market remains in a weakened posture, the comments and forecast
from Gold Fields Mineral Services overnight should provide some support to the
gold investment boom. GFMS suggested that “de-hedging” was responsible
for adding the equivalent of 308 metric tons of demand into the world gold
equation by restricting forward hedge sales. Perhaps the most important
statement offered up by the pivotal gold company, was that total investment in
gold could be 3% lower in the coming 6 months and that fabrication and jewelry
demand were both expected to decline.
SILVER:
Unlike the gold market the silver market is showing no signs of technical
weakness. Furthermore, the silver market is not being pulled down by weak gold
action or by a soaring US Dollar. In fact, we have to think that the silver
market benefited from the sharp rise in the stock market Tuesday afternoon.
PLATINUM:
Another bad trade overnight in the Platinum market would seem to undermine an
existing overly long small spec and fund position and send platinum crashing
down toward chart support of $689. One should also remember that the fund and
small spec percentage of the open interest was very high and that could easily
foster wild stop loss selling. However, platinum should see some support from
recent equity market gains.Â
One
simply can’t discount the persistent decline in LME stocks, as that would seem
to rationalize the bull market status of COPPER: copper. With Chinese copper
prices higher overnight and the US stock market showing positive progression
yesterday, we expect copper to rise in the US session. However, with the market
already showing massive upside indications from the early US pricing, traders
would have to be very aggressive to pay up for longs 100 points above the prior
close.
CRUDE
COMPLEX
OVERNIGHT
CHG to    4:15 AM Â
:CRUDE -1Â Â ,HEAT+7Â Â
,UNGA-22Â Technical the energy complex continues to suffer damage and
with the market expecting a build in inventories this morning, it might be
possible to see even more selling ahead. With Iraq apparently being invited as a
full member to the coming OPEC meeting, the world is giving Iraq credence as an
exporter.
NATURAL
GAS
We
continue to think that January natural gas is poised for a decline to the July
lows of $5.25 but that might represent a significant buying opportunity.
However, in the near term the spec and fund long needs to bolster its short
position and temps need to become a little more seasonal.