Futures Point To A Slightly Weaker Open
INTEREST
RATES
OVERNIGHT
CHANGE to  4:15 AM :BONDS +12
With the Treasury market already factoring in another set of slightly better
macro economic reports this morning it would seem that the market could be
caught leaning on the short side. With auto and steel stocks trading lower in
Europe and the market partially disappointed with the auto sales readings
released from the US yesterday we have to think that prices will attempt to hold
above the Tuesday low. In fact, with the monthly unemployment report looming
Friday morning and the funds holding a massive short position (the fund or large
Spec positioning in last weeks COT report showed 42,653 contracts short) we
think the odds of a short covering bounce are high.
STOCK
INDICES
OVERNIGHT
CHANGE to  4:15 AM:S&P-130
DOW -7Â NIKKEI -68 FTSE -5Â With
the S&P finally forging a new high for the year and the Transportation
issues coming into favor, more of the negative views toward the economy are
erased. With scheduled economic information constantly confirming recovery, the
market has become less inclined to question the pace of the recovery. In fact,
the trade expects to get another sweep of favorable readings today and doesn’t
seem to be too concerned about the critical Friday morning payroll report.
FOREIGN
EXCHANGE
EURO:
With the German Labor office suggesting that there will be no improvement in the
job market until the middle of next year, German manufacturing orders down and
August jobless figures rising by 5,000, we see the Euro favoring the downside
today. Furthermore, US economic numbers today look to be good and that should
keep the Euro tracking toward near term support of 107.59. However, we don’t see
the Euro making a fresh downside breakout unless US numbers Friday morning are
strong!
YEN:
The BOJ is between a rock and a hard place, with the trade assuming it can’t
alter the near term pattern of gains in the currency. As the Wall Street Journal
suggested, the BOJ is no longer looking to force the Yen exchange rate down but
is simply trying to control the rate of climb! Therefore, once the Yen falls to
85.32 we suspect that the BOJ efforts will taper off and the Yen will bottom.
SWISS:
While the Swiss would seem to be poised to breakout down, we get the sense that
the market will breakout but then be unable to extend the decline. In the near
term, the 70.10 level will become a critical pivot point.
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POUND:
The BOE left rates unchanged but that was largely expected. It would appear that
the recent consolidation lows in the Pound will be capable of holding in the
coming sessions and if the Dollar softens off weak, or as expected numbers
Friday, we suspect that the Pound will attempt a bounce toward resistance of
158.00. CANADIAN DOLLAR: The coming 36 hours might be the most critical of the
year for the Canadian. At this point, it would seem like the Canadian is setting
up for a run higher. In other words, a breakout up is necessary!
METALS
GOLD:
Apparently the gold market wasn’t immune to the negative comments floated by the
World Bank. In the action Wednesday the World Bank suggested that gold prices
could slide back below $300 an ounce because “all sources of supply”
was going to exceed demand. The World Bank assumes that the market will see a
resumption of hedging and also suggested that the renewal of the Washington
Agreement was a major issue for gold.
SILVER:
While silver mounted a slight gain Wednesday it really didn’t show the type of
bounce that would suggest strong control by the bulls. In fact, considering the
rather dramatic upgrade of the macro economic view by the stock market, it is
very disappointing to see silver holding so far below its recent highs. A
moderate decline in COMEX silver stocks is slightly supportive but until the
total stocks level declines below 100 million ounces the bulls won’t get any
help from the supply front.
PLATINUM:
The trending pattern in the platinum market is quite impressive with only a few
sessions, since the April low, seeing trades below the moderately aggressive up
trend channel. Up trend channel support comes in today at $702 in the October.
Open interest readings in the platinum are really excessive at 9,218 contracts
especially when one considers the recent COT fund and small spec long position
is 6,440 contracts! Â
COPPER:
Chinese copper prices were higher overnight following a chain of strong US
gains. With the US copper market rising above extremely critical resistance of
82.60 it would seem that copper is rushing to factor in the improvement in the
macro economic outlook. In fact, we have to think that the run to new highs for
the year in the S&P 500 is directly fostering buying in copper.
CRUDE
COMPLEX
OVERNIGHT
CHG to    4:15 AM Â
:CRUDE -3Â Â ,HEAT+21Â
,UNGA+81Â The energy complex simply managed to consolidate just above
the recent lows and would appear to be waiting for some evidence of further
tightening US inventories before they even attempt to bounce off the recent
lows. The expectations for the weekly API and EIA inventory reports call for
mostly bullish readings in crude and gasoline stocks but if the gasoline reading
doesn’t post some kind of decline that could result in another liquidation wave.
NATURAL
GAS
Expectations
for the weekly inventory report call for an injection of 60 to 90 bcf but it
might take a lower than expected build to insure that prices don’t slide to back
to the recent lows. While the hurricane threat remains an issue, the story isn’t
impressive enough to discount weakness in the regular energy complex.