Futures Point To A Slightly Weaker Open
METALS
OVERNIGHT
CHANGE to 4:15 AM:GLD+0.70 ,SLV+1.5Â ,PLAT-4.10,
CP +15 Â London Gold Fix $347.80 +$3.80 LME Copper Warehouse stks
636,250 tns -3,575 tns Comex
Gold stocks 2.675 -96 oz COMEX Silver stocks 107.6 ml oz UnchangedÂ
OVERNIGHT: Gold mounts a slight rise on the back of a minor rise in the
Euro
GOLD:
One can’t dismiss the action in gold last week but one can be skeptical that the
rise will translate into an aggressive upside breakout. With the COT report
showing a net spec long position of 59,000 contracts last Tuesday the market
isn’t as overbought as we feared. However, considering the gains posted since
the COT report was measured, we have to think that gold comes into the session
today net spec long 65,000 to 68,000 contracts.
SILVER:
The silver market has forged a quasi upside breakout this morning on the charts
with a critical pivot point seen up at $4.745 in the September. Early stock
market action is weak and that would seem to undermine the silver market, which
seems to be dependent on the recovery theme. It is possible that silver will be
a little undermined by the talk that the Euro zone doesn’t need a rate cut, as
that story appears to be behind the weakness in equity prices.
PLATINUM:
The platinum market remains poised just under the old highs but the technical
setup doesn’t seem to be that impressive. The net spec long in platinum is
slightly above 5,000 contracts and that is only a minor limitation against more
upside. The trend is apparently up even if the fundamental picture in platinum
is largely unchanged since the April and May consolidation lows.Â
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COPPER:
The weakness in international equity markets undermines copper prices this
morning. However, Chinese copper prices were slightly higher on very low trading
volumes. Near term support in September copper comes in today at 78.10 and then
again at 77.65.
CRUDE
COMPLEX
OVERNIGHT
CHG to Â
4:15 AM
 Â
:CRUDE +4Â Â
,HEAT+24Â ,UNGA-13 Â The
energy complex got strength late last week from a series of developments, some
were related to
Iraq
and others were tied directly
to OPEC member statements. While the early action was boosted by Shiites in
Iraq
claiming to be moving toward
a government of their own, the energy market saw added support Friday morning
from the Venezuelan assertion that
Iraq
would never be able to reach
the 1 million barrel per day export pace by the end of 2003.
NATURAL
GAS
While the
September natural gas contract managed to bounce off a spike low last week, we
see little in the weather to deter the recent selling interest in the market.
The weekly COT report showed a minimal net spec long position as of last Tuesday
and that would seem to leave the market vulnerable to more selling.
INTEREST
RATES
OVERNIGHT
CHANGE to Â
4:15 AM
:BONDS
-5 The Treasury market comes into the week fighting against another downside
washout on the charts. With the September bonds managing to bounce away from
last weeks lows, there is some semblance of a bottom but unless the fundamental
information turns off soft, or the stock market washes out aggressively, it
would seem like the bulls will remain on the ropes. The Leading Indicator report
this morning is barely expected to carve out an up-tick of +0.1% and therefore
we don’t see the Treasuries flirting with the downside off the first report of
the week.
STOCK
INDICES
OVERNIGHT
CHANGE to 4:15 AM:S&P-210 DOW -23 NIKKEI CLOSED FTSE -7.7 Â We are not
sure if the international equity markets are showing lower opening indications
because of comments that the ECB was going to leave interest rates unchanged, or
that the market is weak because of the upcoming heavy slate of US corporate
earnings reports. Apparently 1/3rd of the S&P 500 will report earnings this
week, with Merck and 3M the marquee names under the microscope. Wall Street is
suggesting that the reports out last week were either neutral or positive and
that pretty much justifies the sideways consolidation seen since the beginning
of June! However, it would seem that regularly scheduled US economic numbers
have improved slightly since early June and that leaves the stock market with a
very minor bullish edge.
FOREIGN
EXCHANGE
Dollar:
It would seem like the Dollar is going to start the week out on a down note, as
the first big
US
corporate earnings report this morning was slightly disappointing. Early in the
session the Dollar might have gotten a little lift from the ECB official
statement that no rate cuts are needed in the euro zone. In other words, the ECB
is content to leave the recovery to previous easing efforts and that could have
been viewed as a positive development for the Dollar. As it stands, the market
isn’t exactly ready to pump up the Dollar, as the trade failed to take the Euro
to task for the conservative monetary policy. Furthermore, the
US
indicated that they would not complain about BOJ actions to drive the Yen down,
even though those efforts have given Japanese exporters a huge assist in
international trade. It would appear that the Dollar is headed down to the mid
July consolidation zone of 96.23 to 95.65. However, if the
US
leading
indicators report is stronger than expected at +0.2% that could shut off the
selling in the Dollar.
EURO:
The Euro does appear to have climbed above a downtrend channel resistance line
in the early action today and it has done so into dialogue that could have been
damaging to the currency. With a slightly higher trade surplus reported for May,
it would seem that the “on-hold” statements from a
EU member are being totally discounted. In other words, the trade is simply not
in a posture to embrace negatives toward the Euro. Near term upside objective in
the September Euro is 113.17 and then 113.27.
YEN:
A partial holiday in
Japan
seems
to have removed some of the downside incentive in the Yen, even after
US
officials failed to criticize the BOJ for driving the Yen down. We would assume
that the Yen would rally today, but then should encounter heavy overhead
resistance and resume the downside track as the week progresses.
SWISS:
Unlike the Euro, the Swiss has not forged an upside breakout on the charts. In
fact, until the Swiss manages a climb above 73.97, the downtrend hasn’t been
reversed technically.
POUND:
The technical action overnight would seem to suggest a temporary end to the
washout in the Pound. With a massive downside thrust rejected overnight one
might expect a bottom above the 158.00 level. Maybe the British Chambers of
Commerce readings countervailed the aggressive selling in the Pound, or maybe
the Dollar is expected to be weak enough to cause wholesale profit taking in the
Pound. In any regard, we suspect at least a 24-hour bounce is in order for the
Pound.
CANADIAN:
The pattern of lower lows continues in the Canadian, with the next level of
support seen down around the 70.00 level. Since the Canadian economy has posted
nothing to discourage the attack of the currency, one must generally expect the
sellers to dominate.