Futures Point To A Strong Open
INTEREST RATES
12/15 OVERNIGHT CHANGE to 04:15 AM:BONDS-7 The
Treasury market showed signs of significant strength last week but at other
times showed vulnerability. It is clear that the bias is up but that the trade
can’t seem to maintain buying interest up around the top of the recent
consolidation. It would also seem like the equity market action will serve to
limit the upside but that holiday shopping activity is being held back by poor
weather in the East.
STOCK INDICES
12/15 OVRNIGHT CHG to 04:15 AM:S&P+1240, DOW119,
NIKKEI +321, FTSE+32 As would be expected, the early action in equities shows a
strong positive reaction to the capture of Saddam. Unfortunately, the stock
market needed the Saddam development just to countervail the slightly
disappointing numbers posted last Friday. The Saddam capture also countervails
some weekend retail sales disappointment, as sales in the East were again
impacted by poor weather.
DOW
It is possible that the overnight high of 10,166 is an exaggeration, but we have
to think that a new higher trading range is being carved out and that 10,300
will be seen prior to the markets Christmas closure. Even the COT report
readings show the Dow to be in a solid position to rally, as the net spec
position was still moderately short as of last Tuesday. Weekly support now comes
in at 10,148, with the next upside targeting of 10,376.
S&P
We are a little surprised that the small spec long in the S&P was 72,000
contracts last Tuesday, but until the net spec long reaches 110,000 contracts,
we are not inclined to worry about the overbought status of this market. The S&P
does need to clear the 1074 level this morning, in order to be into new ground
but we have to think that the trend is up and that prices are headed to 1079.70
on the current pulse up. Longer term targeting in the S&P comes in off the
weekly charts up at 1090.
FOREIGN EXCHANGE
US DOLLAR
The Dollar has shown consolidation capacity since
the middle of December and with the weekend news from Iraq, some shorts are
exiting positions rather than weather near term adversity. It would not seem
like the Iraqi condition has that much to do with the down trend pattern in the
Dollar. In the near term, one has to give the Dollar bulls a temporary edge but
we really doubt that the Dollar will be able to rise above 90.00 and shut off
the downtrend pattern. Therefore, traders should be looking to sell the rally
today, expecting the Dollar to settle back into the down trend pattern. If the
US economic numbers were coming in much stronger than expected, or some other
critical fundamental condition had shifted, we would consider altering out
bearish opinion of the Dollar but that hasn’t happened.
EURO
The recent correction in the Euro should have
created a solid low from which traders can get long, especially with the
temporary ebb and flow that is being seen off the Saddam capture. If anything,
the fundamentals strengthened for the Euro from the news last week and therefore
the recent correction is a buying opportunity.
YEN
The Yen is a benefactor of the Saddam capture, as
that strengthens the Dollar and alleviates some of the pressure being shouldered
by the BOJ. However, we doubt that the Yen will fall all the way down to
consolidation support of 91.39 on the current ebb and flow of news. In fact, we
doubt that the Yen will fall below “close-in” support of 92.23. Aggressive
traders should buy a correction to 92.23.
SWISS
Like the Euro, we see the Swiss holding above the
low posted last Thursday. However, given the early Dollar strength we would not
be surprised to see the Swiss return to 78.34 before finding fresh buying
interest.
BRITISH POUND
The Pound action overnight is partly discouraging
for the bull camp but we suspect that the Pound will be able to respect critical
channel support at 172.10. In the end, there would seem to be nothing to suggest
that the well defined up trend pattern is being defeated.
CANADIAN DOLLAR
The Canadian is vulnerable, as the charts seem to
hang all over the Canadian and the temporary strength in the US Dollar is going
to hit right at the heart of the Canadian Dollar. Therefore, one should not be
surprised to see the Canadian slide back toward 74.82 and maybe even lower. Wait
for a full session before considering a fresh long entry in the Canadian Dollar.
METALS
OVERNIGHT
GLD-4.50, SLV-6.50, PLAT+3.60 London A.M.
Gold fix $404.50 -$2.10 LME COPPER STKS 460,425 tons -2,075 tons COMEX Gold
stocks 3.059 ml Unchanged Comex Silver stocks 123.9 ml oz Unchanged
GOLD
While the capture of Saddam certainly instigated the
massive slide overnight, it should be noted that the Dollar has recently shown
recovery capacity and that began the process of weakening gold’s resolve last
week. Overnight gold was at times down almost $8 an ounce and below a couple
levels of technical support. While the market looks to be capable of holding
above critical support of $400.5, the recent consolidation in the Dollar will
have to come to an end, with a decisive breakout down to instantly rekindle the
upside in the Dollar.
SILVER
Like gold, the silver market saw a strong washout
overnight but eventually managed to reject most of the selling. Also like gold,
the silver market came in with a smaller spec long position than was expected
and that bodes well for the bull camp. Trend line support in the March silver
comes in today at $5.48, whereas the middle of the up trend channel comes in at
$5.62.
PLATINUM
Surprisingly the platinum market reduced its net
spec long slightly in the latest COT report and that prevents the market from
registering a bought out positioning. Versus the April platinum, support comes
in at $806.8 and upside targeting is currently pegged at $821. COMMITMENT OF
TRADERS ANALYSIS – FUTURES & OPTIONS Dec 2 – Dec 9, 2003 LARGE SPEC COMMERCIAL
NON-REPORTABLE NET NET NET POSITION NET CH POSITION NET CH POSITION NET CH
SILVER 50558 2787 -77292 -2337 26735 -450 COPPER 26191 -2590 -37239 1960 11048
630 GOLD 126696 -5332 -179208 4757 52511 573 PLATINUM 4955 -352 -6467 422 1513
-69
COPPER
The copper market shook off early weakness last
Friday morning to close strong and that sent a signal that the bull camp was
still very much in charge. LME and Shanghai stocks continue to decline,
suggesting that the supply situation remains the same and therefore fosters the
bull market. With the copper market moving into new high ground this morning and
the macro economic conditions good enough to foster optimism toward the global
economy, there would seem to be little to prevent copper prices from climbing
further.
CRUDE COMPLEX
12/15 OVERNIGHT CHG to 04:15 AM:CRUDE-52,
HEAT-137, UNGAS-149 The closing action last week leaves little doubt as to the
direction of the trend. We are a little surprised that the market managed such a
significant pulse up, as there didn’t appear to be anything significant in the
news Friday to ignite the wave of buying. Traders suggested that weather was a
dominate issue but we also have to think that periodic demand talk was also
responsible for some of the gains.
NATURAL GAS
All the natural gas market needed to see were
minimal signs that the coming North American winter would be normal or colder
than normal and it seems that the market is acting on that assumption. In other
words, the hope that demand this winter will be strong allowed the bull camp to
seize control over the market even with the market technically overbought. In
fact, the correction late last week put the market in an even stronger technical
position and now it wouldn’t be surprising to see a series of new highs in the
coming week.