Futures Point To A Stronger Open

• October 28, 2003
• TradingMarkets Editors

INTEREST RATES

OVERNIGHT
CHANGE to   4:15 AM :BONDS -5 We are partially impressed that the Treasuries
managed to avoid more selling in the action Monday. With the market seeing two
US economic reports come in better than expected and the stock market generally
favorable, we would have expected a little more profit taking incentive from
last weeks buyers. Maybe last week’s buyers were funds simply buying back shorts
and the market is basically devoid of a dominating opinion.

STOCK INDICES

OVERNIGHT
CHANGE to 4:15 AM:S&P+240 DOW +27  NIKKEI +106 FTSE +12 Maybe the market has
found a life raft in the form of Mergers and acquisitions. The market certainly
needed something to turn off the negative sentiment that has been present since
the mid October highs. With R.J.

FOREIGN EXCHANGE

Dollar: Apparently US economic
information has been good enough to give the Dollar a very minor lift. It would
seem that US numbers this morning will also support the Greenback and unless the
US Fed were to surprise the market with talk of lower rates (highly unlikely)
the Fed would not seem to be a force that favors the bears in the Dollar. With
the US equity market throwing off signs of more merger and buyout activity, it
is possible that US stocks manage a slight rise and that also provides light
support to the Dollar. We still think that the trend in the Dollar is down, but
a trade above 92.22 could spark some stop loss buying in the index. However, we
would not back away from selling the Dollar on a rally because the trend and the
fundamentals seem to keep the Dollar locked in a downtrend. However, it should
be noted that short-term technical indicators in the Dollar have shifted into a
buy mode. 

EURO:
Economic information from the German Ifo and the Euro zone indicate that the
recovery is being made more difficult by the rising currency and high-energy
prices and that is enough to create doubt and doubt simply fosters selling of
the Euro. The Euro has also made a bad technical trade overnight and could be
primed to decline to 115.83. With the buyout action lifting US stocks more than
European stocks and the US numbers today expected to be positive to the recovery
theme in the US, the Euro would seem to be pointed down. In fact, unless the
Euro can manage a rise back above 117.34, we think that prices are set to slide
even lower in the session ahead.

YEN:
Negative retail sales readings are evidently not enough to discourage the
positive technical action in the Yen. In other words, the market appears to be
set on a bullish track and little looks to dispel that posture. New highs for
the move are expected but we then expect the BOJ to halt the rally.

SWISS: An
extremely negative chart trade overnight in the Swiss projects a continuation of
the downside with a target of 74.85.

POUND: An
extreme overbought condition leaves the Pound exposed to a setback, especially
if the US numbers today are strong. Initial support is pegged at 168.26 and then
again down at 167.50. A break to 167.50 would certainly be considering a buying
opportunity.

CANADIAN
DOLLAR: Trend line support in the December Canadian comes in down at 75.30 and
considering the overbought technical indicators one can’t discount a moderate
setback today.

METALS

OVERNIGHT CHANGE to 4:15
AM:GLD-1.30 ,SLV-1.7,PLAT+0.30, CP +65 London A.M. Gold fix $386.55 -$.20 LME
COPPER STKS 525,050 tons -3,400 tons COMEX Gold stocks 2.81 ml -2,848 oz Comex
Silver stocks 115.0 ml oz -2,999 oz  OVERNIGHT: More minor declines in Asia
possibly prompted by Dollar gains

GOLD: We
doubt that the gold market is going to see a direct impact off the FOMC meeting
today, but it could see an indirect impact from the Dollar, if the Fed dialogue
highlights any lingering concerns over the US economy. Chinese gold prices were
slightly lower but the Press reported more banks buying in the session. Seeing
bank buying in China keeps the rumors of a change in the Forex peg alive and
that in an indirect way provides support to gold.

SILVER:
It would not seem like silver has the information to come out of the recent
consolidation that is bound by $5.10 and $5.22 in the December contract. While
we are not sure what the daily focus is in the silver market, the silver market
does appear to be getting more favorable news than the gold market. It would
seem like the fund trade is a primary driving force behind strength in the
silver market.

PLATINUM:
With a major platinum producer suggesting that 2003 production would not come in
as high as previously expected, it is clear that production areas outside of
Russia are simply not making up the shortfall from the worlds largest producer.
Therefore, platinum seems to have gotten confirmation that lofty prices are in
many ways justified. Top of the up trend channel comes in today at $752, whereas
key support is pegged at $737.  

There is
no quit in the copper market. Even after it appeared that the Chinese were
balking at high prices and the COPPER: hope of an expansion in supply, the
market managed to shut off the correction and return to the vicinity of the
highs. Even though the market has seen signs of increased production, recent
headlines seem to offer the opposite information.

CRUDE COMPLEX

OVERNIGHT
CHG to    4:15 AM   :CRUDE -16  ,HEAT-5   ,UNGAS+41 The energy market rejected
the higher price action that was posted late last week and seemed to sag toward
critical failure points on the charts in the action Monday. From the weekend
news that was mostly bearish, it would seem that more minor selling is to be
expected in the coming sessions.

NATURAL GAS

With the
regular energy complex declining and the weather simply not helping to support
natural gas prices, it is possible that the remaining small spec long position
is forced from position. Mild weather and almost no significant hurricane threat
has given the bear camp a free reign.