Futures Point To A Stronger Open

May
05, 2003

 

INTEREST
RATES

OVERNIGHT
CHANGE to   4:15 AM :BONDS +2
The bond market looks a little disappointed this morning, as it has yet to
garner much long interest off a payroll report that should have been
supportive. In our opinion, the non farm payroll reading can sometimes be
volatile so we would not attach much significance to the smaller than expected
job loss. On the other hand, to see a .2% increase in the unemployment rate
seems to suggest that the

US

economy remains on the
ropes.

STOCK
INDICES

OVERNIGHT
CHANGE to 4:15 AM:S&P+410 DOW +34 NIKKEI +43 FTSE Closed The stock
market comes into the week in a decent position, as the gains last week gave
the weekend talking heads a reason to be optimistic. We suspect that the stock
market will continue to claw higher, despite the fact that the

US


economy is throwing off signs of stagnant momentum. The fact that
Hong
Kong
is
suggesting that the pace of new SARS cases is slowing is positive, but some
traders think that SARS hasn’t been a major issue holding back stock prices.

FOREIGN
EXCHANGE

DOLLAR:
About the best thing that can be said of the Dollar is that it is oversold. It
would appear that the Dollar might try to bounce today but that could be
because of the holiday thinned trade in

London

. We
have to think that the pace of the

US


economy is hardly an attraction for currency, unless the Fed Chairman
surprises the trade with a better-than-expected outlook for the

US


economy. In the mean time, we still get the sense that money is making long
term allocation changes in an effort to geographically diversify. In other
words, the trade might not be paying much attention to the interest rate
differential or the economic differential. In fact, until there is some
distinction between the

US

and
European economies, it might be difficult to determine just what is driving
currency rates. In the mean time, the trend is down in the Dollar until there
is cause to alter that view. Since the Dollar is oversold it would not be
surprising to see the Dollar bounce to 97.32 but a close above 97.45 might
suggest that something has changed.

EURO:
Just as the Dollar is oversold, the euro is overbought. As we also mentioned
in the Dollar section, we suspect that long term geographical diversification
will continue to benefit the Euro but until one economy or the other shows
itself and the Euro continues to rise in the face of that news, we are
unwilling to suggest that the Euro is going to rise indefinitely. We don’t see
the Euro sliding back below 111.59 basis the June
contract.

YEN:
Considering that the SARS news out of

China

is a
little less negative this morning, it might be possible for the Yen to forge a
climb toward resistance of 84.33. However, some traders are concerned that the
Yen hasn’t been able to get beyond the recent consolidation highs of 85.00 for
the past 7 months! In other words, the fact that the Yen hasn’t benefited more
from the Dollar slide is quite limiting to the bull camp.

SWISS:
We enter the week with slightly less anxiety toward the SARS situation and
perhaps slightly less macro economic anxiety and that weighs on the Swiss.
Near term trend line support in the Swiss comes in all the way down at 73.15,
which highlights the rather steep climb in the Swiss over the last month.
Therefore, the Swiss is technically vulnerable to a moderate correction.

POUND:
With a holiday trade it might be unwise to voice concern over the overnight
action in the Pound, but the charts look vulnerable especially if the June
Pound slides back below 159.64 today.

CANADIAN:
The Canadian might be a little over extended in the short term and with the
market just barely able to maintain prices above the last two closes of 70.22
and 70.26, we have to view that area as a critical pivot point. The path of
least resistance is still up but one does have to consider the technicals.

METALS

OVERNIGHT
CHANGE to
4:15 AM
:GLD+0.70
,SLV-1.7 ,PLAT+2.90, CP +35  

London

Gold
Fix $341.25 Closed LME Copper Warehouse stks 771,850 ton Closed Comex Gold
stocks 2.236 -96,929 oz COMEX Silver stks 108.1 ml oz +5,158 oz OVERNIGHT: A
minor upward bias seen but the trade lacked significant interes

GOLD:
The net spec long position in gold was hardly changed from the prior weeks
reading, but with the gains since the report was taken, we have to peg the
spec long coming into this week at 62,000 contracts, which is long but not
without additional buying capacity. The SARS issue seems to be in a lull, with
reports again suggesting that the pace of new cases in
Hong
Kong
might
be slowing. With the Bank holiday in

London

today,
the

US


session is left to guess at the opening, with the Asian trade showing
minimally higher action.

SILVER:
The net spec long in silver is about 3,000 contracts above the prior weeks
reading but silver prices are almost 20 cents an ounce higher than when the
COT report was measured. Therefore, silver might have a net spec long position
of 40,000 to 45,000 contracts, which is again slightly overbought but not
“bought-out”. We get the sense that the market is capable of holding
above $4.70 and might be capable of clawing its way up to the January
consolidation pattern of $4.80 to $5.00.

PLATINUM:
The platinum market appears to be consolidating above last weeks lows but
unless the stock market can provide consistently positive leadership, we doubt
that the downside run is complete. We get the sense that the $585 level is an
extremely critical support level but we do think that the last 3 months action
suggests that some change in supply patterns have been seen from

Russia

. In
other words, for platinum to have declined so sharply when it appears that the
world is getting beyond the geopolitical cloud, strongly suggests that
platinum is no longer feeding off the tight supply/strong demand environment. 
 

COMMITMENT
OF TRADERS ANALYSIS – FUTURES & OPTIONS Day=”22″ Year=”2003″>
April
22 – 29, 2003

              
LARGE SPEC         
COMMERCIAL        
 NON-REPORTABLE

                
NET                 
NET                 
NET

           
POSITION   NET CH   
POSITION   NET CH   
POSITION   NET CH

SILVER          
9712     5605     
-31040    -3655      
21329    -1949

COPPER        
-11764    -1758 
      6051    
1681       
5713      
78

GOLD           
19608     -768     
-52275      277      
32667      490

PLATINUM        
1704      156      
-1914      223        
210     -380

 

From
the headlines it would seem that SARS might be slowing its spread in
Hong
Kong
but
the news on the rest of

China

is
still unknown. Therefore, the copper market is still on the technical and
fundamental ropes. With the funds short nearly 12,000 contracts and the market
a full 100 points below the level where the COT report was measured, it’s a
safe bet to think that the net fund short is approaching 20,000 contracts.

CRUDE
COMPLEX

OVERNIGHT
CHG to   Minute=”15″>
4:15 AM
  
:CRUDE +7  
,HEAT+32  ,UNGA+22  The
energy complex would appear to be penting up for a failure below the recent
lows. We are a little surprised that the market hasn’t been able to respect
critical support at $26.00 basis the June Crude oil, especially with the spec
and fund position already known to be net short.

NATURAL
GAS Considering
the weather forecast, the recent inventory build
and the moderately large ongoing small spec long position, it is possible that
June natural gas manages to retest the early April lows down around $5.00. We
suspect that anticipation of summer demand and the idea that the coming
hurricane season is expected to be active will discourage the small specs from
exiting.