Futures Point To A Stronger Open
INTEREST
RATES
OVERNIGHT
CHANGE to
4:15 AM:
BONDS
+7 — The consumer credit report Monday did show a rise, but the increase was
smaller than expected and that is generally a negative for bond prices. In other
words, bond bears didn’t want to see consumer credit explode, as that could have
suggested consumers were close to being tapped out. On the other hand, if the
consumer credit figure had come in sharply lower, that could have indicated
consumers were totally shut down off the war anxiety.
STOCK
INDICES
OVERNIGHT
CHANGE to 4:15 AM: S&P +370,
DOW +32, NIKKEI -118,
FTSE -43 — Considering that
intelligence sources are hopeful that Saddam was taken out with a late night
bombing in Baghdad, we are a little disappointed with the magnitude of the rally
this morning. In our opinion, it is very critical that the stock market show a
significant upward thrust, off the end of the war, or the weakened state of the
economy could re-take center stage. While some might suggest that the market has
already factored a good portion of the end of the war, the economy needs a
sentiment kick to countervail the deterioration seen over the last month.
FOREIGN
EXCHANGE
DOLLAR:
Usually a gap down move into the opening is not a positive sign for the Dollar.
We have to think that the Dollar has now entered an extremely critical junction,
especially with the UN attempting to gain a role in post war
Iraq
. Others
are suggesting that the war is coming to an end and no chemical weapons have
been found and that could become a major issue, as the UN attempts to interject
its control over
Iraq
. In
fact, those opposed to the war in the UN Security Council, might attempt to
hammer the
US
over
the weapons of mass destruction issue, until significant patronage contracts are
awarded to
France
and
Germany
. In the
mean time, it would seem that the Dollar is set to slide to 100.00. In order for
the Dollar to reverse the selling wave we would think that US stocks would have
to explode, creating a sense that money not in the
US
,
might miss out on a significant near term rate of return. For the Dollar to
continue higher after the end of the war, means that the
US
has to
regain lost prestige and we are not sure that is a reality in the international
community.
EURO:
A possible near term bottom is in place, despite the fact that German Industrial
production declined for the second straight month. We thought that the end of
the war would result in the June Euro sliding to 105 but now that seems
unlikely. Those that got long puts should bank profits and wait for a recovery
bounce in the Euro to 106.56 to get short again.
YEN:
A gap up move overnight appears to be a technical short covering bounce. With
the Nikkei lower overnight and the SARS issue still dampening
Pacific
Rim
mentality,
the Yen has significant overhead resistance. In fact, we would be surprised to
see the Yen rise above 84.00.
SWISS:
The massive decline and reversal yesterday in the Swiss, sends a loud signal
that the decline is over. In fact, we now see a recovery bounce to 72.84 and
then a very major trend decision will have to be made.
POUND:
The Pound chart is pretty damaged and with the overnight weakness in the Dollar,
the Pound is showing no recovery potential. Therefore we have to assume that the
Pound is a sell on a rally to 155.00.
CANADIAN:
A massive rejection of the probe down Monday, suggests that the Canadian has
already made it through the flight to quality liquidation, without ending the up
trend pattern. Traders should become buyers of the Jun Canadian on a dip to
67.20 in the action today.
METALS
OVERNIGHT
CHANGE to 4:15 AM: GLD +0.80,
SLV +1.7, PLAT -1.20,
CP -10; London Gold Fix $322.30, +$2.55;
LME Copper Warehouse
stks
803,325 ton, -2,075 tns; Comex
Gold stocks 2.380 ml, -96 oz; COMEX Silver stks 107.3
ml oz, -1.30 million oz; OVERNIGHT: With a weak Dollar, gold liquidation appears
to have halted.
GOLD:
It would appear that gold has forged a double bottom around the $320 level.
However, we would not rule out a temporary slide to $318.10, especially on the
final word that the war is completed. The idea that Saddam was killed last night
in a bombing attack doesn’t seem to be impacting gold this morning but an end to
the war might cause a final wave of liquidation.
SILVER:
The silver market almost managed to forge an upside breakout overnight, as it
clawed above resistance of $4.44. Seeing the silver avoid a correlation with the
sagging gold market is impressive and indicative of a commodity driven by the
prospect of improving demand. With COMEX silver stocks dropping an impressive
1.3 million ounces last night it could be easier to talk improving demand.
PLATINUM:
With platinum pricing peaking out below the even numbered $600 mark overnight,
we have to think that a slide to $593 is underway. Apparently the platinum
market isn’t going to track closely with the favorable stock market and that
means to a degree that platinum is still seeing flight to quality liquidation.
Therefore we need to wait for a moderately short spec position reading before
assuming that this market has bottomed. Because platinum prices are at such
historically high prices, the liquidation of flight to quality is a much bigger
impact on prices. Therefore, a slide to $575 can’t be ruled out.
COPPER:
The “SARS” issue is holding the copper market back, as travel to
Hong Kong
and to
other Asian destinations is being curtailed by the disease. In other words,
economic activity is being hurt and that in turn causes copper buyers to go hand
to mouth. With both
London
and
Shanghai
copper
prices higher overnight and the potential toppling of the regime in
Iraq
possible
during the session today, it is possible that copper will track higher even with
the sloppy early
US
action.
CRUDE
COMPLEX
OVERNIGHT
CHG to 4:15 AM:
CRUDE +21, HEAT +105,
UNGA +109 — As we suggested the energy complex wasn’t going to forge a
bottom until OPEC decided to stop the slide with threatening production talk.
During the session Monday, OPEC indicated that they would meet April 24th but
that production could be easily reduced with a telephone conference call.
NATURAL
GAS
The rally
Monday failed to hold, as the weather was initially supportive but can’t be
expected to carry prices consistently higher in the face of directionless action
in the crude oil market. Those that get short the June natural gas around $5.25
should use a stop up at $5.34, with a downside objective of $4.75.