Futures Point To A Stronger Open

• October 6, 2003
• TradingMarkets Editors

INTEREST
RATES

OVERNIGHT
CHANGE to  4:15 AM :BONDS +5 The
Treasury market seems to be getting a little flight to quality buying this
morning off events in the Middle East but the slight upside tilt might also be a
simple technical rebalancing after the debacle last week. Economic numbers
released in the wake of the monthly payroll report were somewhat discounted but
in retrospect the readings should give the bear camp a little pause. Considering
the massive slide in bonds last week, one would have to think that the market
enters the current week excessively oversold (from a short term perspective).

STOCK
INDICES

OVERNIGHT
CHANGE to 4:15 AM:S&P+200 DOW +25  NIKKEI
+30 FTSE -6 The bull camp was given purpose with the monthly US payroll
report released last Friday morning. Therefore, the claims of improving
corporate profits were given a boost by the fact that the US managed to stem a
7-month string of job losses. Perhaps even more important is the fact that the
prior months payroll loss was revised lower, suggesting that not only were
things better than economists expected in September, but conditions in August
were not as bad as was originally forecast.

FOREIGN
EXCHANGE

Dollar:
The Dollar was simply saved by the bell last week. With the Dollar on the rocks
the monthly payroll report simply caught the shorts by surprise. We are actually
surprised that the report didn’t actually result in a more significant short
covering rally considering the breadth of selling seen in the Dollar in the
prior month. However, it would seem that subsequent economic readings from the
US tempered the optimism toward the Dollar. We also think that the US will
continue to foster a weak Dollar and that the December Dollar will find
significant resistance up around the 94.00 consolidation pattern. The US
economic report slate is thin early this week and that could allow the Dollar
some added gains before the reality of the situation re-applies pressure to the
Dollar. Aggressive traders might look to sell the December Dollar on a rally
back to 93.72, with an objective of 92.16 and a risk of 94.15.

EURO:
After the favorable PMI readings late last week, the Euro certainly has some
capacity to stand up to the renewed hope for the US recovery. However, the Euro
was so significantly overbought that one has to expect some stop loss selling
off the surprise set of numbers released from the US last week. If the December
Euro were to slide to 114.58 we would become a buying looking for a return to
the recent consolidation high zone. However, a simple retracement of the
September to October rally would allow the December Euro to slide to 113.58
level without defeating the bigger picture trend.

YEN:
The yen looks to be technically vulnerable in the action today. The 90.00 level
is certainly thin support and with the US payroll numbers helping the BOJ out,
we have to think that a little intervention could go a long way. In other words,
the path of least resistance in the Yen this week might be down with a target of
89.20.

SWISS:
The US numbers simply deflate the flight to quality interest in the Swiss. Using
a normal retracement of the September action, the December Swiss could slide to
74.20 without damaging the big picture trend.

POUND:
Seeing a trade below 164.98 today could spark a minor liquidation wave in the
Pound. However, we doubt that the Pound will break down because of the much
better than expected UK numbers released late last week and the strength of the
existing trend.

CANADIAN
DOLLAR: Trend line support comes in at 73.62 today and it would appear that the
path of least resistance is down. Apparently the US numbers were a little too
strong for the Canadian and that once again undermines the bull camp. 

METALS

OVERNIGHT
CHANGE to  4:15 AM:GLD+3.50
,SLV+5.5,PLAT-2.80, CP +40 London Gold Fix $372.75 -$11.20 LME Copper
Warehouse stks 574,250 tns -2,175 tns Comex Gold stocks 2.82 ml oz -503 oz 
Comex Silver stks 106.2 ml Unchanged OVERNIGHT: Minor gains attempted
early but Tokyo couldn’t foster long interest.

GOLD:
The big wash Friday was to be expected given the Dollar action, the rise in the
stock market and lower economic anxiety off the latest monthly US payroll
report. In other words, a vast number of the reasons to be long gold were
challenged Friday. Considering the action since the last COT report was measured
,we suspect that the fund and small spec long in gold was reduced to less than
150,000 contracts but that is still an overly long positioning that could be
vulnerable to more liquidation in the days ahead.

SILVER:
Like gold, silver was technically vulnerable and then saw a number of
fundamentals turn against the bull camp. Considering the magnitude of the
breakdown in silver, we have to see the 480 area as a level of solid support.
However, given the setup, we have to think that the 490 level might serve as
significant resistance.

PLATINUM:
A major topping pattern might have been put in place Friday, with the market
apparently headed toward chart support of $700 today. The trend in platinum
turns down in the event that a trade below $693.5 is seen early this week. Like
silver, we would have expected the better than expected US payroll report to
have been supportive to platinum but apparently it wasn’t. 
 

COMMITMENT
OF TRADERS ANALYSIS – FUTURES & OPTIONS 
Sep 23 – Sep 30, 2003

              
LARGE SPEC         
COMMERCIAL          
NON-REPORTABLE

                
NET              
   NET                  
NET

           
POSITION   NET CH   
POSITION    NET CH   
POSITION   NET CH

SILVER         
51441    -2545     
-81535      5587      
30095    -3040

COPPER         
33774     -995     
-42721      2673       
8946    -1679

GOLD 
         114523   
-4664     -163265     
5946       48742   
-1281

PLATINUM        
5099      -97      
-5937      
-78        
838      175

 

COPPER:
The copper market should have been lifted from the surprise US payroll outcome.
With LME copper stocks still on the decline and the market expecting decent
demand, the price structure might be adjusted higher. As we said last Friday
before the opening, the only thing holding copper back from a new higher trading
range was the macro economic outlook.

CRUDE
COMPLEX

OVERNIGHT
CHG to 4:15 AM: CRUDE +20, HEAT +40, UNGAS +30 N-GAS -42 Apparently the
energy complex guessed right late last week on the Nigerian situation as the
Nigerian Labor Congress decided to strike on October 9th as they claim that
energy prices are too high inside the country. It would seem strange that a
crude and gasoline exporting country would see internal prices so high and the
labor Unions claim that the is government is simply extorting excessive prices
from the people.

NATURAL
GAS

If it
were not for the regular energy complex strength, the natural gas market might
have come under more liquidation pressure last week. Not only were the weekly
injection readings pretty bearish, but the annual deficit has narrowed to 250
bcf.