Futures Point To A Stronger Open

• October 10, 2003
• TradingMarkets Editors

INTEREST RATES

OVERNIGHT
CHANGE to   4:15 AM :BONDS -3 While there are some European analysts talking
bullishly about bonds this morning, it would seem that the general tilt is
bearish toward prices. With Yahoo posting a very strong earnings report and
Marriott meeting earnings and besting sales projections, the stock market would
seem to have a positive tilt and that could add to the pressure in the bonds. We
are simply shocked that the Treasury market ignored the wave of favorable Fed
comments on the US recovery and managed to forge gains on Wednesday morning.

STOCK INDICES

OVERNIGHT
CHANGE to 4:15 AM:S&P+110 DOW +20 NIKKEI -10 FTSE +20 Some might suggest that
earnings haven’t lived up to lofty expectations and others might suggest it is
way too early to judge the current cycle. We continue to be a little surprised
that very favorable commentary from the Fed hasn’t kicked the market into an
aggressive upward pattern, but that could still happen if US numbers today are
positive and the market sees a few more positive earnings surprises! In fact,
considering the Yahoo results, we would have expected a stronger opening
indication, than is being registered in the overnight action. In the end,
traders have to respect the potential bullish tilt and go with the direction of
the fundamentals, which have been supportive of the recovery view.

FOREIGN EXCHANGE

Dollar: Early this morning the
Dollar was pegged to new lows but subsequently the Dollar has bounced, as if
some intervention took place. Considering the favorable dialogue flowing from
the US Fed and the positive bias toward US stocks, we can see how Dollar sellers
are a little suspicious. Furthermore, some French numbers this morning don’t
really promote the idea that the Euro zone is that much better off than the type
of growth being seen in the US. In fact the Euro zone 2nd quarter GDP contracted
and German numbers this morning were nothing special. Therefore, the US Dollar
would seem to win the economic differential argument this morning. However, if
the Dollar can’t rally on the type of dialogue floated by the US Fed yesterday,
then there must be a firmly entrenched trend in place. The pace of the downtrend
in the Dollar is pretty steep suggesting that the market is significantly
oversold but that doesn’t seem to alter sentiment toward the Dollar. Sell
rallies to 92.50 looking for an eventual move to new lows.

EURO: The
Euro zone numbers this morning are very disappointing to those that bought and
chased the Euro sharply higher over the last two weeks. Both France and Germany
produced disappointing numbers at the same time that the US is getting very
supportive information flow. Therefore, we have to think that the Euro is
vulnerable to a setback and support is moderately down on the charts at 117.30. 

YEN: We
would think that the BOJ is going to be forced into action with the move
overnight. The problem the BOJ has, is that money is flowing into Japanese
stocks and that type of flow is difficult to countervail. Therefore, a sharp
upward thrust is expected in the Yen and if the BOJ doesn’t intervene, the Yen
might reach that ultimate target we predicted several weeks ago up at 95.00.

SWISS:
While the Swiss might pause today, we would continue to suggest buying
corrections down to 75.82, but we would not risk the position below 75.35.

POUND:
The BOE left rates unchanged, but the Pound seems to be tracking toward a test
of chart support down at 164.98. While we doubt that the BOE is interested in
forcing the Pound sharply lower, we have to think that they might decided that
the recent highs were a little too high.

CANADIAN
DOLLAR: The ebb and flow of the Canadian trend seems to be allowing for a slight
setback today. Trend line support comes in down at 73.91 and closer-in at 74.29.

METALS

OVERNIGHT CHANGE to 4:15
AM:GLD+0.90 ,SLV+0.5,PLAT+1.90, CP -15 London A.M. Gold fix $376.45 -$.15 LME
COPPER STKS 563,100 tons -3,100 tons COMEX Gold stks 2.82 ml oz Unch Silver
stocks 106.9 ml oz up +549,102 oz OVERNIGHT: Chinese gold lower, Tokyo gold up
slightly, London higher off Forex

GOLD: In
our opinion, the gold market remains vulnerable to failure as long as it remains
below the old up trend channel of $386.3 in the December contract. The market
did manage to regain critical moving average levels on Tuesday but has flirted
with that trend signal in each of the last two sessions. While the gold market
appears to be a one trick pony (currently focusing on the Dollar) it could see
support from that issue today as the Dollar is into new low ground in the early
action today.

SILVER:
The silver market failed to hold the highs posted Wednesday and it would appear
that prices are poised to slide back toward chart support of $4.805.
Unfortunately the silver market doesn’t get the same lift from a sagging Dollar,
as does the gold market. It would almost seem like the weak equity market action
undermined the silver market yesterday and may provide that same impact in the
action today.

PLATINUM:
The platinum market was unable to hold the 23-year high posted yesterday and
with the volume and open interest readings, we see platinum as excessively over
extended. However, there isn’t a specific fundamental development that would
suggest a sell of futures is in order. Yesterday we suggested that traders buy a
January 650 platinum put looking for a temporary correction. 

There
would seem to be some hesitancy in the copper market this morning as Chinese
traders took profits and suggested that COPPER: the market needed a rest. A Dow
Jones reporter in Asia suggested that some down stream buyers of copper might be
set to balk at higher prices and that some buyers are “shocked” by the level of
next years price listings. In other words, there appears to be a backlash
against the price increases that are being forced into the system.

CRUDE COMPLEX

OVERNIGHT
CHG to    4:15 AM   :CRUDE -24  ,HEAT-80  ,UNGAS-42 Despite favorable overnight
dialogue from a noted US Oil man (T. Boone Pickens) the price action this
morning is weak.

NATURAL GAS

Expectations for the weekly natural gas injection report call for 60 to 85 bcf.
As long as the injection pace is above 55 bcf, we assume that the market is
seeing a rebuilding and if the injection is triple digit, that could cause a
backlash from the recent short covering binge.