Futures Point To A Weak Open
INTEREST RATES
OVERNIGHT
CHANGE to  4:15 AM :BONDS +8 The Treasuries continue to defy gravity in their
recent climb. One might suggest that bonds have been able to rally because of
the lack of solid economic information and others think that the magnitude of
the spec short has fueled the rally. In the end, it is clear that some light
fresh buying is taking place, otherwise we doubt that December bonds would have
been able to rally two full points off the recent lows.
STOCK INDICES
OVERNIGHT
CHANGE to 4:15 AM:S&P-150 DOW -17Â NIKKEI -141 FTSE -1Â While the market has
recently shown the capacity to turn off negative sentiment, it would seem that
the market comes into the session this morning in moderately weaker position
than normal. In fact, since the early earnings reports have prompted some noted
early selling, it is possible that prices go into a more sustained liquidation
mode. Some might suggest that favorable earnings reports haven’t really driven
prices aggressive higher and therefore some slightly disappointing earnings
readings shouldn’t have that much of a negative impact on prices.
FOREIGN EXCHANGE
EURO: The
Euro would seem to have a positive bias today but the market might find it
difficult to get above chart resistance of 116.88. Euro bonds were lower this
morning on the decision by the BOE to leave interest rates unchanged and that
type of sentiment serves to reduce the upside momentum in the Euro. We also have
to think that recent Euro zone economic readings are serving to restrain buying
interest. The short-term trend would seem to be up in the Euro, but we are not
sure just how much upside the market has!Â
YEN: The
BOJ is doing its best to talk up the economic differential between the US and
Japan, in hopes that the trade will back away from aggressive Yen buying. It
would seem that the Yen is going to respect resistance of 91.55 and could easily
slide down to 90.80 in the coming two sessions. For the time being, the
aggressive upward tilt in the Yen seems to be tempered.
SWISS:
The strength in the Euro might serve to support the Swiss, but it would appear
that the market is closer to a breakdown than to a rally. Near term support
could be tested down at 74.80 but with the Dollar leaning toward the downside,
we don’t expect a breakout down in the Swiss.
POUND:
The decision to leave interest rates unchanged probably isn’t that important but
if the Pound thinks status quo will be maintained that could favor the bull
camp. In fact, if the Dollar falls below 92.22, that could ignite the Pound to a
new higher trading range. We see the December Pound rising to 169.10 on the
coming wave up.
CANADIAN
DOLLAR: Canada is out today talking up the extensive export relationship with
China and that should foster a better economic feeling toward the Canadian
economy. It would seem that the Canadian cattle export ban in the US is slowly
working its way loose, and that might be a slight additional benefit to the
Canadian. Near term buying support is seen at 75.67 today. +
METALS
GOLD: The
trade seemed to attribute the massive breakout Tuesday to the funds. Certainly
seeing gold rise above $378.5 kicked off a number of technical buy signals and
might have fostered stop loss buying by a number of players. Some traders
suggested that the recent slack nature of the stock market has raised the
attractiveness of gold as an investment but to really get investment interest
turned back on in gold, the Dollar needs to slide back below 92.22.
SILVER: A
continued pattern of new highs for the move fosters the idea that silver is in a
swing higher. Like gold, silver was thought to be led higher by fund buying but
in silver, the fund buying pattern actually started a day earlier than in gold.
It would seem like the December silver is going to attempt to settle into a new
higher trading range bound by $5.10 to $5.33.
PLATINUM:
Another new high was posted overnight but with the top of the channel coming in
at $739.2 there would not seem to be too much upside potential without running
into some resistance. On even minor rallies this market can quickly reach an
overdone status, especially with recent COT reports confirming a very large
portion of the open interest is collecting in the fund and small spec long
categories. In other words, this market is heavily long already. Â
This
morning the market is showing another solid probe into new high ground and the
Chinese seem to confirm that move with positive price action and ongoing bullish
sentiment. With the market digesting a large Chinese COPPER: copper concentrate
import number Tuesday and the trade suggesting that Freeport is shipping
concentrate to customers directly from inventory, there would seem to be a scope
for even more gains. As we have been saying for at least a week now, the
December contract looks to continue rising until prices reach 93.50.
CRUDE COMPLEX
OVERNIGHT
CHG to    4:15 AM  :CRUDE +17 ,HEAT+125 ,UNGAS+39 The energy complex showed
signs of rejecting the downside thrust Tuesday afternoon but with critical
inventory readings due out today, we suspect that the bear camp might get some
impetus to take charge of prices again. In addition to the fear of rising weekly
inventories, a private forecast pegged OPEC production to have increased by
400,000 barrels over the prior month.
NATURAL GAS
The
natural gas market showed some bounce Tuesday, as recent shorts decided that the
lack of strong downside momentum was signaling an end to the easy money. It
would also seem like the regular energy complex found a little support and that
also served to firm up support in natural gas.