Futures Point To A Weak Open
INTEREST
RATES
OVERNIGHT
CHANGE to  4:15 AM :BONDS -5
The persistent optimism being thrown off by the stock market is certainly
preventing the bonds from getting support off recent layoff headlines. Another
1,100 jobs will be lost at a tire facility in Alabama and yesterday the market
continued to foster rumors about auto industry job losses. Therefore, the bonds
would seem to have some measure of support, especially when one considers the
massively oversold condition that resulted from the surprise payroll report last
Friday.
STOCK
INDICES
OVERNIGHT
CHANGE to 4:15 AM:S&P-350 DOW -31Â NIKKEI
+80 FTSE -16Â The market is poised to see pretty favorable earnings reports,
as the 3rd quarter earnings cycle gets underway today. Some traders suggest that
the bar has been set pretty high and that anything less than “stellar”
readings will result in the market being disappointed. With Pepsi and Alcoa
setting the tone for the earnings cycle, the market might find it difficult to
foster aggressive additional gains.
FOREIGN
EXCHANGE
EURO:
Favorable German numbers are almost lost in the shuffle this morning but they
should in a way foster additional gains in the euro. In fact, the German numbers
were a surprise improvement and that should simply inspire more buying. The Euro
would seem to have a near term target of 118.40 on the monthly chart, with
action that could become quite volatile.
YEN:
With a US Senate Banking Committee Chairman suggesting that the Yen is too cheap
and the Dollar falling against most other currencies, it would seem like the Yen
is primed to breakout to the upside. We are not even sure that the BOJ is going
to step in against what would appear to be a tide of buying in the Yen. In order
to shut off the near term up trend in the Yen, a surprise trade back below 90.00
might be needed.
SWISS:
While the coming move in the Swiss won’t be fostered by flight to quality
issues, it does appear to have enough steam to put the Swiss into a new high for
the move. Initial resistance is seen at 76.30 but the bias is up.
POUND:
So far, the UK hasn’t bristled under the potential negative impact of a soaring
Pound and that might be the only development likely to turn the Pound down from
another upside adjustment. In fact, if the Pound doesn’t make a new high in the
coming 24 hours, that alone could be considered a negative indication. In other
words, a decline back below 166 would be a sign that the bull camp lacks the
capacity it appears to have.
CANADIAN
DOLLAR: The bull trend lives on and with the Canadian showing it can forge
higher despite significant losses in the Dollar, the stage is set for a pulse up
to a new higher trading range. Next upside target is 75.10.Â
METALS
GOLD:
The gold market action this morning surprises the European trade but considering
the magnitude of the Dollar decline the gains are certainly justified. In fact,
with the Dollar at a new low and the Euro rising to the highest level since June
3rd, the interest in gold was expected to rise. Toward the end of the month,
India will see the beginning of the Wedding Season and that could begin to spark
increased physical consumption.
SILVER:
The silver market isn’t showing as much recovery capacity as the gold but with
gold adding an impressive addition to the gains this morning, we suspect that
silver will be pulled up slightly. A million ounce decline in Comex silver
stocks gets the attention of the market but really stocks need to get below 100
million ounces to whip up supply interest. The silver did have massive volume
last Friday on the break and that probably means that a number of weak handed
longs threw in the towel.
PLATINUM:
The platinum market ignored the corrective action of the rest of the precious
metals and remains entrenched in its up trend pattern. The only resistance on
the charts seems to be the old contract high. Â
COPPER:
With another base metal, Nickel at a new 13 year high, it would seem likely that
copper could extend its recent pattern of gains. Exchange stocks continue to
tighten enough that prices should be able to move to a new contract high. As
long as the world equity markets continue to rise, copper should have the
environment to grind higher.
CRUDE
COMPLEX
OVERNIGHT
CHG to    4:15 AM Â
:CRUDE -17Â ,HEAT+0Â Â
,UNGAS-77Â The energy market managed to forge higher in a bid that
would seem to target the August consolidation. While it is possible that the
Nigerian general strike could be delayed or called off, following an Oil
Industry/Union meeting this morning, we suspect that the US session will hardly
be underway when the news from the meeting hits the market.
NATURAL
GAS
Apparently
the funds were not willing to stand by idly and watch the regular energy complex
drag prices higher, as they decided to buy back short positions in the action
Monday. The trade is evidently aware that the winter is approaching and that the
end of the injection season could come in as little as three weeks and therefore
it just doesn’t make sense for the funds to maintain a massive short position.