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 -31  NIKKEI
+80 FTSE -16 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


Dollar:
A new 5-year low in the Dollar was fostered by a series of comments from the
outgoing ECB President. The ECB President suggested that more Dollar weakness
was “unavoidable” and that would seem to clear the decks for a
significantly downside follow through. Also of note, were comments from a US
Congressman that the Yen was significantly undervalued. In other words, the US
wants the Dollar even lower and the market appears ready to act on that
sentiment. In fact, until the point where some type of multiple coordinated
intervention is seen, we suspect that the Dollar is set to fall precipitously.
The fact that the Euro zone continues to produce strong numbers is simply
countervailed by the slightly improved attitude toward the US economy. In
looking at long term charts, the next downside target might be 90.74 on the
monthly chart but more than likely a trek to even number 90.00 is possible over
the coming weeks.

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. 


METALS

OVERNIGHT
CHANGE to 4:15 AM:GLD+3.90 ,SLV+5.5,PLAT+8.90, London A.M. Gold fix $376.20
+$3.45 LME COPPER STKS 570,225 tons -4,025 tons COMEX Gold stks 2.82 ml Unch
Silver stocks 105.2 ml oz up -1,012,270 oz OVERNIGHT: A continuation of the
downside in the $ fostered overnight buying

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.  

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  
:CRUDE -17  ,HEAT+0  
,UNGAS-77 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.