Futures Point To A Weaker Open
METALS
OVERNIGHT
CHANGE to 4:15 AM:GLD-1.00 ,SLV+0.0Â ,PLAT+6.00,
CP +10 Â London Gold Fix $362.80 -$4.55 LME Copper Warehouse stks
714,600 tns -4,900 tns Comex
Gold stoc 2.468 Unchanged COMEX Silver stocks 105.2
ml oz +6,109 oz OVERNIGHT: Minor losses in Asia despite minor $ losses in the
European trad
GOLD:
The net spec long in gold was 120,000 contracts as of last Tuesday and with the
market only slightly below the level where the COT report was measured its clear
that the large spec long is still in position. With the stock market remaining
strong it would seem that some investment interest is turning away from gold.
Therefore, traders should continue to be wary of gold, especially if the August
contract falls down below critical support of $361.8.
SILVER:
We suspect that silver will continue to outperform the gold market, especially
if the equity market continues to provide positive leadership. Critical support
in July silver is $4.50 and solid resistance isn’t seen until $4.68. The weekly
COT report showed a net spec long of 49,000 contracts, which is a little
burdensome.
PLATINUM:
The platinum market is a moderately long in the small spec and fund position at
4,000 contracts (considering that this market normally carries a much smaller
open interest than either gold or silver) and that could be limiting to platinum
if the stock market stumbles. We still think that platinum is factoring a hope
for improved physical buying not flight to quality buying. Â
Â
COPPER:
September copper is poised just above critical chart support but is being
supported this morning by a weaker Dollar and indications that the stock market
is showing more positive action. Chinese copper futures showed positive action
overnight but ended up closing down on the session and therefore we don’t get
the sense that the copper market has the bull interest to push prices up into
near term resistance of 79.25 in the September contract. The weekly COT report
showed the net spec long to be 28,000 contracts, which is moderately long but
not overextended.
CRUDE
COMPLEX
OVERNIGHT
CHG to Â
4:15 AM
 Â
:CRUDE -18Â
,HEAT-30Â ,UNGA-6 Â The
energy complex remained poised around the recent highs despite news that
Iraq
was indeed moving toward
export status. In fact, the EIA pegged Iraqi output to be 1.5 million barrels
per day, with that total rising to 2.4 million barrels per day by the 4th
quarter.
NATURAL
GAS
The
weekly COT report in natural gas showed a net spec long of 30,000 contracts,
which is slightly below the old record net spec long registered in the prior
week. However, since the COT report was measured, the natural gas market added
to the upside and is probably right on the old record net spec long reading, as
we enter this week.
INTEREST
RATES
OVERNIGHT
CHANGE to Â
4:15 AM
:BONDS
+12 It is surprising that the
US
stock market continues to
rise at the same time that the bond market is finding more than enough economic
doubt to support prices around the recent highs. Some are suggesting that
business spending is going to remain flat and that the airlines and automakers
are in real trouble. Others are suggesting that the recent euphoric bounce in
sentiment has no legs and others suggest that the real numbers are still ultra
soft.
STOCK
INDICES
OVERNIGHT
CHANGE to 4:15 AM:S&P+180 DOW +17 NIKKEI +36 FTSE -15Â Many would think
that the stock market enters this week partially overbought but when one looks
at the recent spec and fund readings from the COT report, is it clear that this
market didn’t burn a significant amount of fuel in posting recent gains. In
fact, the net spec long of both the Dow and S&P futures was still net short
as of last Tuesday! We feared that the net spec long position in the key futures
markets would be racing toward overbought status with the action last week but
in fact only the E-Mini is holding a moderately large small spec long position.
Furthermore, with the
US
bond
market fostering a skeptical view on the economy, it would seem that the market
in total, maintains a balanced view on the future.
FOREIGN
EXCHANGE
DOLLAR:
Like the stock market, the Forex
markets might have narrower trading ranges this week, as the macro economic
information is mixed and the action last week fosters the consolidation pattern
in effect since mid May. In other words, the Dollar has tried several times to
come out of the range to the upside but failed and on the other hand, the Dollar
tried the downside breakout and has failed at least a couple of times.
Considering the action in the Euro following their rate cut, it is possible that
the Dollar would fall if it became clear that the Fed wasn’t going to cut in the
June 25th meeting. Middle of the trading range in the September Dollar is the
middle of the June 5th trading range, or 93.63. We would now be unwilling to buy
a slide to 93.00 but would place a stop at 92.35.
EURO:
We are not sure if there will be a driving focus this week unless the Pound/EU
issue provides a surprise reaction. The September Euro seems to have critical
support this morning of 116.02 and it would not be a good thing for the trade to
take the market below that level in quiet action, as that could result in a
capital break down to 115.00. We are slightly bearish the Euro this morning but
a rise back above 117.27 might turn the tide on our negative sentiment. Talk
from the Times of London that the EU might be preparing to halt the Euro’s
rise, is probably enough to hold down the currency in quasi quiet market
conditions.
YEN:
The fruits of the BOJ efforts to deflate the Yen haven’t been stellar, as the
currency stubbornly has found support above 84.00 and remains within striking
distance of the May highs. The economic numbers from
Japan
are
simply not encouraging enough to rationalize a long play considering that the
Yen is 80 points above chart support.
SWISS:
Considering the discussions of intervention against the Euro, the Swiss is
understandably vulnerable. With the violations of chart support, the Swiss might
be headed down to 74.99 support but only if the Euro leads the way with overt
weakness.
POUND:
The trade is digesting a report that the Pound would have to fall significantly
in order to join the EU and that is causing a slide in the currency this
morning. The economic reports from the
UK
this
morning are mixed but are not weak when compared to other G8 readings.
Therefore, the market really isn’t prompted to sell the Pound as much as many
would expect off the EU conversion story. Support in the Pound might even hold
up at 164.00.
CANADIAN:
The Canadian made a bad technical trade this morning and could be headed down to
72.00 in the coming sessions. A couple closes below 72.00 could be a very
damaging situation unless Canadian economic numbers come back to life quickly.
Some traders are fearful of the SARS effect on the numbers but we have to think
that issue was overstated.