Futures Point To A Weaker Open
METALS
OVERNIGHT
CHANGE to 4:16 AM:GLD+3.30 ,SLV+3.8Â ,PLAT+12.00,
CP +60 Â London Gold Fix $372.75 +$3.05 LME Copper Warehouse stks
760,250 tns -4,850 ton Comex
Gold stocks 2.471 Unchanged COMEX Silver stocks 108.8 ml oz +1,283,313 oz
OVERNIGHT: Asian gold was only slightly higher despite very supportive $ acti
GOLD:
Gold is moderately higher this morning and would appear to be primed for another
upside breakout above the old resistance of $374. The next upside target in
August gold comes in at $376.4 and support probably isn’t significant until
$364.5. The weekly COT report showed the net spec long to be 102,000 contracts
which was moderately higher than we suspected it would be.
SILVER:
Apparently the COMEX warehouse quickly regained the large draw posted last week
but with the gold market providing positive incentive, silver should be able to
mount some gains today. The COT report put the net spec long in silver at nearly
56,000 long which is burdensome but not excessive. The silver is showing signs
of reversing the weakness seen last week with the overnight rise but it appears
clear that silver will lag behind gold on the way up.
PLATINUM:
The market nearly gapped higher overnight and would seem to be entrenched in the
up trend in effect since late April. Open interest has begun to rise and we
suspect that gold gains are serving to lift platinum. Until July platinum rises
to the March high of $694 we would expect consistent gains.Â
Â
COPPER:
The SARS issue is beginning to drift into the back ground and copper seems to be
comfortable holding the majority of the upside breakout forged on the charts
last week. Thus far, the fear of disappointing slowing in the global economy
doesn’t appear to be dampening the prospects in copper. In fact, some suspect
that the Dollar slide is fostering US gains at the expense of
London
and
Shanghai
copper.
CRUDE
COMPLEX
OVERNIGHT
CHG to Â
4:16 AM
 Â
:CRUDE +25Â
,HEAT+31Â ,UNGA+35 Â The
market is showing positive overnight action and that could easily translate into
a new high for the move early in the action this week. The small specs and funds
remained short crude as of May 20th but we suspect that gains forged after the
report was measured early last week, brought the position closer to flat.
NATURAL
GAS
The
weekly COT report showed the small spec and fund long to be 34,000 contracts and
we suspect that it reached as high as 35,000 contracts, around the highs last
week. In the end the natural gas comes into the summer cooling season, with a
record spec long position but could easily add more longs is supply fails an
accelerated build during prime injection time.
INTEREST
RATES
OVERNIGHT
CHANGE to Â
4:15 AM
:BONDS
+7 We are not sure what the fundamental temperature of the fixed income market
is coming into the new week but it would seem like the slightly overbought
status was tempered by the long weekend. Maybe the longs should fear the April
existing home sales data this morning but given the direction of international
equity markets this morning and the sagging Dollar we suspect that bonds and
notes can weather a bearish number quite easily. In fact, given the forecasts
the existing home sales reading might offset the new home sales reading due out
at the same time this morning.
STOCK
INDICES
OVERNIGHT
CHANGE toÂ
4:15
AM
:S&P-240
DOW -29Â NIKKEI -107 FTSE -49Â The
stock market would seem to enter the week vulnerable but the pattern over the
last month has shown an ability to discount a series of bearish developments.
However, the market certainly had trouble extending gains last week. It would
seem that the “terror alert status†change had very little impact on the
market but we are seeing increase nervousness off the rise in the bonds and the
slide in the US Dollar.
FOREIGN
EXCHANGE
DOLLAR:
The Euro raced to a new all time high against the Dollar overnight and few
central bank comments seem to stand in the way of even more gains. In fact, EU
officials seemed more inclined to down play the action. We suspect that
US
economic information today will show some weakness and that should allow for the
early Dollar losses to entrench. There is certainly the suspicion that US
exporting companies are benefiting but as of yet the Dollar isn’t getting much
in the way of long interest off that issue. Furthermore, since the Dollar gapped
down, it would not appear that the trade is inclined to look for a bottom
anytime soon. Next support in the June Dollar comes off the monthly chart down
at 90.74. About the most positive thing one can say about the Dollar, is that
open interest is rising and that could eventually leave the market over extended
and technically unable to forge additional massive declines. In the near term,
little looks to stop the slide in the Dollar.
EURO:
EU officials are suggesting that the Euro rate is now more in line with the
fundamentals and that would seem to suggest that the ECB is not poised to
intervene. The EU also suggested that recent inflation data gives them the
latitude to cut interest rates if necessary and that deflation is still not a
significant risk. Therefore, traders are not discouraged from buying the Euro
even at lofty levels. There is still a little more deflation concern for
Germany
than in
the rest of the Euro zone! We still see the Euro targeting the 123.04 high off
the monthly Euro chart.
YEN:
The yen seems to have solid support down around 85.23 and with the Dollar so weak,
we have to think that Japanese officials are concerned about a sharp rise in the
Yen. With April Japanese retail sales down 2.7%, there is some countervailing
force against a strong Yen rise. In the mean time, the Yen should be able to
forge a bounce to 86.07.Â
SWISS:
The Swiss is still lagging behind the Euro on the way up and that is because the
current move is coming off reasons other than uncertainty. Next upside targeting
in the June Swiss is found off the monthly chart up at 80.20.
POUND:
Stocks in
London
are
weaker this morning on fears that exporters are losing business to US interests.
However, the Pound looks set to climb into new high ground early this week.
Upside targeting in the Pound comes in at 165.20.
CANADIAN:
Another warning by the WHO rekindles concerns toward the Canadian Dollar. While
the warning is restricted to
Toronto
, the
market is put off by the uncertainty. It would even seem that the BSE scare is
contributing to the choppy stance in the Canadian. Therefore, longs should be
defensive but should stay long futures with some long puts as a hedge.