Futures Point To A Weaker Open
INTEREST
RATES
OVERNIGHT
CHANGE to  4:15 AM :BONDS +6
The Treasury market is acting a little peculiar, as it remained weak in the wake
of supportive initial claims and ongoing claims readings and only showed minor
support off what appeared to be a decent auction. Some in the trade suggest that
the gains earlier in the week put the US Treasuries into an overbought condition
and that recent weakness in the US Dollar and fears of run away deficit spending
on Iraq, were chasing away the buyers. However, if the international investor is
uninterested in Treasuries how did the bid to cover ratio come out so strong? We
have to think that the main issue confronting bond and note longs Thursday was
the fear of a strong retail sales number today.
STOCK
INDICES
OVERNIGHT
CHANGE to 4:15 AM:S&P+130 DOW +16Â NIKKEI
+166 FTSE +23Â One has to be impressed with the stock market action this
week, as it could have succumbed to the lackluster jobs data and the fears of
terrorism. In fact, even in the face of mostly negative headline flow, it would
seem that investor sentiment has steadily plowed money into a number of
different stock sectors. In other words, Wall Street and Main Street seem to be
more accepting of recovery than the economists and analysts.
FOREIGN
EXCHANGE
EURO:
The Euro is lacking clear cut incentives and with the trade at least initially
anticipating a favorable set of US numbers today, the downside could win out in
the Euro. With the Euro already posting a lower low on the charts and the short
term techs not quite in sell modes, the downside action should be limited and
disjointed. If by chance, the US retail sales readings are patently weak that
will instantly put a floor in the Euro. Because of the potential tension in the
Middle East, the Euro probably is left out of the flight to quality circle.
YEN:
The Nikkei managed to right the ship overnight with a gain and the Yen would
seem to be flirting with a downside breakout on the charts. Near term support in
the December Yen comes in at 85.53 and even lower support comes in at 85.35.
However, we don’t expect the Yen to break out down unless the US numbers are
really strong this morning.
SWISS:
The technical failure overnight in the Swiss suggests that the trend is down for
the day and the losses could be quite significant if the US manages to post good
numbers on top of the downside momentum. Near term support is targeted at 71.70.
Â
POUND:
A Series of GDP revisions for past years is largely unimportant for the Pound
today but the condition of the UK economy is such, that buyers are willing to
push the Pound up toward a very critical downtrend channel resistance line of
159.98 in the December contract. CANADIAN DOLLAR: It seems as if every day is a
critical day for the Canadian trend, but since the currency hasn’t been able
to distinguish itself, that will continue to be the case. The chart action
speaks of vulnerability and one might also grant the same view off the
fundamentals. Therefore, the bulls might come under pressure with a trade below
72.40.
METALS
GOLD:
After the lackluster overnight action the US gold market seems to be pointing
down in the action today. With the Dollar breaking out to the upside one would
expect some pressure on gold prices. Fortunately for the gold bulls a strong US
equity market managed to gloss over a series of weaker than expected US economic
numbers on Thursday.
SILVER:
The silver continues to hold all of its gains and is making gains in the face of
lower gold price action. Since we suspect that funds have shifted their
attention from gold to silver, that alone could provide a major lift to silver
prices. While silver is also going to produce a record spec and fund long
position in the COT report tonight, the fund long won’t be nearly as
overbought, as it will be in the gold market.
PLATINUM:
The technical damage has a lopsided fund and small spec long position under the
gun. Trend line support in the October contract comes in down at $693.4. It
would also seem like weaker US economic numbers are undermining platinum but as
long as the US equity market is strong, fundamental selling should be muted. One
should note that the current break has now become the longest duration break
since the March and April time frame.Â
The
trade suggested that Chinese buying interest sparked the buying binge seen
Thursday in the US market but with the Chinese market COPPER: showing only minor
additional gains overnight and some profit taking, we have to think that US
gains will slow or halt. Also with Shanghai copper warehouse stocks increasing
by a moderately large 11,486 tons, one gets a sense of profit taking pressure
for the US session. However, the US action was so strong that it would not seem
to be reversed easily without cause.
CRUDE
COMPLEX
OVERNIGHT
CHG to    4:15 AM Â
:CRUDE +12Â ,HEAT+29Â
,UNGA+11Â For a change, the OPEC Secretary General was accurate in
his comments when he suggested that the world oil market is in balance but the
problem is that most of the consuming nations are unhappy with the fact that the
market is finding balance at $30 to $31 a barrel. With the exception of price
flares in 2000 and 2003, crude oil prices haven’t spent much time trading above
$28.00 a barrel.
NATURAL
GAS
The
natural gas market saw a double negative Thursday, when the weekly injection
rate came in at 97 bcf and at the same time, saw an Easterly track for hurricane
Isabel. In other words, the two main driving forces for the bull camp are being
downgraded.