Positive News, But Flat Open
A flat open appears in the cards after equity futures had been strong, but
have turned lower.
Strength in the European and Asian stock markets, the U.S. dollar regaining
some strength and mostly favorable earnings news out of Texas Instruments
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PowerRating),
AT&T
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PowerRating) had boosted the index futures in the Globex
market. However, some drug stocks, while reporting in line with consensus
estimates, are not offering guidance for next quarter, and a Novellus
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PowerRating)
downgrade along with a Bank of America downgrade of 10 energy companies appears
to be throwing water on the face of the positive equity futures prior to
Tuesday’s open.
Pre-Opening Outlook for Tuesday, July 23.
INTEREST RATES
OVERNIGHT CHANGE to
:BONDS -21 We would think that the
the rally Monday and the slightly less anxious action in the international
equity markets overnight. It would seem that the bonds became a little top heavy
when they traded above 106-00, especially since they are operating almost
exclusively off equities. The economic report slate remains thin until Thursday,
with only private retail sales readings seen this morning.
STOCK INDICES
OVERNIGHT CHANGE to
NIKKEI +26, FTSE +70. Sentiment is so negative that even in the face of a
moderately strong overnight bounce, few are thinking the rally is anything but
technical short covering. We heard another Wall Street type, projecting a
3000-4000 Dow, which highlights the jump on the bandwagon mentality of the
Press. Unfortunately, there still isn’t anything fundamental to suggest that
buyers should move back into the market for a long-term position play.
FOREIGN EXCHANGE
Dollar: Is the stronger equity market
giving the Dollar a boost, or is the stronger US Dollar giving the equities a
boost? It might be possible that intervention is boosting the Dollar. It might
also be possible that the market postured for the most bearish scenario toward
the
wisdom. Two things could help bottom the Dollar, the most likely being that
European and
that diffuses some of the aggressive buying of those currencies.
Secondly, and less likely is that the
to recovery and surprises the trade. In the short term, we prefer to call the
gains in the Dollar mere corrections against a massive and overdone downtrend.
Those that bought the Dollar calls we suggested should keep profit objectives
small because the trend in the Dollar is more than likely still down.
EURO: In addition to the technical considerations forcing
the Euro down are a series of downgrades toward continental European businesses.
An earnings warning from Fortis, dampened the
European equity market gains with the Press calling the rally “fake”. In other
words, the majority of the trade would seem to be eager buyers on more downside
in the Euro. Critical chart support levels come in at 98.07.
YEN: The Press reported strong action in Japanese exporters
and that is to be expected with the
significant washout Monday. With the
higher today, the flow of money back toward
allowed to fall in the direction that the BOJ wants it to. We suspect that some
intervention has been taking place and that the Yen is temporarily weakened and
headed toward chart support of 84.80.
GOLD
Not only did the gold not rally in the face of significant
equity market declines but also it would now appear that intervention or the
threat of intervention is going to provide support to the Dollar, and that puts
a selling pressure onto gold. The rally in the Dollar is not a minor development
for gold, especially after the failed opportunity to rally and the continued
overbought condition. However, until the Dollar Index climbs above the July high
of 108.33, we would not suspect that the downtrend in the Dollar has been
truncated.
CRUDE COMPLEX
OVERNIGHT CHG to 4:15 AM :CRUDE -7 ,HEAT+23 ,UNGA+36
The energy markets finally succumb to the sagging macro economic conditions but
were given a little push by the talk that both Nigeria and Venezuela might be
set to increase production. Some might doubt that a slight increase by
their quota by some 400,000 barrels per day is enough of a supply threat that
the market would totally breakdown but these threats are a continuation of an
already existing chain.
|
Today’s Program Numbers |
| Buy | Sell | Fair Value |
2.44 |
-1.63 | 0.84 |
|
Today’s Futures Pivots |
|
S&P |
Nasdaq |
|
R2 |
873.93 |
|
R2 |
1007.17 |
|
R1 |
846.87 |
|
R1 |
975.33 |
|
Pivot |
828.93 |
|
Pivot |
953.17 |
|
S1 |
801.87 |
|
S1 |
921.33 |
|
S2 |
783.93 |
|
S2 |
899.17 |