Tuesday, February 13, 2007

Evening State of Play

Let's start with the dollar first. As noted last night on the chart, 200 day moving average has been coming to the bulls which just stinks from a technical perspective and the blue downward line that I've drawn is super-resistance. The bears can thank the triple current, budget and trade deficits for hobbling the buck. There were some large factors weighing on once mighty King Dollar: a $61 bln December U.S. trade deficit and Eurozone GDP that printed at 3.3% vs an expected 3%. That's kept the Euro going, with the March futures flying up to $1.3050 today. The Yen also moved higher thanks to the tentative North Korean nuke accord. Selling is also abating ahead of Japanese GDP figures and a BOJ meeting next week.

When all was said in done, yet another red bar on the chart - the dollar index remaining above recent support at 84.50, but again failing to get above the 200 day moving average. The dollar is little changed tonight.

Big Ben Bernanke will enter the picture tomorrow. I've got my own wonderful "big" Ben here, but he's only six and I named him Benjamin, unlike Bernanke's parents who officially named Ben Bernanke - Ben Shalom Bernanke and not Benjamin.

The Fed Chief gets to spill his guts for two days on all things economic before committees on Capitol Hill. Bernanke is likely to echo familiar themes before the hapless bunch of lawmakers - perhaps a little bit of Goldilocks economy, maybe even a lot where things are growing fairly well but not too fast, but that we still have to vigilant about inflation and be ever mindful of the risks from the real estate market.

It's a shame that one of the lawmakers who will be listening to this stuff won't have the smarts to point out that Goldilocks may very well be another Anna Nicole Simpson about to keel over and that the three bears in the story are all off their prozac, pissed and ready to maul the economy with possible credit crunch conditions due to the spreading subprime debacle.

By the way, those trade deficit figures have got to imply that GDP estimates for Q4 are going to come down rather sharply. Will anyone ask about that tomorrow?

Retail sales data will be released by the government tomorrow and that's expected to show a gain of .3% both overall and ex autos.

Firmer dollar good for gold - back up above $671.

Crude recouped less than half its losses earlier today; same with nat gas. My short position in nat gas is still open.

Not much movement for Coffee. On the New York Board of Trade, March Arabica coffee futures settled down 0.20 cent at $1.1370 a pound. I am getting a bit cautious on the short side of that trade. We'll see what happens tomorrow. A sharper downward move in the dollar may be a bullish factor for commods across the board - don't want to be on the wrong side of the trade!

Copper surged 10.7 cents to $2.5845 on word a decline in inventories.

Stock market - Dow scores its first triple digit gain of the year. Will there be an Oliver Twist "more please sir?" tomorrow? Dow lifted by the speculation about Alcoa, GM upgrade, and 3M's $7 bln buyback plan. The icing on the cake was a record close by the Dow Transports led by a rally in the railroad stocks.

The Nasdaq remained the laggard. Perhaps that will change tomorrow by way of Applied Materials (AMAT) which rose about 5% on strong earnings reported after the bell tonight. The Semiconductor Index (SOX) has literally been like a real sock that disappeared after the wash is done - just not a part of anything related to the bulls recently. But it is sorely needed to really power the market higher. It sure looks like a potential bullish triangle pattern - or have I just gone goffy with the drawing tools? There's defintely a fork in the road coming for the SOX and the investors are going to take it (to paraphrase the great Yogi). '

S&P and Dow futures are pretty much unchanged tonight Nasdaq futures up 3/4's.

No comments: