The Futures Pattern, Price & Time Report

Swine Flu Catastrophe is Obama's Katrina

2009-10-25T07:10:00Z

In my opinion the growing Swine Flu epidemic is becoming President Obama's personal Katrina. Criticism for President Bush came almost immediately following the hurricane disaster in New Orleans. He was criticized for not being prepared, not spending enough money, the failure to predict where the hurricane was going to hit, and maybe even for not issuing a stern enough warning to evacuate the city. (Yes I believe that a few of the deaths could have been avoided if the people had just evacuated as ordered.)

All tolled, it’s been reported that 1836 people lost their lives in Hurricane Katrina. Last week, it was reported that the 1000th person had died from Swine Flu in the United States. This weekend President Obama declared the Swine Flu epidemic a national emergency. The problem I am having with this is that the Obama administration had at least six months to prepare for the current outbreak. I have been reading that the Swine Flu vaccine is not available in all areas of the country. I have also seen warnings that there will be shortages. Instead of worrying about the National Healthcare Plan, he should have been worrying about the health of the nation.

President Bush only had hours to decide beforehand when and where hurricane Katrina was going to reach landfall. President Obama has had months to prepare for the Swine Flu breakout. Something is wrong with this developing scenario. At some point, maybe when the Swine Flu deaths exceed the Katrina death toll, I expect an apology from President Obama for not being prepared and not directing enough resources to ensure that everyone, not just pregnant women, the elderly and children, had access to the flu vaccine.

Investors should begin to prepare for the worst. Since the President has decided that the Swine Flu epidemic warrants national emergency status then I have to believe that it is probably more serious than we are being told. My only criticism is that the President should have used prime time TV to issue the declaration. This is a serious matter and could have a tremendous impact on the economy at a time when the nation can not afford a set-back.

It is possible that schools, businesses, factories or even malls could be shut-down if this epidemic gets out of control. Think about all the people that touch shopping carts. Do you know of anyone who uses an alcohol wipe on a shopping cart before they touch it? Do you even think twice about touching it? The retail sector which is already hurting because of the slowdown in consumer spending during this recession could be hit a second time since the credit crunch began. The timing of this, right before the start of the Christmas shopping season, could prove to be disastrous for the economy or at least prove to be a major bump in the road for our recovery out of the recession. I don't think the Fed, the Treasury or Congress have the power to order people to shop and spend especially if consumers decide to stay home to avoid this deadly illness.

Beside the retail sector, investors should also consider the Swine Flu's possible effect on the travel and restaurant industries. It has been reported that the virus can travel up to ten feet. Think about how many in a 10 foot radius could be infected on an airplane. What will the choice be, quarantine the whole plane? China did this several months ago. And if you think flying takes long now, just wait if travelers are required to have their temperatures taken before boarding a plane. Yes, one symptom is a high temperature. Beside checking your stocking feet for explosives, airport security will now have to learn to read an oral thermometer. Again these are things to consider if the Swine flu gets out of control.

As far as restaurants are concerned, menus are a great place for this virus to manifest. Do you really think that restaurants clean their menus? Think of all the hands touching the menus. Think of all the menus which touch plates and eating utensils. Once again from an economic standpoint, news of this disease spreading through restaurants can cause people to stay home. This may hurt sit down restaurant businesses.

At this time investors shouldn't panic, but should be aware of the possible economic impact the Swine Flu can have on the economy. It's always best to be prepared for the unknown.

Finally, not all of the news is potentially bearish. Companies that sell anti-bacterial hand-washing products may see a surge in sales. Companies that sell protective masks or rubber gloves may also see windfall sales. Online shopping sites could see the biggest economic boost if consumers decide to stay home during this Christmas shopping season. Last week the stock market reacted hard to the downside when news hit that Wal-Mart was looking for a "rough" holiday spending season and was considering drastic price cuts. Can you imagine what could happen to the stock market if the Swine Flu kept consumers away from malls and shopping centers?

Once again I didn't declare this a national disaster, but something may be brewing which indicates conditions will worsen. It's just good risk management to be aware of the possible economic impact this flu season could have on your portfolio.

British Pound Traders Await News Regarding Additional Quantitative Easing

2009-07-09T10:30:00Z

Traders are calling for a higher opening in the September British Pound this morning. Overnight strength in European and Asian equity markets is helping to increase trader demand for higher risk assets.

After a six-day sell-off, the British Pound is attracting buyers. Fundamentally this market has been getting beat-up since June 30th when an economic report showed that the U.K. economy had its worst quarter since 1958. Since then there have been signs that the economy is improving. The service sector is beginning to show growth, housing prices have stabilized and inflation is running ahead of the Bank of England’s target.

Despite these small signs of recovery, the Bank of England is expected to leave interest rates at their historically low level of 50 basis points when it makes its interest rate announcement early this morning.

Investors do not expect the BoE to touch interest rates until they are absolutely sure the U.K. economy is well on its way to recovery. Although there are small signs of a recovery, credit issues still exist with lending to businesses well down from recent peaks. Mortgage approvals are also down which is a common problem all around the world.

Interest rates may not be an issue at this time, but rumors that the Bank of England would increase the level of funds available for quantitative easing helped trigger a sharp sell-off in this market since Sunday night.

Quantitative easing which is essentially the printing of money is an economic program in which the central bank buys government assets. It is a very dangerous maneuver because it can lead to an inflationary environment which will lead to a debasing of the economy.

The British Pound should rally if quantitative easing is left out of the plans of the Bank of England. Traders should watch today’s central bank statement to see how committed it is to buying government assets.

Should the BoE mention that it would increase its activity in the asset buyback program then look for the British Pound to feel downward pressure.

Technically, the September British Pound is in a down trend, however it may be short-term oversold. This means this market may retrace 50% of its recent break back to 1.6362 to 1.6452.

The Futures Pattern, Price & Time Report - Currency Futures

2009-03-14T03:42:00Z

The U.S. Dollar is showing mixed results overnight. Some traders are booking profits after this week’s break in the Dollar, feeling the sell-off was overdone to the downside.

If reports today show that the economy is recovering then look for another wave of selling pressure.

The June Euro is called lower this morning. Traders are booking profits after yesterday’s spectacular gains. A strong stock market today will support the Euro because trader appetite for risk will likely increase. If there is no follow-through rally today then traders may pressure the Euro late in the session on the thought that the European Central Bank is going to have to take more aggressive action to revive the Euro Zone economy.

June British Pounds are trading higher overnight. The fundamentals support a weaker Pound, but a strong equity market today is likely to trigger a short-covering rally as traders will demand more risky assets. Fundamentally, the quantitative easing campaign enacted this week should be bearish as it effectively floods the market with cash and weakens the currency.

The June Japanese Yen is called lower on the opening based on weaker overnight trade. There will be no interest in the long side of the Yen until the Japanese economy turns around. This is not likely to occur until the economies of its two biggest customers: the U.S. and Europe begin to show economic improvement.

The June Swiss Franc is likely to open flat after yesterday’s massive sell-off. On Thursday the Swiss National Bank simultaneously lowered its benchmark interest rate and intervened. These actions triggered a huge sell-off in the Swiss Franc market. Traders do not know what to expect today because it is not known whether the break hit the SNB’s target price. If it missed the mark then look for another round of intervention today. Even if they do not intervene then look for the SNB to start a round of quantitative easing. There are stories already circulating that they will buying government debt. The moves by the SNB were designed to weaken the currency in order to trigger demand of Swiss products which would stimulate the economy.

Stronger equity and commodity markets helped the June Canadian Dollar gain on Thursday. The bullish action helped take the bearish Canadian economy off of the minds of investors. Today this market may find downside pressure if the unemployment number is greater than pre-report estimates of 100,000 jobs lost. Otherwise, look for the stock market to dictate the Canadian Dollar’s direction.

The Futures Pattern, Price & Time Report - Stock Index Futures

2009-03-13T12:05:00Z

U.S. equity markets are expected to open higher this morning based on overnight trading. There were no major overnight events to affect the market. One concern today will be whether traders can pass on the spectacular gains from this week and hold on to their positions over the week-end. Short-term traders are going to have a difficult time passing on the tremendous returns from this week’s rally; therefore I expect a profit-taking break late today. If this takes place then look for a rally early to drive out the weaker shorts then a sell-off late in the day.

The fundamentals remain weak so in my opinion this is a technically driven rally. Furthermore, a support base was never built which usually means there will be a retracement down to test the validity of the bottom.

The Futures Pattern, Price & Time Report - Financial Futures

2009-03-13T12:01:00Z

June Treasury Notes and June Treasury Bonds are trading lower overnight on concerns about future interest in U.S. government debt from China. Overnight China’s Premier Wen Jiabao said he was concerned about the safety of U.S. government debt. He went on to say that the U.S. must do its part to protect the safety of its assets invested in the U.S. treasury markets. This news is leading traders to lighten up positions. It is a well-known fact that China is the largest holder of U.S. government debt and that the U.S. needs to have them continue to invest in its debt instruments to finance this country’s debt. Given the financial situation of the global community, it will be difficult to find a replacement if China cuts back on its purchases of U.S. debt.

U.S. interest rates may rise if other countries begin to question the safety of U.S. debt. This could be a disaster for the U.S. economy as it tries to recover from the current recession.

The good news this week is the government debt auction went well as demand was huge. This helped lower interest rates. Before the auction started, many traders were concerned that demand would be light and that investors would drive down bond prices by asking for higher yields.

The Futures Pattern, Price & Time Report - Opening Calls

2009-03-13T12:00:00Z

The markets are quiet overnight due to the lack of major news events.The media is talking about the strong move in the stock market and asking anyone who will listen if this is the bottom while still reporting a huge amount of new foreclosures, lower retail sales and falling business inventories. Just last week the government reported a massive amount of additional job losses. For years we’ve been told the housing market triggered the top in the stock market so I cannot see any reason why anyone would call this a bottom until housing begins to show some improvement.

The current rally is a trader’s rally. In other words, professional traders, money managers and private funds are driving this market higher based on technical indicators. The public or small trader is not participating. The fundamentals have not changed. Professionals are going to do what they do best, generate profits in the short-run. The long-term is dead so selling will begin again once the professional stops buying.

Public traders and professionals have different objectives. The public trader has been led to believe that buy and hold is the best strategy while professional traders look for quick, volatile moves. The return that the market has seen the past few days will be too good to pass up for the professional trader, but I fear the individual investors is going to buy near the top of this swing. Somewhere, somehow he will become convinced that he is missing out and more than likely he will buy it from the professional who will be selling to him.

I don’t believe in rallies that start without a support base. Even the great rally from 2002 to 2007 started with a huge base that began in July 2002 and extended until the war started in March 2003. I firmly believe that the height of the market is determined by the length of the base, and this current market has not built a support base at all.

Financials: Strong demand pushes yields down. China comments pressure bonds.

Stock Indices: Equity markets could see continuation rally today. Will traders book profits before the week-end?

Currencies: Swiss National Bank may not be done influencing market.

Energies: Traders buying ahead of OPEC meeting this weekend.

Metals: Swiss intervention triggers rally in gold and silver.

Grains: Corn could benefit from renewed demand for ethanol.

Softs: Weaker Dollar triggers demand rally in cocoa and coffee.

The Futures Pattern, Price & Time Report - Soft Futures

2009-03-12T12:07:00Z

May Cocoa is building a trading base which has been primarily supported by production issues. This market appears to be set up for a rally, but it is going to take a dramatic drop in the U.S. Dollar and some improvements in the European and U.S. economies to increase demand before this market will move higher. The chart pattern and the fundamentals support a rally if the Dollar can break.

May Coffee appears to be building a bottom in a range between a pair of old bottoms at $1.05 and $1.00. Production issues are more likely to be bullish later in the year. Cheap prices are causing producers to hold back crop. A weaker Dollar is needed to trigger a breakout rally to the upside.

After finding support at a key 50% price, May Sugar seems poised to continue its rally. Global production is expected to be down in both India and China but some traders feel that Brazil will be able to cover the shortfall especially if demand is down for sugar used in bio fuel production. Like Cocoa and Coffee, the Sugar market needs to see a drop in the Dollar lead to increased demand. Without demand this market is likely to remain firm but range bound.

Speculators are supporting May Cotton and helping to build a support base but the lack of demand is keeping this market in a holding pattern above the $40.00 mark. As long as consumers continue to curtail spending for clothing, look for demand for cotton fiber to be down. Both domestic demand and global demand are expected to remain low as long as the global recession continues to worsen.

The Futures Pattern, Price & Time Report - Grain Futures

2009-03-12T12:06:00Z

May Corn could trade lower as the USDA has forecast an increase in World Corn Reserves. The growing global recession, tight credit markets, falling crude oil and a strong U.S. Dollar have hurt demand. Speculators have been driving this market higher in anticipation that a breakout rally in crude oil will stimulate demand for corn used for ethanol. If OPEC does not cut production then this scenario is unlikely to take place. Furthermore, a stronger Dollar will continue to keep a lid on global demand.

Lower worldwide consumption for soybeans was down leading the USDA to increase Global Soybean Inventories to 49.95 million tons. This is likely to keep downside pressure on soybeans in addition to the stronger Dollar.

The May Wheat market could get interesting. The recent drought in the Plains is adversely affecting the winter wheat crop. This has been bullish news. The USDA however increased its estimate of global inventories. With the news mixed and the inventory news dated, look for the rally to continue as more crops could be damaged if the drought intensifies.

The Futures Pattern, Price & Time Report - Stock Index Futures

2009-03-12T12:05:00Z

U.S. equity markets are expected to open lower this morning based on weaker overnight markets in Asia and Europe.

Asian markets are leading the way lower based on a report which showed the Japanese economy declined 12.1% during the fourth quarter in 2008.

Equity traders will react to today’s U.S. Retail and Business Inventory Reports. Calls are for a drop of between -0.3% to -0.5% in Retail Sales and a decline of -1.0% to -1.1% for Business Inventories.

This week’s rally demonstrates how sensitive the stock market is to news regarding banks. Tuesday’s up move was triggered by friendly news regarding Citigroup earnings. Late Wednesday, news that Chase was profitable during January and February triggered a late session rally. It will be interesting to note how many other banks step forward with similar news. If Chase and Citigroup are the only two willing to comment on earnings then the market may react to the downside on speculation the other banks are still losing money.

Technically, a two-day rally does not change the trend. Look for a pull-back to at least 50% of the week’s range. This means that the March E-mini S&P 500 may decline to 699.75 before new buyers step in.

The Futures Pattern, Price & Time Report - Energy Futures

2009-03-12T12:04:00Z

May Crude Oil is expected to open flat to lower as demand issues continue to dominate the market as well as the debate over OPEC production issues. It is already known that demand is down in the United States and Europe, but this week’s report that China industrial production fell last month is adding to the bearishness. This news adds another piece to the supply/demand equation that may prevent OPEC from lowering production.

OPEC has no way to estimate how low demand will fall. Because of this they do not know how much production to cut. Each time they tried to cut production since the fall, they underestimated the drop in demand. Saudi Arabia is already on record saying they are not in favor with another cut until there is 100% compliance with the previous cuts. Iran, Venezuela and Russia are already in favor of a cut, but it looks like this meeting will pass without any decision being made. This should break the crude oil market hard over the near-term.

The Futures Pattern, Price & Time Report - Metals Futures

2009-03-12T12:03:00Z

April Gold and May Silver are trading a little better overnight. Oversold conditions and a slight possibility of a decline in equity markets are triggering the light buying. Traders are taking insurance against a possible drop in equities due to a bearish U.S. Retail Sales Report.

Banking issues continue to dominate the news but have not caused any panic buying in precious metals lately. I think the precious metal markets fear deflation at this time rather than inflation. The fact that so many central banks have stopped lowering rates and are now focusing on quantitative easing may mean they fear deflation in the short-run also. After this fear eases then there may be an inflationary rally because of the huge amount of cash that has been pumped into the market.

May Copper may feel downside pressure as there is evidence that China and South Korea were hoarding copper. This is bearish news. For weeks the market has been rallying on the notion that the increase in buying was related to usage by China because of the implementation of its stimulus plan. This has not been the case however, as China has been stockpiling copper because of cheap prices. They are going to have to consume the cheap copper before they will come back into the world market to buy copper. This is putting pressure on the market today.

The Futures Pattern, Price & Time Report - Currency Futures

2009-03-12T12:02:00Z

The U.S. Dollar is called higher overnight as risk averse traders are once again dumping higher risk assets. The direction of the Dollar today will be dictated by the move in equities. Traders will also react to the release of the U.S. Retail and Business Inventory Report. Pre-report estimates are for retail sales to show a decline of between -0.3% to -0.5%. Business inventories are expected to show a loss of -1.0% to -1.1%.

The March Euro is called lower this morning based on the decline in overnight trading. Traders are citing the weakening Euro Zone economic picture as the main reason for the drop. There is a consensus building that the European Central Bank has to become more active in combating the deterioration in the economy. The ECB is on record, however opposing any more aggressive interest rate cuts. They reiterated their position to take a "look and see" attitude toward the markets.

March British Pounds are trading lower. The weaker stock market is once against driving traders away from higher risk assets. Traders are also reacting to the drop in interest rates. Yesterday the Bank of England began its plan to begin quantitative easing. Their first action was to buy government bonds. This action flooded the market with cash and put pressure on interest rates. These two actions are bearish for the Pound.

Overnight the Japanese government confirmed that 2008 fourth quarter GDP dropped 12.1%. This was slightly better than last month’s estimate but nonetheless reflected an economy in shambles. Despite the confirmation of the decline in GDP and the threat of deflation, the Yen has been rallying. This up move is most likely technical short-covering. It is just a matter of time before the market starts to decline again. If investors cannot stop the rally then the Bank of Japan is likely to take action since the government is already on record in favor of a weaker Yen.

The March Swiss Franc is called lower this morning. Traders are expecting the Swiss National Bank to lower interest rates to 0.25% then begin a campaign of quantitative easing and possibly intervention. Some of the suggested activity includes the SNB buying government bonds. The main goal of the SNB is to help revive the economy by boosting the export market.

Weakening equity markets and falling commodity markets are likely to keep downside pressure on the March Canadian Dollar today. The growing global recession between trading partners in Europe and the United States is likely to keep a lid on Canadian exports. Higher crude oil should help limit losses but overall this currency will remain weak while there still is downside pressure on the equity markets. Look for lower markets unless both commodity and equity markets turn bullish.

The Futures Pattern, Price & Time Report - Financial Futures

2009-03-12T12:01:00Z

June Treasury Notes and June Treasury Bonds are up overnight as traders are ignoring the supply hitting the markets this week and instead are focusing on the global economic outlook and the stability of the world’s financial system.

T-Notes and T-Bonds rose after the Asian stock markets declined after Japan confirmed last month’s bearish GDP report. Although the actual decline in the GDP was less than previously estimated, the 12.1% drop in 4Q 2008 still represented a significant contraction in the Japanese economy.

This morning’s U.S. Retail Sales and Business Inventory Reports will be watched closely. Most traders feel these reports will set the tone and direction of the financial and equity markets today. Pre-report guesses for retail sales is for a decline of -0.3% to -0.5%. Estimates for business inventories are -1.0% to -1.1%.

Keep an eye on the activity in Washington. The House Financial Services Committee meets to begin discussions on Mark-to-Market Accounting Rules. A change in this rule will have dramatic effects on the markets.

The Futures Pattern, Price & Time Report - Opening Calls

2009-03-12T12:00:00Z

Equity markets are looking weaker overnight as traders brace for this morning’s U.S. Retail Sales Report and Business Inventories.

U.S Retail Sales are estimated to show a decline of between -0.3% to -0.5%. Business Inventories are expected to decline by -1.0% to -1.19%.

The Treasury will auction $11 billion of 30-year debt today. Although it is more supply hitting the market, investors are more concerned about Retail Sales and the stock market.

Risk aversion trading is back overnight, driving the U.S. Dollar higher. China industrial production declined. The Japanese government confirmed the economy shrank during the 4Q in 2008.

Financials: Bond auction today, but traders more concerned about stock market risk.

Stock Indices: Equity markets down in Asia over contracting Japanese economy.

Currencies: British Pound feeling effects of quantitative easing.

Energies: Slower demand expected because of lower China industrial production.

Metals: Deflation concerns could pressure gold and silver.

Grains: USDA report says nothing bullish about soybeans and corn.

Softs: Sugar fundamentals have market set up for rally.

The Futures Pattern, Price & Time Report - Soft Futures

2009-03-11T12:07:00Z

May Cocoa received some friendly news overnight regarding the condition of the Malaysian crop. Producers are reporting insect damage to plants. News that producers have shifted to planting more profitable crops such as palm oil means that supply of cocoa could be limited. A support base is being built, but it is going to take sustained weakness in the U.S. Dollar to trigger demand.

May Coffee is finding some buyers between the $105.00 and $100.00 area. This is a value zone and key support as it has attracted buyers before. The trend is decisively lower but prices are cheap. Look for a weaker U.S. Dollar today to trigger a short-covering rally.

May Sugar is finding support at a key 50% zone. The longer-term fundamentals should support a rally but the stronger Dollar has been curtailing demand. Lower crude oil prices have also limited demand for sugar used for bio fuel. If the Dollar weakens and crude oil rises then based on the already tight supply situation, look for a strong rally in May Sugar.

Speculators are supporting May Cotton in anticipation of increased demand if global recessionary pressures can ease. A strong rally in the equity markets may trigger a short-covering rally today as it will scare bearish traders into lightening up positions out of fear the economy is beginning a recovery.

The Futures Pattern, Price & Time Report - Grain Futures

2009-03-11T12:06:00Z

The weaker U.S. Dollar could trigger a demand driven rally in both May Soybeans and May Corn. Today’s USDA report is expected to be supportive for soybeans as inventory numbers may drop. Corn on the other hand may see an increase in inventory.

Corn may see a pick-up in demand if crude oil can get back over $50. Demand for ethanol has dropped substantially since the crude oil market fell apart. A move back over $50 in crude oil may trigger higher prices for gasoline which will lead to more production of ethanol. Corn demand could surge as inventory at ethanol plants may be low.

Hot, dry weather in the U.S. Plains is causing damage to the winter wheat crop. Today’s USDA report may reflect just how much damage has been sustained. Wheat could rally on the news, but gains may be limited by the lack of demand or higher than estimated inventory.

The Futures Pattern, Price & Time Report - Stock Index Futures

2009-03-11T12:05:00Z

U.S. equity markets are expected to follow the lead of the Asian and European markets by opening sharply higher. The markets are already following through to the upside following the market’s biggest daily gain since November.

The first leg of this rally is generally short-covering which means there is going to be another correction to the downside to test the recent lows before new buyers step in.

News that Citigroup was on its way to a profitable quarter ignited this rally, but it was positive comments from Fed Chairman Bernanke that fueled the follow through rally yesterday. The market has been looking for clarity and conviction from a voice in Washington and maybe Bernanke has been targeted to take on that role.

The Futures Pattern, Price & Time Report - Energy Futures

2009-03-11T12:04:00Z

Crude oil is expected to trade lower this morning in anticipation of an increase in inventory. At 9:30 AM CDT the Energy Department is expected to announce an inventory increase of about 250,000 barrels per week.

News that China’s oil imports will be down because of a decline in demand is also weighing on the market overnight.

Traders are getting mixed signals at this time and may be content with holding the market in a range. Bearish traders are citing the drop in global demand as the main reason for keeping downside pressure on crude oil. Bullish traders are buying in anticipation of another OPEC production cut at this weekend’s meeting. The Saudi’s are not in favor of a cut until there is full compliance with the earlier cuts. Venezuela, Iran and Russia have already gone on record favoring a daily reduction.

The Futures Pattern, Price & Time Report - Metals Futures

2009-03-11T12:03:00Z

April Gold and May Silver are expected to open higher this morning in a technically based short-covering rally. These two markets have hit short-term oversold levels and are due for a rally.

The trend in gold turned down on the daily chart earlier this week. Most of the recent pressure has been caused by talk that the banking crisis may be easing and position liquidation because of margin calls in the equity markets.

Gold at a $1000 is not attractive to too many investors either. The public may be trapped near $1000 after they bought into reports of gold going to $2000 per ounce. Smart money sold the rally and is likely to keep pressure on this market until it reaches more favorable value areas.

Platinum is following gold this morning. Any weakness in gold is likely to put pressure on April Platinum. News that China’s import market fell could also lead to speculation that demand for industrial metals will drop. This could affect both demand for platinum and May Copper.

The Futures Pattern, Price & Time Report - Currency Futures

2009-03-11T12:02:00Z

The U.S. Dollar is called weaker this morning against most major currencies as it is starting to lose its safe haven status because of demand for higher yielding assets.

The March Euro is called higher this morning following a strong rally overnight. Despite bearish economic reports, traders feel this market is oversold and prefer to trade the long side. Judging from the trading action, it looks as if the Dollar is weaker rather than the Euro stronger. Traders are still waiting for more aggressive action by the European Central Bank to combat weakness in the Euro Zone economy before acknowledging a bottom.

March British Pounds are trading lower on news that the Bank of England will begin its quantitative easing campaign. After lowering interest rates to almost zero and providing numerous stimulus plans, the only thing the BoE has left is to print money to provide enough liquidity to revive the economy.

Despite a weakening economy and the threat of deflation, the March Japanese Yen is expected to open higher this morning. Some traders feel that this bad news was already in the market. The rally in the Yen is probably more a reflection of the weaker Dollar rather than the stronger Yen. Look for the short-covering rally to continue if equity markets can continue to rise today.

The March Swiss Franc is trading mixed this morning. Some traders are buying the Swiss because the firm equity markets are causing the Dollar to lose its safe haven status. The rally could be limited by news that the Swiss banking system is still in shambles because of losses reported by UBS. Other see downside pressure as the Swiss National Bank is expected to lower interest rates to 0.25% on March 12. The threat of quantitative easing and a possible intervention could also weigh on the market today.

Greater demand for higher yielding assets is helping to boost the March Canadian Dollar this morning. Calls for higher commodity prices and a stronger stock market this market are also triggering greater buying interest. Yesterday’s positive comments regarding Canada’s ability to rally out of the recession before other countries is also providing some support.

The Futures Pattern, Price & Time Report - Financial Futures

2009-03-11T12:01:00Z

June Treasury Notes and June Treasury Bonds are feeling downside pressure overnight because the upcoming Treasury auction is expected to feed the fixed income market an abundance of supply. Because of the size of the auction traders feel that investors will be asking for a higher yield. This is leading to long side liquidation.

The rally in the stock markets is also contributing to the weakness in the T-Bond and T-Note markets as traders are allocating out of fixed income instruments and into equity markets.

Look for more weakness to develop in the Treasury markets over the near term if yields rise more than expected. Barring a resumption of the bear market in equities and a renewal of banking issues, the Treasury markets could be in the midst of building a major top.

The Futures Pattern, Price & Time Report - Opening Calls

2009-03-11T12:00:00Z

Equity markets are continuing the rally ignited yesterday by positive Citigroup comments and fueled by friendly comments from Fed Chairman Bernanke.

Upcoming Treasury auction is expected to drive up yields and drive down prices. Rally in equity markets is also causing investors to reallocate their funds from fixed income instruments to equities.

The U.S. Dollar is losing its luster as a safe haven currency as banking pressures may be easing. British Pound is under pressure because of the start of quantitative easing.

May Soybeans and May Corn are expected to trade higher because of the weaker Dollar. Today’s USDA crop report may extend gains in soybeans, but limit gains in corn. Hot, dry weather in the Plains has damaged the winter wheat crop.

Financials: Treasury markets feeling pressure from upcoming auction.

Stock Indices: Following through to the upside after yesterday’s big rally.

Currencies: Euro is surging as trader appetite for risk is increasing.

Energies: Energy Dept. inventory report is expected to be bearish.

Grains: Weaker Dollar and lower inventory number supports higher soybeans.

Softs: Falling Dollar could trigger demand driven rally.

The Futures Pattern, Price & Time Report - Stock Index Futures

2009-03-10T12:05:00Z

U.S. equity markets are called higher this morning in reaction to positive comments from Citigroup CEO Pandit. In a released memo, Pandit mentioned that Citigroup was having its best quarter since 2007 and that the stock price does not reflect its capital strength. This comment triggered a rally in banking sector stocks and spread to the broad indices.

Fresh money is coming into the stock market from traders who had been seeking safety in the U.S. Dollar, gold and Treasury markets.

Although this move is essentially a short-covering rally, it has helped establish a point at which market participants perceive value. Like it did between November and February, now that a value zone has been identified, the market may trade sideways-to-higher for several weeks.

The key the rest of this week is to hold on to the overnight gains. If the market turns negative today after a strong overnight rally then investors are likely to liquidate in a big way.

The Futures Pattern, Price & Time Report - Currency Futures

2009-03-10T12:02:00Z

The U.S Dollar is trading lower overnight. Positive comments regarding Citigroup are driving investors out of the safety of the Dollar and into riskier asset classes. Citigroup CEO Pandit noted in a memo that Citigroup was having its best quarter since 2007. He also added that the stock’s price does not reflect its capital strength.

The March Euro is called better this morning despite a report showing that industrial production in the Euro Zone was down. Overnight gains reflect more the weaker U.S. Dollar than a strong Euro. Traders who bought U.S. Dollars for safety and security during the recent banking turmoil are selling Dollars overnight following positive comments regarding Citigroup. Traders are less averse to risk this morning.

Traders are taking a break from the bearish news affecting the U.K. banking system and buying March British Pounds in the overnight markets. Currency traders are willing to take on a little more risk this morning because of the strong surge in equity prices following optimistic comments from Citigroup CEO Pandit.

The weaker U.S. Dollar is triggering a profit-taking rally in the March Japanese Yen. This should lead to a higher opening. A bad economy led by weak exports and a current account deficit have been putting pressure on the Yen. The news that Citigroup may be in a position to post its best quarter since 2007, is driving traders out of the U.S. Dollar and into higher risk assets. The rally overnight reflects more Dollar selling than Yen buying. Over the short-run there may be a short-covering rally, but longer-term, the fundamentals support a stronger Dollar.

The March Swiss Franc is trading higher overnight as the U.S. Dollar is losing some of its luster as a safe haven currency. Traders are buying Swiss Francs and selling the U.S. Dollar following positive comments from Citigroup CEO Pandit. In his statement he noted that Citigroup is experiencing a strong quarter and that the current price does not reflect its capital strength. Traders are more inclined to buy higher risk assets this morning because of the strength in the stock market.

The March Canadian Dollar is called higher this morning based on the strength in the global equity markets and crude oil. Friendly news regarding Citigroup is driving equity prices higher and increasing demand for higher risk assets. News that OPEC is considering another production cut is buoying the crude oil market which is a major component of the Canadian economy. This rally is only short-covering as the Canadian economy is still experiencing a major drop in growth based on the recent decline in GDP.

The Futures Pattern, Price & Time Report - Financial Futures

2009-03-10T12:01:00Z

June Treasury Notes and June Treasury Bonds are expected to open lower as positive comments about Citigroup are driving investors out of the safety of treasuries and into the risky stock market. Equity traders are reacting positively to statements by Citigroup CEO Pandit stating Citigroup is having its best quarter since 2007. He also added that the bank’s stock price does not reflect its capital strength.

Traders are also selling Treasuries in anticipation of a new supply of debt instruments hitting the market this week. Later this week the Treasury will auction $12 million in new Bonds and $10 million in new Notes. Investors are adjusting prices down in anticipation of higher yields.

The Futures Pattern, Price & Time Report - Opening Calls

2009-03-10T12:00:00Z

Equity markets are trading higher this morning based on positive comments from Citigroup CEO Pandit. In a memo Pandit noted that Citigroup is having its best quarter since 2007 when it was last profitable. He also noted that the bank’s stock price does not reflect its capital strength.

This news is sending stock markets higher in Europe and Asia. The desire for more risky assets is spreading into other futures sectors as well.

The rise in the stock market and the desire for higher risk assets is putting pressure on the three safe-haven markets: Treasuries, gold and the U.S. Dollar while supporting commodity markets such as soybeans, crude oil and copper.

It looks as if the markets will take direction from the stock market today. An up stock market will translate into strong commodity markets and a weaker U.S. Dollar. A down market will likely see another flight-to-safety rally in gold, treasuries and the U.S. Dollar depending on how weak the market trades.

Financials: Treasury markets getting pressure from supply issues.

Stock Indices: Global equity markets are higher on positive Citigroup comments.

Currencies: U.S. Dollar poised to trade lower as investors take on more risk.

Energies: Crude oil could find strength if OPEC gets full compliance.

Metals: Desire for higher risk assets provide support for Copper.

Grains: Weaker Dollar, light farmer selling supporting prices.

Softs: Drop in U.S. Dollar, demand for risky assets trigger short-covering rally.

The Futures Pattern, Price & Time Report - Soft Futures

2009-03-09T12:07:00Z

A stronger U.S. Dollar overnight is likely to keep demand down for May Cocoa. There are production issues cropping up all over the world, but without buying from the U.S. to alleviate some of the supply, look for the market to remain on the weak side.

May Coffee prices are holding above the key support area at 105.00. A break through this level indicates a test of 100.00 is next. The stronger Dollar and the global recession is hurting demand. Production is expected to be down this year, but news will not have time to affect the May contract. Continue to look for sideways-to-lower trading.

Sugar has the best long-term fundamentals but demand is causing bearish price action. Unless the Dollar weakens and demand picks up, look for weakness to continue to develop in the May Sugar market.

Traders know that India and China will have short crops, but the lack of demand is helping to build ending stocks which is bearish. If crude oil can get to $50 then Brazil may have enough incentive to demand more sugar for bio fuel.

May Cotton continues to hover slightly above key bottoms at 41.16 to 40.25. Without demand, however, look for this market to stay in a sideway-to-lower trading range. News that fewer acres will be planted this spring could be bullish if there are weather issues. This market needs a weaker Dollar to stabilize but a complete turnaround in the world economy to trigger fresh global demand.

The Futures Pattern, Price & Time Report - Grain Futures

2009-03-09T12:06:00Z

The strong U.S. Dollar has been hurting foreign purchases of soybeans, corn and wheat. Foreign buyers have been shunning U.S. markets and shopping in South America. News that the Argentine government is not going to give up on its export tax plan is helping to drive some business back to the U.S. overnight. This is likely to be a short-term move because the strength in the Dollar is likely to have a bigger influence on foreign buyers.

Over the intermediate term, corn and soybean markets could firm up if the Dollar weakens. Currently there are bullish factors developing which could support higher prices. Rising crude oil, lower crop production in South America and light farmer selling are potentially bullish factors.

May Wheat has been rallying for a few days in anticipation of bullish news out of winter wheat growing areas in the U.S. Speculators are waiting for reports regarding crop damage due to hot, dry weather in growing areas.

The Futures Pattern, Price & Time Report - Stock Index Futures

2009-03-09T12:05:00Z

U.S. equity markets are called lower this morning based on selling pressure in Asia and Europe.

Traders are reacting negatively to the bad news regarding the issuance of deeply discounted rights by HSBC. The bank had planned to raise enough new capital to shore up its financial position, but traders are responding by forcing the bid lower.

News that Lloyds agreed to sell up to 77% of its company to the U.K. government is putting pressure on banking stocks as U.S. traders feel the government is getting closer to nationalizing a few of its large banks.

There are no major reports this week which means the market will be sensitive to news regarding banks, AIG and GM. The issue regarding banks is nationalism. AIG will be watched to see if it needs additional funding because it is too big to fail. GM is considering bankruptcy without new government money.

The merger announcement between Merck and Schering-Plough did nothing to the market. Under normal market conditions this announcement would have been bullish news, but because of tough economic times, it means nothing to the average stock investor.

Friday’s late short-covering rally may have been end-of-the-week profit-taking. Technically the markets are oversold, but there is a possibility of a rally if Friday’s highs in the S&P, NASDAQ and Dow can get taken out. If selling pressure persists then look for a test of last week’s lows.

The Futures Pattern, Price & Time Report - Energy Futures

2009-03-09T12:04:00Z

The energy complex is trading mixed this morning because of weakness in the equity markets. Bearish traders are still holding on to hope that the recession will worsen and demand for crude oil will decline further. Bullish traders are beginning to take control of the markets in anticipation of another production cut by OPEC at its next meeting on March 15.

Seasonality is also another reason to look at the long side of crude oil. The start of the U.S. driving season is expected to increase demand for unleaded gasoline and crude oil.

News that OPEC may cut production again is already getting the support of Russia, Iran and Venezuela. Traders fear that OPEC will try to cut 800,000 to 1,000,000 barrels per day. Given the current 80% compliance with previous cuts, crude oil could rally to $50 over the near-term.

The Futures Pattern, Price & Time Report - Metals Futures

2009-03-09T12:03:00Z

April Gold and May Silver are trading weaker overnight. It looks as if speculators are not buying precious metals despite the weakness in global equity markets. News that interest rates may rise this week because of the Treasury auction is also not encouraging talk of inflation. Something is going on in the precious metals complex. My fear is that big time gold and silver traders do not want to pay $1000 per ounce but would rather buy sharply lower. Another scenario is deflation rather than inflation is likely to occur first. Finally, a third scenario is the possibility that gold is being sold by investors to meet margin calls in the stock market.

April Platinum may fall in sympathy with gold, but both platinum and May Copper may find support from pick-up in demand. News that China’s first stimulus plan is working could be providing support at this time but a second stimulus plan is really needed to launch a strong rally.

The Futures Pattern, Price & Time Report - Currency Futures

2009-03-09T12:02:00Z

The U.S Dollar is trading sharply higher overnight in another round of flight-to-safety buying. Foreign currency markets are down all over the world as global banking issues continue to dominate the news. Traders are buying the Dollar because they feel the U.S is the safest place to be despite having its own problems with the economy.

The March Euro is trading lower overnight. The stronger Dollar is pressuring the Euro as investors believe the Euro Zone economy is going to weaken further. Traders are already anticipating another interest rate cut by the European Central Bank at its next meeting.

Investors are also anticipating quantitative easing by the European Central Bank in an effort to help revive the Euro Zone economy. The only problem with this idea is which European Union member nation to bailout since there are sixteen.

March British Pounds are trading sharply lower overnight. Traders are selling the Pound because of weakness in HSBC stock and news that Lloyds agreed to sell up to a 77% stake in its company to the U.K. government in exchange for toxic asset insurance.

Look for more pressure on the British Pound as traders anticipate a series of quantitative easing moves to help stimulate the economy. Having cut interest rates to almost near zero, the Bank of England is running out of options and may have to intervene immediately to get the economy back on track. Just about anything they do will be perceived as bearish.

The March Yen is expected to trade lower this morning as more bad news was released regarding the economy. Overnight it was announced that Japan suffered its first current account deficit in 13 years. This grim report is an indication that the global recession is killing Japanese exports. Falling equity markets and lower interest rates also contributed to a decline from overseas investments.

The Japanese government wants the Yen to weaken to attract more exports, but it looks as if the Yen price has nothing to do with the lack of demand. Recessions in the economies of two of Japan’s biggest customers - Europe and the U.S. are curtailing demand for Japanese goods. Do not expect a turnaround in the Japanese economy until global consumers start spending again.

The March Swiss Franc is trading lower overnight. Traders are selling the Swiss and putting money in the safer U.S. Dollar. Banking problems and an economic contraction in the Swiss economy are also leading investors to the Dollar.

The chart pattern indicates the Swiss could rally but only if the global financial crisis lessens. A rally today in the stock market could lead traders back to the Swiss Franc.

The March Canadian Dollar is expected to feel downside pressure today because of the weaker stock market. The Canadian economy is worsening based on falling GDP figures. Some traders feel that U.S. banking woes will find there way up to Canada.

A rally in crude oil due to production cuts by OPEC may help to curtail losses in the March Canadian Dollar. A rally through $50 could turn the trend higher.

The Futures Pattern, Price & Time Report - Financial Futures

2009-03-09T12:01:00Z

June Treasury Bonds and June Treasury Notes are trading lower this morning. Yields are rising overnight in anticipation of this week’s Bond and Note auctions. Traders are bracing for a hike in rates as the Treasury auctions $12 billion in new bonds and $10 billion in notes. Bullish treasury traders know the rally is near its end as the time is coming when the government will have to pay for the government bailouts.

Look for pressure to continue all day unless the equity markets break so badly and trigger a flight-to-safety rally in Treasuries.

June Eurodollars have been dropping slowly over the past month. This is an indication that short-term credit markets may be tightening up. This is not good since locked-up credit markets are to blame for the start of the current financial system mess.

The Futures Pattern, Price & Time Report Opening Calls

2009-03-09T12:00:00Z

Banking issues are raising concerns about the stability of the global financial system. Investors are still waiting for clarity from the U.S. government regarding its plan to support the U.S. banking system. In the meantime, short-sellers continue to pound bank stocks in anticipation of the U.S. wiping out stock equity while nationalizing stocks.

News that Merck is merging with Schering-Plough in a $41.1 billion deal has failed to bring any optimism to the stock market. During better economic times this type of news would rally a market. This is just another sign that the markets want long-term solutions, not short-term band-aids.

Crude oil is up overnight in anticipation of another production cut by OPEC. Hedge funds continue to maintain their upside bias.

This morning on CNBC, Warren Buffett called out the President and Congress to work together in getting the economy back on track. He basically said without pointing figures that the Democrats were wrong to attach earmarks to the budget bill and that the main concern of Congress and the President should be passing a budget that helps improve the economy. Buffett also implied that Republicans should put aside differences and do what is right for the country.

Financials: Treasury markets are trading lower as investors look ahead to this week’s auctions.

Stock Indices: Global equity markets are lower as pessimism over banks continues.

Currencies: U.S. Dollar is up on more flight-to-safety buying.

Energies: Crude oil is rising in anticipation of another production cut by OPEC.

Metals: Gold and Silver are flat. Money is moving to the U.S. Dollar for safety.

Grains: High Argentine export taxes could send foreign buyers into U.S. grain markets.

Softs: Higher crude oil could boost demand for sugar used for bio fuel.

Global Recession Drives Coffee Prices Down

2009-03-06T12:07:00Z

The weaker U.S. Dollar could help demand today especially if a bad U.S. Non-Farm Payrolls Report drops the Dollar further. Inventories are increasing in New York as demand is dropping because of the recession. Industrial buyers have been stepping away despite the low prices. Look for demand for chocolate to continue to fall if the global economy continues to remain depressed.

May Coffee is called steady to better this morning because of the weaker U.S. Dollar. The lack of demand because of the global recession has sent prices down to the most recent low at $105.00. A break through this level indicates a further decline to $1.00 is likely over the near-term. Falling equity prices today will most likely lead to additional downside pressure. A better-than-expected U.S. Employment Report could trigger a rally in equities and a spillover rally in coffee.

Although world production is expected to be lower in 2009, demand is controlling the price action at this time. The global recession is causing a decrease in sugar used as food and falling energy prices have hurt demand for sugar used in biofuel manufacturing. The chart indicates a move to 12.38 - 12.01 is likely before new buyers step in. A rise in crude oil and equity markets today could trigger a short-covering rally along with a weaker Dollar.

May Cotton could see short-covering today as a weaker Dollar and cheap prices may attract some foreign buyers. Without another stimulus plan from China, this market is likely to remain under pressure over the short-run. The chart indicates this market is getting close to major support at 41.16 to 40.25. A rally in equities today could trigger an up move in cotton.

Speculators Buying Precious Metals as Alternative to Stocks

2009-03-06T12:06:00Z

April Gold and May Silver are stronger overnight as the U.S. Dollar is trading sharply lower. Speculators have been buying the precious metals this week as an alternative to the falling stock market. Traders will be watching the U.S. Non-Farm Payrolls Report carefully this morning. A bad report will tank the stock market which should lead to more buying in gold. A better than expected number will be bullish for stocks and bearish for precious metals.

Some traders are buying gold out of fear of a banking crisis while others are anticipating inflation. Conditions are still ripe for a banking crisis, but there are still no indications of inflation over the short-run.

Industrial metals such as April Platinum and May Copper are also higher this morning. The weaker Dollar may increase demand for Copper. Platinum may also rise along with gold, but there is a possibility that demand from China will increase if their economic recovery goes along as planned.

Don't Be Surprised by a Huge Equity Market Reversal Today

2009-03-06T12:05:00Z

U.S. equity markets are traded mixed overnight as speculators square up positions ahead of the U.S. Unemployment Report. Traders are anticipating a loss of 650,000 jobs while the unemployment rate jumps to 7.9%.

News that GM may be considering bankruptcy as an option could pressure the market this morning. Banking stocks are also still weak. Industrial stocks fell a bit yesterday when China backed away from endorsing another round of economic stimulus. However, news that the first stimulus plan is working and helping the economy recover may actually provide support to the market today.

Technically, all three major indices are oversold which means a reversal up is due at any time. Don’t be surprised by a huge reversal to the upside today especially if the markets trade sharply lower following the release of the Non-Farm Payrolls report.

Crude Oil Weakens on News China Will Not Initiate New Stimulus Plan

2009-03-06T12:04:00Z

April Crude Oil broke on Thursday following the news that China would not initiate a new economic stimulus plan. Although the market gave back some of its gains from Wednesday, the short-term uptrend remained intact leading to speculation that crude may take another shot at an upside breakout.

Overnight news that China’s first stimulus plan is helping the economy to recover may provide support this morning. A worse than expected U.S. Non-Farm Payrolls Report may be bearish as it will be a sign that the economy is headed for a lengthy recession. This news will likely lead to another decrease in demand.

China Recovery Will Increase Demand for Copper

2009-03-06T12:03:00Z

Gold and Silver Rally Overnight Despite No Sign of Inflation

2009-03-06T12:03:00Z

British Pound Higher as Bank of England Ends Rate Cuts

2009-03-06T12:02:00Z

The U.S Dollar is trading sharply lower overnight as traders take profits from the recent run-up and position themselves for a potentially bearish U.S. Non-Farm Payrolls Report. Traders may not pay attention to a flight-to-safety rally today, and instead may chose to focus on the worsening U.S. economy. Today’s jobs report will give traders an important clue as to how long and how deep the U.S. recession is likely to be.

The March Euro is rallying in the overnight market. Yesterday the European Central Bank cut its benchmark interest rate as expected by 50 basis points. Comments after the meeting indicate that they are considering further cuts in the future as well as quantitative ways to reduce rates. This may include buying securities, but nothing has been decided. Traders are wondering what securities they will buy since there are 16 members of the Union.

March British Pounds are sharply higher in the overnight market as traders are selling U.S. Dollars ahead of today’s U.S. Non-Farm Payrolls Report. Yesterday the Bank of England probably made its last interest rate cut for several months when it slashed rates by 50 basis points down to 50 basis points. Traders expect the BoE to begin the process of quantitative easing by purchasing government debt. This process of putting more cash into the system can be risky and inflationary if not done correctly. The BoE is willing to take the chance since the banking system still needs to be fixed and credit is not moving.

The March Yen has formed a short-term bottom at 1.0032 but this is not an indication that the trend is turning to up. The economy is still fragile and should get worse as the export market has virtually shutdown. There is also a cash shortage developing in Japan which is prompting the Bank of Japan to buy corporate bonds to alleviate the pressure by providing liquidity. Speculators are still buying assets outside of Japan and are likely to increase their buying if the U.S. equity markets can rally.

The March Swiss Franc is trading better overnight. This market has been holding in a tight range for several days, but now appears to be ready to breakout to the upside. This may be an indication that the U.S. Dollar will begin to diminish its role as a safe haven currency. This will be especially true if the U.S. jobs data comes out worse than expected this morning.

The March Canadian Dollar is in a position to rally this morning based on the weakness in the U.S. Dollar. A worse than expected U.S. jobs report will be bullish news also. Gains may be limited, however as traders may begin to believe that the weak U.S. economic conditions will spillover to the Canadian economy. Signs that crude oil may be bottoming could also begin to provide support for this currency. News that China’s economy is on the road to recovery could trigger new demand for industrial metals.

Investors Buy Treasuries for Safety Not Quality

2009-03-06T12:01:00Z

June Treasury Bonds and Treasury Notes are trading firm overnight following a huge flight-to-safety rally on Thursday. You have to call it a “flight-to-safety” rally because somewhere down the road when inflation comes back I don’t know how much quality left in the Treasuries.

Speculators are buying Bonds and T-Notes ahead of today’s U.S. Non-Farm Payrolls report because the report is expected to show weakness in the economy. As long as the U.S. economy remains weak, the Treasury will continue to sell financial instruments. Pre-market estimates are for a decline of 650,000 jobs, leading to an increase in the unemployment rate to 7.9%.

The charts indicate the June Bonds will turn the main trend up through 129’02 and the June T-Notes will have to get through 122’28.5 to turn the main trend to up.

Traders Evening Positions Ahead of U.S. Unemployment Report

2009-03-06T12:00:00Z

The U.S. Dollar is getting punished overnight ahead of the U.S. Unemployment Report. Pre-Report guesses are calling for a loss of 650,000 jobs. A number of this size will increase the unemployment rate to a 24-year high at 7.9%.

Equity markets are trading mixed following a huge sell-off on Thursday. The overnight rally is being attributed to position squaring ahead of the U.S. Non-Farm Payrolls Report. Bearish news in still in the air because of weakening bank stocks and the threat of bankruptcy from General Motors.

Although China denied it was planning a second stimulus plan, it did report that the first stimulus plan was working well and that the economy is improving.

Financials: More buying ahead of U.S. Non-Farm Payrolls Report.

Equities: Mixed trade overnight as traders square positions ahead of U.S. jobs report.

Currencies: U.S. Dollar is down sharply in anticipation of big decline in U.S. job market.

Energies: Technicals indicating a bottom may be in. Demand is still down, however.

Metals: Weaker U.S. Dollar is boosting interest in the long side of precious metals.

Grains: Weak global demand putting pressure on soybeans and corn.

Softs: Global recession likely to slow demand for cocoa and coffee.

Lower Gasoline Lowers Demand for Sugar as a Bio Fuel

2009-03-05T12:07:00Z

The stronger U.S. Dollar is expected to curtail demand for cocoa. Despite production issues, May Cocoa is likely to face renewed selling pressure today.

May Coffee is also expected to trade weaker. Reports are indicating that the global recession is expected to limit demand for coffee. There is nothing bullish at this time to support a rally in coffee.

Despite supply issues in India, May Sugar is expected to continue to feel more downside pressure. Traders are becoming concerned that lower gasoline prices will limit demand for Brazilian sugar used as a bio fuel.

May Cotton is called lower this morning. The lack of global and domestic demand is hurting sales. News that China does not have a new stimulus plan in the works is not good news as they are now likely to stay away from the U.S. market. Inventories are still too high.

Weaker Global Equity Markets Pressuring Commodities

2009-03-05T12:06:00Z

May Soybeans and May Corn are feeling downside pressure as weaker global equity markets are pressuring commodity markets. The stronger U.S. Dollar is also hurting demand for U.S. grains.

Demand may be shifting to South American crops as the world perceives U.S. grain as too expensive. Demand is the issue at this time as it is still too early to be concerned about supply as this year’s crop is not even in the ground yet.

GM Bankruptcy Talk Sends U.S. Equity Markets Lower

2009-03-05T12:05:00Z

U.S. equity markets are following the lead of European and Asian markets and selling off hard overnight. Gains from yesterday’s short-covering rally are likely to be erased as China has taken the possibility of a second stimulus plan off the table for the time being. News that GM may be considering bankruptcy is also sending shockwaves through the equity markets. This is a concern because if they go bankrupt then Chrysler and Ford are likely to follow.

Crude Falls on Rumors China Has No New Stimulus Plan

2009-03-05T12:04:00Z

News that China may not activate a second stimulus plan is putting pressure on April Crude Oil this morning. Without China’s spending, demand for crude oil is likely to continue to fall.

OPEC may try to curb losses in the crude oil market by cutting production at its next meeting on March 15 but there is almost no way to estimate how much demand will continue to drop.

April Gold and May Silver Regain Safe Haven Status

2009-03-05T12:03:00Z

April Gold and May Silver have regained their status as safe haven assets this morning as traders are once again buying the precious metals as protection against the possibility of a decline in the stock market.

Industrial metals such as April Platinum and May Copper may feel pressure now that China is not going to activate a second stimulus plan. Demand for these two metals is likely to drop as worldwide production and manufacturing is falling. Losses may be limited in platinum if traders treat this market as a safe-haven metal instead of an industrial metal.

Flight-to-Safety Rally Sends U.S. Dollar Higher Overnight

2009-03-05T12:02:00Z

Flight-to- safety traders are buying the U.S. Dollar for safety and liquidity this morning as global equity markets are under pressure from the news that GM may have to file bankruptcy and China may not have a second stimulus plan. The rally overnight is erasing loses from yesterday and resuming the uptrend.

The March Euro is under pressure because of the stronger Dollar. The European Central Bank slashed interest rates by 50 basis points as expected. Traders are once again focusing on the contracting economy in the Euro Zone and banking issues in Eastern and Central European banks.

March British Pounds are called lower this morning because of the stronger Dollar. Banking issues just cannot seem to go away in the U.K. Despite a plan to ensure banks against toxic assets, the possibility of more losses is once again raising concerns that the banking system is being threatened. News that the Bank of England would cut rates by 50 basis points to 50 basis points was already in the market. Traders are now waiting for a new round of quantitative easing.

The March Yen continues to feel downside pressure as traders are expressing no confidence in the Japanese economy at this time. Look for more downside pressure as the Bank of Japan does not seem to have any plan at this time to help revive the economy. With major trade partners in the U.S. and Europe facing major recessions, look for Japanese exports to continue to decline.

Traders are buying the U.S. Dollar and selling the Swiss Franc in a flight-to-safety move as the Dollar regains its luster as a safe haven asset. The threat of quantitative easing by the Swiss National Bank is also a bearish issue.

Pressure on equity and commodity markets is causing another sell-off in the March Canadian Dollar. Bearish speculators are concerned that the global recession is spreading to the domestic market as both retail sales and the GDP have shown significant declines recently. The Bank of Canada lowered rates earlier this week while announcing a stimulus plan, but the market seems to be looking for more positive action before turning around.

Weak Equities Encourages Treasury Buying

2009-03-05T12:01:00Z

Investors and speculators are once again buying Treasury markets this morning because of the weakness in global equity markets. News that China may not have a second stimulus plan in the works and the possibility of bankruptcy by GM is driving both stocks and commodity markets lower today.

Gains may be limited in the March Bonds and March T-Notes because of the $12 billion and $10 billion auctions next week by the Treasury. This market could get volatile as flight-to-quality traders clash with the bearish traders concerned about the abundance of supply in the hitting the marketplace.

Markets React to GM Bankruptcy Plans

2009-03-05T12:00:00Z

Two stories dominate the news this morning. Yesterday equity markets and commodity markets celebrated the possibility of a new stimulus plan from China, today all of those gains will likely be given back as China expressed doubt that a new stimulus plan was necessary. The second story putting pressure on the equity markets overnight is the possibility of GM going bankrupt.

Financials: Look for higher markets this morning in another flight-to-quality rally.

Equities: News that GM may have to declare bankruptcy is shaking things up.

Currencies: U.S. Dollar regains its luster as a safe haven during financial uncertainty.

Energies: Fears that the global recession will limit demand is driving prices lower.

Metals: Renewed interest in gold as a safe haven asset has this market higher.

Grains: Bearish equity markets likely to pressure grain commodities.

Softs: Stronger U.S. Dollar likely to continue to curtail demand for softs.

Bargain Hunters Bottom Picking in May Coffee

2009-03-04T12:07:00Z

A new forecast indicating a larger supply deficit than previously estimated is helping to support May Cocoa. Greater demand is needed, however to drive this market higher. A weaker U.S. Dollar may trigger some short-covering as well as a stronger equity market. External markets are expected to have a bigger influence on this market today than normal fundamentals.

News that Viet Nam may cut its harvest forecast could provide some support for May Coffee this morning. Shorts are covering their positions and bargain hunters are picking a bottom based on the news that poor weather has caused the size of the coffee bean to shrink. Gains could be limited if the U.S. Dollar strengthens today or if equity markets break hard.

May Sugar is feeling pressure on speculation that the global recession is expected to deepen and worsen. With no clue as to when the recession will end, traders are abandoning long positions bought in anticipation of a steady demand for sugar used for Brazilian ethanol. Concerns are the lack of demand will outstrip the production problems that are developing in India.

Speculators may buy May Cotton today in anticipation of greater demand from China. Bullish traders may buy cotton if China’s new stimulus plan includes more demand for raw materials including cotton fiber.

Grain Export Business Moving to South America

2009-03-04T12:06:00Z

The weaker U.S. Dollar is helping to renew some light interest in U.S. soybeans and corn. The main concern lately has been the effect the stronger Dollar has had on demand. There is evidence that export business is moving to South America.

Speaking of South America, speculation that demand for U.S. crops may rise if Argentina takes control of its crops is helping to provide support overnight. The story that is circulating has Argentina taking control of its domestic soybean and corn supply/demand market before making grain available for exporting. This could be bullish if they run into problems running the program.

Asian Stocks Rally as Markets Anticipate China News

2009-03-04T12:05:00Z

U.S. equity markets are expected to open higher as buying in Asia has spilled over to the U.S. markets. Asia was up in anticipation of an announcement from China of a new stimulus plan. This new plan may include new demand for U.S. goods and raw materials. This news is helping to support industrial related stocks. Banking and financial stocks may see short-covering but overall fundamentals are still bearish.

A sell-off in gold and Treasury markets may encourage traders seeking a better yield and more risk to buy equities today. Volatility could increase today as bulls and bears will battle it out for position. Bottom-pickers and short-covering could help support this market, but disappointing financial system news may cap gains.

Stimulus Plan from China May Trigger Short-Covering Rally in Crude Oil

2009-03-04T12:04:00Z

Although the worsening global recession is leading to fear of less demand for crude oil, the announcement of a new stimulus plan by China may provide enough good news to trigger a short-covering rally today. Gains could be limited by expectations of an increase in oil ending stocks.

Speculators seem to be more concerned about falling demand rather than the possibility of a new production cut by OPEC later this month. Although Russia, Iran and Venezuela are in favor of a cut, it is unclear at this time whether all members will vote in favor of decreasing supply.

Traders Shift Interest from Precious to Industrial Metals

2009-03-04T12:03:00Z

Metals are trading mixed overnight. Interest in the long side seems to have shifted away from precious metals and into industrial metals. April Gold and May Silver have retraced into support area so there may be a short-covering rally, but sentiment is shifting in these markets as the fear of a banking system meltdown has been diminished.

News that China may announce a new stimulus plan is helping to support industrial metals. Both April Platinum and May Copper stand to gain if the plan includes new infrastructure. The Platinum/Gold spread is favoring a rally and the charts indicate a strong support base has been built in May Copper.

Canadian Dollar Up in Anticipation of Chinese Demand

2009-03-04T12:02:00Z

The U.S. Dollar is mixed overnight. Some foreign currency markets are up in anticipation of greater demand for commodities and others are up as appetite for risk is increasing slightly.

The March Euro is trading weaker overnight. Weakness in the Euro Zone economy is putting pressure on the market. News of the announcement of a new stimulus plan from China has had no effect on the Euro. Traders could be pressuring the Euro in anticipation of an aggressive rate cut by the European Central Bank on March 5.

The March British Pound is trading better this morning. Trader appetite for risk is increasing as equity markets have firmed up. Look for the Pound to follow the stock market today. Gains may be capped by trader selling in anticipation of a 50 basis point interest rate cut by the Bank of England on March 5. News that the BoE is also considering quantitative easing is also likely to limit a move to the upside.

The March Japanese Yen is expected to open lower. Despite news of a new stimulus plan from China, traders feel the Japanese economy is too far in the hole to recover quickly from its recession. The weakness is likely to continue unless the Bank of Japan comes up with an aggressive solution to reviving the economy.

The March Swiss Franc is trading mixed overnight. There may be a limited short-covering rally if trader appetite for risk increases or if the Dollar begins to lose its luster as a safe haven asset. Gains may be limited as traders are still anticipating a devaluation and quantitative easing by the Swiss National Bank.

The March Canadian Dollar could rally today if the China stimulus plan includes increased demand for industrial metals. A rise in equity markets may also lead to increased demand for the Canadian Dollar. Yesterday the Bank of Canada cut interest rates to 50 basis points while at the same time announcing a new stimulus plan. Although no details were released about the plan, feelings are mixed. Some think it is a good idea while others see it as a sign the domestic economy is expected to worsen.

Gains in Asian Stock Markets Pressure Treasury Bonds and Notes

2009-03-04T12:01:00Z

March Treasury Bonds and March Treasury Notes are feeling downside pressure overnight as gains in Asian stock markets have spread to the U.S. markets. Traders see this as a positive and are selling treasuries to raise cash to invest in stocks.

The Treasuries can feel downside pressure today as traders may take profits on flight-to-quality positions initiated as the stock market broke to new lows for the year. T-Notes and T-Bonds are also feeling pressure because of the increased supply that is supposed to hit the markets next week. Note traders are looking for about $10 billion in additional debt next week. Bond traders expect about $12 billion.

The cost of protecting Treasury debt instruments against failure is increasing. This indicates that supply may be overwhelming demand bringing the ability of the U.S. to cover its debt into question. The size of the new budget is a new concern for the market. Some longer-term traders fear financing the budget may cause the debt market to explode later in the year.

Asian Markets Up on China Stimulus Plan

2009-03-04T12:00:00Z

Asian stock markets are up overnight in anticipation of the announcement of another massive stimulus plan by China. Speculators are buying key raw materials in anticipation of increased demand from China. Industrial metals are firm on speculation that the news may include infrastructure plans for bridges and roads.

Industrial stocks could carry the stock market today. Financial stocks are still weak as the market is still looking for clarity from the Obama administration regarding its housing bailout plan. Traders have been selling financial stocks out of fear of nationalization. Some of the selling pressure is reflecting trader intolerance to ambiguity and the lack of detail from the U.S. government.

Financials: Lower as money is moving into equities. New supply next week is bearish.

Equities: China stimulus plan is driving Asian stocks higher overnight.

Currencies: U.S. Dollar a little weaker as trader appetite for risky currencies increases.

Energies: Short-covering rally likely if equities rise.

Metals: Traders are selling precious metals and buying industrial metals.

Grains: Argentina has a plan to control domestic supply and demand.

Softs: More production with Cocoa. Weaker U.S. Dollar may increase demand.

Lack of Demand Sends Coffee to Oversold Level

2009-03-03T12:07:00Z

The weaker U.S. Dollar this morning is likely to lead to a slight increase in demand for May Cocoa. The higher Dollar has been crippling demand for Cocoa. Production issues are keeping this market afloat but demand is needed to drive it higher. Deflation is being talked about. This means the market could go much lower if the Dollar doesn’t weaken.

Look for a little strength in May Coffee this morning if the market can keep downside pressure on the U.S. Dollar. Demand is still down because of the recession but traders feel this market is oversold at this time.

May Sugar has the potential to move higher because of production issues in India and China. The stronger Dollar has been capping this market lately, however. Without demand this market is going nowhere.

The global recession is keeping pressure on May Cotton as demand is down both internationally and domestically. The chart indicates an oversold condition which means cotton could be poised for a strong short-covering rally.

Strong Dollar Killing Demand for U.S. Grain

2009-03-03T12:06:00Z

Soybeans and corn could trade higher today as trader aversion to risk is a little higher this morning. Any rally is likely to be short-covering as longer-term these markets are bearish. The strong Dollar is killing demand for U.S. grain at this time. Foreign buyers are buying more grain from South America because of higher prices. The threat of deflation is beginning to look real. This could lead to more selling pressure following a two-day short-covering rally.

Equity Traders Await News on "Toxic Asset" Bank

2009-03-03T12:05:00Z

Equity markets are trading higher overnight. Traders seem to have absorbed the bad news regarding AIG and are now focusing on the prospect of better times ahead.

Traders are now looking for good news from the government regarding the creation of a “toxic asset” bank. If the President can do a good job at presenting this idea then the market will likely rally. All investors want is clarity and conviction in any plan.

The market wants action from this administration. Investors are hoping the President starts governing instead of campaigning. Look for the March S&P to rally toward 724.75 this morning before news selling pressure steps in.

Another Production Cut by OPEC May Not Be Enough to Support Prices

2009-03-03T12:04:00Z

The worsening global recession is leading to fear of less demand for crude oil. The market seems to think that another cut by OPEC in the middle of this month will not be enough to turn this market higher. Look for selling to come in on any rally.

Metals Traders Could Be Factoring in Threat of Deflation

2009-03-03T12:03:00Z

The gold and silver markets sold off on day when traders were looking for safety. This could be a sign that traders are beginning to factor in the threat of deflation in commodity prices. If gold loses its appeal as a safe haven market then look out below. Margin calls in the stock market may also be a reason for the break in gold as traders are searching everywhere to get cash to answer the calls.

British Pound Down as Traders Await BoE Plan to Print More Money

2009-03-03T12:02:00Z

The U.S. Dollar is weaker overnight as appetite for risk is increasing slightly.

The March Euro is trading higher overnight. This move is more profit-taking in the Dollar rather than new buying in the Euro. Traders are looking for an aggressive rate cut by the European Central Bank at its next meeting on March 5.

The March British Pound is called higher based on strength overnight. Traders are looking for the Bank of England to cut rates by 50 basis points at the next meeting on March 5. The BoE is likely to announce another plan to stimulate the economy by printing Pounds. This is probably going to provide more bearish news for the market.

The March Japanese Yen is trading lower overnight. The Bank of Japan is reportedly going to tap its foreign reserve to provide liquidity to the financial system. While this may loosen up the economy over the short-run, it is likely to put pressure on the Yen. The market is looking for more aggressive action by the BoJ at this time.

The March Swiss Franc is up in overnight trading. Trader appetite for risk is up a little, but not enough to change the trend. Banking issues and the threat of an intervention by the Swiss National Bank is expected to keep pressure on the Swiss.

The March Canadian Dollar is likely to open steady to better this morning. The market is following the equity markets at this time. Longer-term the Canadian Dollar is bearish as the global recession is finally showing signs of affecting the domestic economy. Canadian GDP is down indicating contraction. As long as equity and commodity markets remain weak, look for more downside pressure.

Treasuries Fall as Financial Meltdown Fear is Alleviated

2009-03-03T12:01:00Z

March Treasury Bonds and March Treasury Notes are selling off overnight as fears of a meltdown in the U.S. equity markets have been lifted. The world is expecting higher interest rates but as long as traders buy treasuries for safety and liquidity look for a choppy two-sided market.

Global Recession Leads to Drop in Demand for Cotton

2009-03-02T12:07:00Z

Production issues aside, the strong U.S. Dollar is driving May Cocoa prices lower. Look for demand to continue to drop as long as the trend remains up in the Dollar.

The worsening U.S. economy and the stronger Dollar are expected to limit demand for Coffee in the short-run. Look for May Coffee to trade sideways-to-lower until the Dollar weakens. Production is expected to drop later this year but it may be too late to save the May contract from making new lows.

Everyone knows India needs sugar because of a crop shortage, but product is not going to move unless the Dollar weakens. Supply issues have been driving prices up, putting May Sugar in a position to breakout to the upside, but as long as the Dollar is strong, look for downside pressure.

The worsening global recession is leading to a drop in demand for cotton. Both domestic and global buyers are out of this market at this time. Look for the decline in May Cotton to continue. The stronger Dollar is also encouraging selling as traders expect demand to continue to weaken over the near-term.

Strong Dollar Drives Grain Demand to Argentina

2009-03-02T12:06:00Z

May Corn and Soybeans are expected to open lower this morning. The stronger U.S. Dollar is driving traders out of U.S. grain markets and into Argentina. Look for this trend to continue until the Dollar weakens. Demand is the only issue at this time until the planting season begins.

Stock Market Liquidation Continues Led by Banking Sector

2009-03-02T12:05:00Z

Equity markets are trading lower overnight. News of an AIG bailout and a massive loss from HSBC is driving investors out of financial stocks. The sell-off is expected to worsen this month as more investors are expected to redeem their investments in hedge funds.

OPEC May Have to Cut Aggressively to Get Ahead of Demand

2009-03-02T12:04:00Z

Look for demand for crude oil to continue to drop as global economies continue to contract. Manufacturing and production is down all over the world, leading to a rise in crude oil inventories because of falling demand despite OPEC production cuts.

OPEC is set to meet on March 15. At that time look for an announcement of additional cuts. They may have to cut aggressively to get ahead of demand.

Bullish Speculators Jump on Precious Metals

2009-03-02T12:03:00Z

Fear of a global financial system meltdown is driving speculators into April Gold and May Silver this morning. Look for the precious metals to move opposite the equity markets. If stocks continue to drop then investors will look for protection in Treasury Bonds, the U.S. Dollar and precious metals.

May Copper is expected to fall as demand for this metal is expected to drop because of the worsening global recession. April Platinum is taking on the characteristics of a safe haven market. As global meltdown fears increase, look for more traders to seek safety in platinum.

Dollar Up as Risk Aversion is the Theme

2009-03-02T12:02:00Z

The U.S. Dollar is rallying overnight as traders seek safety and liquidity. Risk aversion is the theme.

The March Euro is called lower based on the overnight trade as trader appetite for risky assets wanes. Economic contraction and the fear of a collapse of the European Union are the driving forces behind the selling pressure. Traders are also pricing in a rate cut of at least 50 basis points by the European Central Bank on March 5.

The March British Pound is called lower. Fear of a meltdown in the global financial system is driving traders to the U.S. Dollar. News that HSBC posted a big loss is an indication that toxic assets are still having an effect on financial institutions. Last week the U.K. government announced a plan to insure banks against exposure to toxic assets. Based on the sell-off in the Pound the last few days, it looks as if investors will be asking for more from the government.

The March Japanese Yen is up a little overnight. Technically oversold conditions may be the cause of the rally. With Japan’s economy on the brink of a meltdown, it would be hard to believe that investors are putting their money in the Yen for protection. Then again, the U.S. financial system may be so weak that traders may think that the Yen is a safer bet.

The March Swiss Franc is down in overnight trading. Banking problems are weakening the economy. The Swiss banking system is facing exposure to potential defaults from Central and Eastern European banks. This currency has not been the same since the U.S. probe of tax cheats using the Swiss banking secrecy laws to hide assets expanded. Fear of an intervention by the Swiss National Bank is also encouraging selling.

Weakness in the Canadian economy is driving the March Canadian Dollar lower. The recessions in the U.S. and Europe are reducing demand for Canadian exports. The weakness in the U.S. economy is beginning to spread north as Canadian retail sales have also dropped. Although the banking system appears to be sound at this time, Canadian financial institutions should be watched to see if they have exposure to the U.S. and Europe.

Threat of Financial System Breakdown Supports Treasury Bonds

2009-03-02T12:01:00Z

March Treasury Bonds and March Treasury Notes are called higher this morning based on weakness overnight. Investors are buying the Treasuries for safety and liquidity as fear of a financial system breakdown is sweeping through the financial markets.

Flight-to-Safety Buying Continues as AIG Asks for More Money

2009-03-02T12:00:00Z

Over the week-end the U.S. government gave AIG another $30 billion after the insurance giant posted the largest corporate loss in history. The money is expected to be used to reduce debt. The government also lowered the interest rate on borrowed funds. AIG tried to make it clear that the insurance businesses are sound but a hedge fund unit that is part of the company is mostly responsible for the loss because of risky investments.

Overseas, HSBC, one of Europe’s biggest banks, announced they are basically pulling out of the United States after a poor performance by their U.S. consumer loan division. They also announced the need for an $18 billion which they intend to raise through a rights offering. The dividend by the company was also cut as the firm’s annual loss was almost half of its prior year’s profit.

Financials: Treasury Bonds are trading higher as flight-to-quality buying returns.

Stock Indices: The liquidation continues led by the banking sector.

Currencies: More money is flooding into the safety of the U.S. Dollar.

Energies: Global economic contraction means less demand for crude oil.

Metals: Fear is driving investors into Gold and Silver overnight.

Grains: Strong Dollar shifts soybean demand to Argentina.

Softs: Global recession, stronger U.S. Dollar reduces demand for Coffee and Sugar.

Weakening Global Economy Causing Drop in Cotton Demand

2009-02-27T12:07:00Z

May Cotton is called lower as the weakening global economy is causing a drop in demand for cotton fiber. Global demand and domestic demand is down. Buyers may be waiting for lower prices, but news that fewer acres may be planted this year could help to form support at current levels. This market could rally if equity prices can make a dramatic turnaround.

Lower equity markets and a stronger Dollar are expected to put downside pressure on May Cocoa. Speculators who bit on the cheap prices and weaker Dollar may find themselves scrambling to get out of bad positions if this market opens lower. Falling equity markets will also put pressure on this market as this will be a sign that demand will drop because of the worsening global recession.

The stronger U.S. Dollar is expected to keep the downside pressure on May Coffee. Producers are holding back crop because of the lower prices. More pressure is coming from new shorts who believe that the worsening global recession will lead to less demand for coffee. Longer-term traders are just waiting for the right opportunity to buy as prospects are for higher prices later in the year because of lower production.

Overnight India announced bigger than forecast shortfall. Normally this would send the May Sugar market sharply higher, but the stronger U.S. Dollar coupled with weakening equity prices is putting pressure on Sugar overnight. Sooner or later the true fundamentals will take over this market, and sugar prices should surge to the upside.

Soybean Plantings Expected to Increase by 3%

2009-02-27T12:06:00Z

May Soybeans and Corn are set to finish this week sharply lower. News that China may demand less feed grain because of smaller livestock herds is helping to drive prices lower.

Planting intentions are due out this morning. Traders expect more soybeans to be planted and less corn. Farmers tend to plant more of the higher priced commodity. The guess is for a 3% increase in soybean planting intentions from the February 12 report and a decrease of 1% in corn.

The stronger Dollar and tighter credit markets could put additional pressure on these markets as export sales are expected to fall. Sharply lower equity markets could also weigh heavily on these markets.

Nationalization Issue Triggers Weakness in Gold and Silver

2009-02-27T12:05:00Z

April Gold and May Silver are up overnight as global stock markets are selling off on the news that the U.S. may obtain up to 40% of Citigroup common stock. Although not officially nationalization, traders are seeing otherwise and selling equity positions. Fear that more “nationalization” may take place is leading traders to dump banking stocks. The money leaving the stock market may be flowing back to safer assets such as gold, Treasury Bonds and the U.S. Dollar.

May Copper is under pressure this morning. Although this market has been receiving support from China, fear that demand will slow down considerably in Europe is encouraging selling overnight. News that Japan’s factory and automobile outputs have dropped is also putting pressure on this market.

Lower Japanese Production Leads Crude Oil Lower

2009-02-27T12:04:00Z

April Crude Oil is erasing gains from yesterday as traders are reacting negatively to the news of the drop in Japanese factory and automobile production. The slowdown in production means less oil will be needed.

Earlier in the week the market found support from an unexpected drop in gasoline inventory stocks. Losses may be limited today as talk is circulating that OPEC will announce another production cut at its next meeting on March 15. Russia, Iraq and Venezuela have already voiced approval of the impending announcement.

British Pound Down as Royal Bank of Scotland Reports Record Loss

2009-02-27T12:03:00Z

The U.S. Dollar is rallying overnight. Traders are once again treating the Dollar as a safe haven currency.

The March Euro is called lower as trader appetite for risky assets wanes. The Euro is weaker on news that the economy is deteriorating. Lower production and increasing unemployment are the main reasons for the weakness. Traders are also beginning to price in an interest rate cut by the European Central Bank on March 5.

The March British Pound is expected to open lower this morning. Yesterday the Royal Bank of Scotland announced a record loss on the same day the U.K. government revealed its plan to insure banks against toxic assets. With this widely anticipated announcement out of the way, investors may be telling the government that they want more by selling the Pound today.

The March Japanese Yen is recovering slightly after trading lower the whole week. Last night the government announced that factory and automobile output had dropped. This trend is likely to continue as long as the economies of Japan’s biggest customers - the U.S. and Europe - continue to weaken. Oversold conditions may trigger a short-covering rally today.

The March Swiss Franc is under pressure this morning as traders are once again returning to the safety of the U.S. Dollar. Most traders are skeptical about going long the Swiss Franc in anticipation of quantitative easing and devaluation by the Swiss National Bank.

The March Canadian Dollar is giving back yesterday’s gains as lower equity markets are putting pressure on commodity prices. Crude Oil, a key component of the Canadian economy is also under pressure because of the lower production numbers out of Japan. Look for the Canadian Dollar to follow the stock market today.

Equity Traders Express Dismay at New Citigroup Deal

2009-02-27T12:02:00Z

Stocks are selling off overnight as traders express there dismay with the pending announcement of the U.S. getting a bigger share of common stock in Citigroup. Although it is technically not nationalization, traders can see no difference and are selling stocks like they did on Monday.

Right before the opening, the March E-mini S&P 500 looks like it will be in a position to take out the November 20 bottom at 739.00. No one really knows what is under this price so new support cannot be determined at this time. How far this break goes through this bottom will be determined by the momentum at the time of the break.

Banking issues are leading the market lower. Healthcare issues are close behind because of issues with Obama’s budget. Unless there is a massive reversal early in the trading session, look for downside pressure all day as traders will liquidate positions rather than hold risky stocks over the week-end.

Size of Budget Deficit Puts Negative Spin on Treasuries

2009-02-27T12:01:00Z

March Treasury Bonds and March Treasury Notes are called higher this morning as a sell-off in equities overnight is rekindling the recent flight to quality rally. Yesterday Treasuries were getting pressure from traders who were anticipating higher interest rates because of the increase in the size of the budget deficit. Overnight, however, the weaker stock market is encouraging investors to dump risky stocks and buy the safer Treasury Bonds and Notes.

Treasury Considering Deal to Boost Stake in Citigroup

2009-02-27T12:00:00Z

The news broke overnight that the U.S. Treasury was considering a deal to significantly boost its stake in Citigroup. The plan is for the government to convert its preferred shares in Citigroup into common shares but only if private investors do the same.

The action by the government is to bring Citigroup closer to the mix of capital that the Feds want when they conduct their stress tests. The stress test will be used to determine the banks ability to survive future economic shocks.

The deal which has the potential to increase the government’s stake from 8% to 40% will require no additional money from taxpayers. Those who consider this a good deal cite the fact the Treasury will get voting shares and more say in the bank’s operations. On the downside, shareholders will have to absorb losses and taxpayers could lose money if the bank continues to post losses. Another thing to consider is the stock of Citigroup is cheap right now and has tremendous upside potential which could lead to big profits for taxpayers.

The major issue is the deal is too close to nationalization which the stock market showed on Monday it does not want. Like I mentioned the other day in my overview, it’s all about semantics.

Economists are still mulling over Obama’s $3.55 trillion budget. The main concern is the report is too optimistic with its outlooks. Too many positive assumptions have been made about future revenue streams.

Last week the Euro fell on the news that Euro Zone banks faced exposure to downgrades of several Eastern and Central European banks. Last night the European Bank for Reconstruction and Development, the European Investment Bank and the World Bank announced a two-year plan to ensure that Eastern European banks would have access to capital. The Euro is down this morning. Let’s see if this solution solves the problem.

Yesterday the Royal Bank of Scotland posted one of the largest corporate losses in U.K. history. At just about the same time the U.K. government announced a plan to insure banks against toxic asset exposure. The British Pound is down overnight. Is this a case of buy the rumor, sell the fact or a lack of confidence in the plan?

Also yesterday General Motors announced a $30.9 billion loss in 2008. Now they may have to go back to the government for more money, go bankrupt or find someone to merge with. It looks as if they will not be able to pay back the loan from the U.S. given to them in December.

The market may react to the decrease in U.S. GDP. The new updated GDP figure is expected to show a decline of 5.4% for October 2008 to December 2008. The first guess a month ago was for a decline of 3.8%. The new figure is the worst number since the first quarter of 1982.

Financials: Treasury Bonds are trading higher as flight-to-quality buying returns.

Stock Indices: Nationalization issue drives equities lower overnight.

Currencies: The U.S. Dollar is regaining its status as a safe-haven currency.

Energies: Production losses in Japan mean less global demand for crude oil.

Metals: Gold and Silver are set to recover losses from earlier in the week.

Grains: Soybeans are trading lower in anticipation of higher planting intentions.

Softs: Sugar could rally as India announces a greater short-fall.

Lower Production from India and China Likely to Support Sugar

2009-02-26T12:07:00Z

Higher equity markets and a lower Dollar may increase demand for May Cocoa. Prices have dropped far enough to make cocoa cheap enough to attract both speculative and industrial buyers.

Look for a possible short-covering rally in May Coffee as the weaker Dollar may lead to an increase in demand. Fear that the recession may lead to less demand for coffee has been keeping prices down. Longer-term, lower production is expected to support a rally later in the year.

News that India and China will produce less sugar is helping to support May Sugar. The market is still waiting however for India to actually step in and start buying. Right now the market is trading firm because speculators are supporting the market. Once India starts to buy the market should breakout to the upside.

May Cotton has been feeling pressure recently because the worsening global recession is decreasing demand for cotton products. A surge in equity prices today and a weaker Dollar may be enough to trigger a short-covering rally. New speculative buyers may not step into this market until after the release of planting intentions on February 27. This may be a bullish factor as planted acres are expected to drop.

Soybeans Could Feel Pressure on Weakening Demand from China

2009-02-26T12:06:00Z

May Soybeans and Corn could feel pressure today because of reports out of China that demand for U.S. soybeans may drop. China’s livestock industry has been devastated by the downturn in the economy leading to less demand for feed. This is leading to speculation that demand for U.S. feed grains will drop as some herds are being thinned or eliminated.

Losses may be limited however if a strong rally in equity markets increases demand for commodities. Trading may also be limited because of the upcoming release of U.S. planting intentions on February 27. This report is expected to show an increase in soybean acres and a decrease in corn acres. The weaker Dollar may also trigger increased demand elsewhere. The key to supporting this market will new sales to other foreign countries to replace the decline in demand from China.

Gold and Silver Lose Appeal as Safe-Haven Investment

2009-02-26T12:05:00Z

Speculators who bought precious metals for protection against the weakening stock market are selling positions as the fear of a major market breakdown is waning. Comments this week by Fed Chairman Bernanke and President Obama that the U.S. is not considering nationalizing its major banks is helping to drive up demand for higher yielding assets like the stock market at the expense of gold and silver. April Gold and May Silver could see large declines if the stock market posts another strong rally.

May Copper is getting a boost this morning from a weaker Dollar and the prospect of more demand from China. China has been moving forward with its plan to stimulate the economy which is leading to more demand for industrial metals. April Platinum could also benefit from greater demand for industrial metals.

Surprise Drop in Gasoline Stocks Could Ignite Rally in Crude Oil

2009-02-26T12:04:00Z

A surprise drop in gasoline inventory is leading to a surge in April Crude Oil this morning. Stronger equity markets are also helping to support higher markets today.

News that OPEC members have been complying with production cutbacks had been supporting the market all week. The current rally, however, is a sign that shorts are becoming nervous and may be forced to cover.

Longer-term traders may also be positioning themselves for a rally in anticipation of another round of production cuts by OPEC. These new cuts are expected to be announced at the next meeting on March 15, but traders are fairly confident something will be done as Russia, Iraq and Venezuela have already thrown their support behind another reduction.

U.S. Dollar Weak on Thought of Ballooning Deficit

2009-02-26T12:03:00Z

The U.S. Dollar is under pressure this morning. Traders are more confident in holding higher risk assets as the fear over banking nationalization that has been gripping the markets seems to be waning.

The March Euro is expected to open higher. Traders are buying the Euro and selling the Dollar as trader appetite for more risky assets is increasing. The Dollar is losing its luster as a safe haven asset following comments this week by Bernanke and Obama that the idea of nationalizing banks is off the table.

The March British Pound is trading higher this morning. The combination of a weaker Dollar along with plans by the Bank of England to cut interest rates and provide economic stimulus are attracting investors.

The March Japanese Yen continues to lose value as fear of an economic meltdown in the Japanese economy continues to grow. Yesterday’s report of a 45.7% decline in exports is rocking the Japanese economy as Bank of Japan officials try to figure out a way to shore up the economy. At this time the BoJ is said to be considering a plan to buy Japanese stocks. What the economy really needs is an increase in exports, but that is unlikely to happen as Japan’s major trading partners are all going through severe recessions.

The March Swiss Franc is expected to trade higher this morning as the U.S. Dollar is losing its grip as a safe haven currency. Traders seem to be more willing to look for better return on their assets despite the fear of quantitative easing and devaluation by the Swiss National Bank.

The March Canadian Dollar is expected to open higher. The firm trade in equity markets is leading commodity prices higher. This is helping to support commodity-linked currencies like the Canadian Dollar. Higher crude oil prices are also helping to rally the Canadian Dollar. A rally in the stock market is likely to increase trader demand for higher risk assets which should help to support the Canadian Dollar today.

Equity Markets Looking for Fresh Buying

2009-02-26T12:02:00Z

Equity markets are expected to open higher. Traders are feeling more optimistic about holding higher risk assets now that the thought of the nationalization of major banks has been squashed according to comments by Fed Chairman Bernanke and President Obama.

Although this current rally is most likely short-covering, there are signs that bargain hunters are also expressing interest. Both short-covering and fresh buying is needed to drive this market out of the hole. Bulls are excited about the prospect of a weekly reversal up as the market has recovered last week’s close following a test of the November 20 bottom.

Treasury Bonds Trading Lower on Flight-to-safety Profit-Taking

2009-02-26T12:01:00Z

March Treasury Bonds and March Treasury Notes are expected to open lower as traders are selling off positions initiated out of fear of banking nationalization. Traders no longer feel that nationalization of the nation’s major banks is a threat following assures by Bernanke and Obama that the idea is off the table. News that the U.S. budget will be about $3.55 trillion and create a deficit of $1.75 trillion is leading to speculation that interest rates will have to rise, thereby pressuring Treasury prices.

Obama to Announce $3.55 Trillion Budget; U.S.Deficit to Balloon to $1.75 Trillion

2009-02-26T12:00:00Z

The fear that has been gripping the market the past two weeks seems to be waning. The best signs of this are the weakening U.S. Treasury markets, the lower U.S. Dollar and falling Gold prices. All three of these markets had previously been used as safe-havens.

It has been reported that Obama will announce a $3.55 trillion budget package that will increase the budget deficit to about $1.75 trillion.. The equity markets seem to like the idea of spending money but the Treasuries are indicating that interest rates will have to rise to cover the debt to pay for this budget while currency traders think it will be bad for the Dollar.

The worsening economy in China is taking its toll on farmers. Livestock prices are plunging and ranchers are limiting their herds. This is expected to lead to less demand for feed grains such as soybeans.

Financials: Treasury Bonds are trading lower as flight-to-safety traders sell positions.

Stock Indices: Fresh Buying Rather Than Short-Covering Needed to Get Markets Out of Hole

Currencies: The U.S. Dollar is weak on the thought of a ballooning deficit.

Energies: Surprise drop in gasoline stocks could ignite a rally in crude oil.

Metals: Gold and Silver are losing their appeal as a safe haven market.

Grains: Soybeans could feel pressure on weakening demand from China.

Softs: Lower production from India and China likely to support Sugar.

Cheap Prices Could Lead to Increase in Demand for Cocoa

2009-02-25T12:07:00Z

Cheap prices could lead to increased demand for May Cocoa from speculators and food producers. The key is whether the U.S. Dollar will cooperate and trade lower. Hedge funds have been supporting this market because of concerns over supply, however the lack of demand because of the strong Dollar is the major concern at this time.

March Coffee seems to be following equity markets over the short-term. Speculators believe a rise in the stock market will lead to increased demand for commodities. Currently the bears are in control as a prolonged recession is likely to reduce consumption. Another round of negative economic news may trigger another decline. Longer-term traders are still counting on a smaller crop in Brazil to support prices later this year.

News that global production shortfalls affecting Sugar will widen as output declines in India and China may support higher prices today in May Sugar. The longer-term fundamentals are still indicating that global demand is going to outstrip production, but the stronger Dollar has been curtailing gains. The market seems to be waiting for India to step in and start buying. A weaker Dollar today could fuel a strong rally.

The unknown factor at this time is Brazil. The bulls are wondering if Brazil will be able to step up and make up the shortfall in supply. Bearish traders cite the fact that less demand for sugar used as a bio fuel will allow Brazil to make more sugar available.

May Cotton continues to feel downside pressure as consumer demand for cotton is expected to drop as the global recession worsens. Traders will be watching the USDA planting intentions report on February 27 to find out how many acres will be planted this spring. The number is expected to be down as many cotton acres have been claimed by soybean farmers. Although this market is bearish in the short-term, fewer planted acres along with a weather market this spring or summer could help rally cotton over the long-run.

External Factors Will Determine Direction of Soybeans and Corn Today

2009-02-25T12:06:00Z

May Soybeans and Corn were trading higher at the overnight close in anticipation of greater demand for higher yielding assets because of the stronger stock market and weaker Dollar. Since this close, however, equities have weakened and the Dollar has strengthened. This could lead to a lower opening. Corn and soybeans seem to be reacting to external factors lately rather than traditional grain fundamentals.

Looking ahead to later this week the USDA reports new planting intentions on February 27. Soybean traders plan to increase acres by up to 3.9% from 75.7 million acres in 2008. This is also 6.3% more than reported on February 12.

Corn plantings may fall 1% to 85.14 million bushels from the 85.98 planted last year. 88 million acres was the estimate on February 12.

Gold Could Fall if Optimism Returns to Equity Markets

2009-02-25T12:05:00Z

Based on the overnight trading, precious metal traders can expect a volatile day. April Gold and May Silver are mounting a comeback rally after a night of selling. Traders are either setting up a top with the rally or buying again in anticipation of another day of heavy selling in the equity markets. Technically the precious metals look good for a long-term rally, but short-term the market may have gone up “too far, too fast” last week. The market is beginning to look a little crowded up at $1000.00.

May Copper may get support today from a weaker U.S. Dollar and the possible hoarding of supply by China. China has been buying up other industrial metals in anticipation of greater demand because of the implementation of its stimulus plan. April Platinum has reacted like Copper, but is instead taking its direction from the rally in gold.

Crude Oil Under Pressure From Drop in Demand; Inventories Expected to Rise

2009-02-25T12:04:00Z

The direction of the April Crude Oil market is likely to be dictated by the stock market today. A follow-through rally in the equity markets will likely trigger greater demand for higher yielding assets. Lower equity markets will cause traders to dump crude oil.

Traders will also be paying attention to today’s crude inventory report. Guesses are for an increase of 1.25 million barrels. Expectations are for the trend to continue to rise as OPEC production cuts have not been able to keep up with falling demand although OPEC member compliance with the production cuts is at a high level.

Expect another production cut by OPEC at its March 15 meeting. Russia, Iraq and Venezuela have already indicated that they are in favor of a cut. Bullish traders are still waiting for the drop in demand to level off. Reports are showing that this may not occur until late in the year.

U.S. Dollar Could Drop if Equity Market Rally Leads to Greater Demand for Risk

2009-02-25T12:03:00Z

The U.S. Dollar is trading better this morning. The lack of follow-through in the equity markets overnight is leading traders to take profits in the currency markets following yesterday’s short-covering rally.

The March Euro is trading lower overnight. Last night’s speech by President Obama failed to ignite any optimism in the markets and traders see no reason to seek higher yielding assets at this time. Traders may once again focus on the deteriorating Euro Zone economy and the possibility of a 50 basis point interest cut by the European Central Bank on March 5. News released over night that the European Union is going to recommend that financial institutions be regulated by a financial market watch dog may be having a negative effect on trading this morning.

The March British Pound may be forming a short-term top ahead of the announcement later this week of a plan to remove toxic assets from the books of some of its banks. Central bank buying of assets usually means more money flooding the market which can have the effect of diluting the currency.

Late last night a government report showed that the revised U.K. 4th quarter GDP showed a decline of 1.9%. This was inline with estimates but lower than the original number which showed a gain of 0.%. The current weakness may be attributed to technical factors which are indicating a slightly overbought condition.

The March Japanese Yen traded sharply lower overnight following the release of a report showing that exports declined a record 42% during January. The recent trading action suggests that the large carry trade has been officially unwound as traders are no longer focusing on the stock market buy on the Japanese economy.

The market turned higher overnight following the release of the export report. This may be a case of sell the rumor, buy the fact as traders may have already priced the bearish number into the market. News that the Bank of Japan may be in the market to buy Japanese stocks in an effort to prop up the stock market may also be triggering the short-covering rally although this is unlikely since putting more money into the market would devalue the currency. Technically, oversold conditions may be driving shorts to cover.

The March Swiss Franc is trading steady-to-better overnight. There is no particular reason for this firmness unless traders believe the market is oversold or the U.S. Dollar is losing its luster as a safe-haven currency.

Longer-term, the March Swiss Franc is expected to feel more downside pressure as the contraction in the Swiss economy is leading traders to believe that the Swiss National Bank is ready to use quantitative easing and devaluation as a means of increasing demand for Swiss exports.

The March Canadian Dollar is giving up gains overnight as the weaker equity markets are leading traders to shy away from commodity-linked currencies. Lately the Canadian Dollar has been trading in an opposite direction of the stock market. News earlier this week that retail sales dropped is a sign that the global recession is no longer isolated to Canadian exports but is spreading to the domestic economy.

Were Bernanke's Comments Strong Enough to Trigger a Follow-Through Rally?

2009-02-25T12:02:00Z

Yesterday Fed Chairman Bernanke injected optimism into the equity markets by saying the U.S. government has no plans of nationalizing its major banks and that he believes the government is well on its way to stabilizing the banking industry and finding the source of the problems. Trader appetite for higher yielding assets increased on his comments but gains may have been limited by his comment that the recession may last into 2010.

Equity markets are trading sideways-to-lower overnight as last night’s speech by President Obama offered no new insight into his financial stimulus plan. Although he was not as negative in his speech as he was while making comments last week, he really said nothing to encourage a follow-through rally today. So far it looks as if this oversold market was merely retracing 50% of Monday’s losses. A follow-through rally today will most likely be technically driven because of oversold conditions as the fundamentals continue to remain bearish.

Treasury Bonds Are Trading Mixed as Traders Await Stock Market Opening

2009-02-25T12:01:00Z

March Treasury Bonds and March Treasury Notes are trading sideways to higher as the market has had no strong reaction either way to last night’s speech by President Obama. The lack of fresh details of Obama’s financial stimulus plan means the market will most likely get its direction from the stock market. If sellers hit the short side of the equity markets then look for a rally as traders will seek the safety of the treasury market. A stronger stock market will likely lead to profit-taking from traders who bought Treasuries as a safe haven investment.

Obama says Current Financial Situation Could Get Worse

2009-02-25T12:00:00Z

The markets are having a mixed reaction to President Obama’s first speech to a joint session of Congress last night. Obama did not reveal any great details about the government plans to revive the economy. This speech was more upbeat than his recent comments. He must have listened to his critics who had accused him of putting fear into the market. While he made not have been as negative in his delivery as he was last week, he did mention that the current financial situation could get worse if nothing is done.

Obama cautioned that his financial stimulus plan was only the first step toward recovery and that more money may have to be made available to the banks, but he denied that the government’s intention was to nationalize the larger banks. He also stated that there will be no real recovery unless we clean up the credit crisis which has crippled the economy. Furthermore, he added that the U.S. is working with the G-20 nations to restore confidence in the global markets. Finally, he said that there will be no movement toward protectionism but we have to find a way to spur demand for U.S. goods.

Yesterday Fed Chairman Bernanke helped bring optimism to the markets when he stated that the government is not on a path toward nationalizing major U.S. banks. He also said that the government is well on its way to figuring out how to stabilize the financial markets and how to fix the problems. The only negative was his opinion that the recession may continue into 2010.

The issue regarding nationalization is boiling down to semantics. If the private sector does not want to invest in bank stocks and the government puts up the money - it is nationalization whether they call it that or not. Bank stocks have been going down lately because investors believe their equity will be wiped out if the banks are nationalized. Until investors can be assured that the banking system is safe, continue to look for more selling pressure driven by fear.

Before the week’s end, 19 banks that received TARP money will be undergoing stress tests to see if they have enough capital to survive. This will be an important test to see if the government has the ability to separate the good banks from the bad banks. Basically it amounts to a pass/fail test.

Today’s sales of U.S. previously owned homes may show a rise this morning as bargain hunters may have taken advantage of the large number of home available because of foreclosure.

Financials: Treasury Bonds are trading mixed as traders await stock market opening.

Stock Indices: Were Bernanke’s comments strong enough to trigger a follow-through rally?

Currencies: U.S. Dollar could drop if equity rally leads to greater demand for risk.

Energies: Still under pressure from drop in demand. Inventories are expected to rise.

Metals: Gold could fall if optimism returns to the equity markets.

Grains: External factors will determine the direction of soybeans and corn.

Softs: Cheap prices could lead to increase in demand for cocoa.

Sugar May Fall as India Votes to Curb Speculative Rise in Sugar Prices

2009-02-24T12:07:00Z

May Cocoa is could trade higher today if the U.S. Dollar remains under pressure. A rise in equity markets could help draw traders into buying higher yielding assets like cocoa. Supply is not an issue at this time. Traders seem to be more focused on whether demand will pick-up. The rapidly deteriorating global economy is said to be having a negative influence on demand for cocoa products. Unless the Dollar declines substantially look for any short-covering rally to be short-lived.

March Coffee may get a boost if the Dollar remains under pressure today. A rally in the stock market may also trigger greater demand for higher risk assets like coffee today. Short-term this market remains weak because of the lack of global demand tied to the weakening global economy. Longer-term, lower production is likely to trigger a price rise later in the year.

The longer-term fundamentals are still supporting May Sugar, but news that the government of India is taking action to prevent the speculative rise in sugar prices could put pressure on the market today. This action should hurt the market in the short-term but sooner-or-later the bullish fundamentals will take over to drive prices higher as India is going to have to come into the open market to buy sugar.

May Cotton remains under pressure because of the lack of global and domestic demand for U.S. cotton products. A weaker U.S. Dollar may curtail some of the break today. Longer-term, the planting of fewer acres of cotton should be supportive to prices later in the spring. Speculators are hoping China returns to the market, but this is unlikely as they have been move active in shoring up dwindling food stocks.

Lower U.S. Dollar Needed to Jump Start Demand for Soybeans and Corn

2009-02-24T12:06:00Z

May Soybeans and Corn are under pressure overnight despite the weaker U.S. Dollar. Export sales have failed to see a revival despite the recent weakness in the Dollar. Tighter credit markets are said to be having the biggest influence on export sales at this time. Foreign buyers may be having a hard time obtaining letters of credit to complete deals.

A strong stock market today could help support the grain markets as traders may gain confidence and seek to buy higher yielding assets.