Commodities Report

lunedì 28 aprile 2003 -- THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS ENERGY:4/28 OVERNIGHT CHG to 4:15 AM :CRUDE -39 ,HEAT-33 ,UNGA-97 There was a clear divergence between crude oil and unleaded late last week, as the news that Venezuela might have trouble restarting unleaded production rekindled the fear of summer gasoline tightness. In other words, it would appear that we are right back to the age-old problem of getting product supply, even though the supply of crude might be on the rise. Over the last three years, we have seen consistent concerns about summer gasoline supplies and therefore the duration of the Venezuelan RFG outage is a significant issue. The COT report showed a net short fund and small spec position of 27,000 contracts and the crude closed the week nearly $2.00 below the level where crude was trading when the COT report was measured. Therefore, we have to think that the net short position might be close to 40,000 contracts, which is pretty oversold. With the exception of the 1998 debacle, crude oil hardly ever sees a net spec short position in excess of 50,000 contracts. While the technical position would seem to limit the downside, it is possible that a negative macro economic condition could combine with a slack seasonal demand period, to press prices lower than they might see under normal conditions. There could be some support for prices this morning off reports that Venezuela had to shut down a massive 940,000 barrel per day refinery, because of a fire over the weekend. However, apparently other units at the affected refinery are more than capable of offsetting the lost output of that one cracker. We would not be surprised to see the June crude contract attempt to test the April low, particularly if the SARS issue continues to be a threat that could eventually shut down a large portion of international air travel. We would not underestimate the macro economic impact of shutting down the world economy, to prevent the spread of disease. Some think it won't happen but that could be the only way to contain the spread of the virus. With the stock market already weak and OPEC apparently not scaring the bears, it might be easy to see another $1.00 decline in nearby crude. In fact, it would not be shocking to see a $2.00 break but then the market would be historically oversold. NATURAL GAS: The net spec long reached up to 31,647 contracts and that is a very over extended long position, in a market that is seeing negative weather, negative macro economic conditions and negative influence from the regular energy complex. Considering that the last inventory report showed a large injection, instead of a draw, would seem to turn the seasonal pattern against the bulls. Furthermore, the natural gas market is also holding significantly above the April lows and massively above the natural gas price structure, seen in the dead of winter. We see no reason why the June contract would not slide back to the March and April consolidation zone, which is bound by $5.33 and $4.93. ---------------------------------------------------------------------- lunedì 28 aprile 2003 -- THE HIGHTOWER REPORT MORNING STOCK COMMENT CHANGE to 4:15 AM:S&P+190 DOW +22 NIKKEI 91 FTSE +7.5 According to a late flash, the WHO (World Health Organization) suggested that the worst of the SARS outbreak is over in Canada and Vietnam and they also seemed to suggest that the spread of the outbreak might have peaked in Hong Kong and Singapore. Therefore, we can at least understand the partially favorable overnight action in the US markets, following the mostly weaker equity market action in Japan. While the market might pay attention to the McDonalds earnings report today, we suspect that the overriding attention will be given to the state of the world economy and that outlook is unclear. With a widely followed German economic survey showing significant weakness in the German economy and Taiwan promising to quarantine visitors coming from infected areas, it is clear that international travel activity is still under attack. With the WHO statement this morning suggesting that SARS cases in China (everywhere but Hong Kong) appear to be spreading rapidly, it is clear that we are not done with the SARS story as a market impacting phenomenon. Certainly the economy is benefited by what appears to be another downside breakout in energy prices, but since lower fuel prices will take time to work through the economy, little benefit is detected in the near term. Our gut feeling is that the market is undermined and is simply using the SARS issue to justify a correction off the March and April rally. In fact, unless Saddam is located, or Bin Laden is captured, we get the sense that the market is willing to accept the bear view, at least for the early part of this week. According to the COT report, neither the Dow, nor the S&P have an extensively long small spec position, so the pace of selling should not be that aggressive. In other words, unless the SARS issue is fostering broad based panic, the declines in the stock market should be orderly and measured. In conclusion, the bull camp needs some headline story to countervail the bear tilt! DOW: Moving average support comes in at 8107 in the June Dow, while a trend line gives slightly lower support at 8098. Unless one of the earnings reports today comes in much better than expected, or the WHO suggests that SARS in China (outside of Hong Kong) is coming under control, we see no reason to halt the slide in prices. S&P: We see a critical pivot point coming in today at 896.30 and that same point figured into a number of forecasts last week. Therefore, we would use that level as a critical bull/bear line on the close today. The S&P would not appear to be vulnerable from a technical perspective, but is somewhat suspect from a fundamental perspective. Because the market lost the bull buzz off the favorable earnings reports so quickly, it's apparent that the trade is not ready to extend the rise off the March low. A logical correction point on this move is 870 to 875 in the June contract. ---------------------------------------------------------------------- lunedì 28 aprile 2003 -- THE HIGHTOWER REPORT MORNING METALS COMMENT METALS:4/28 OVERNIGHT CHANGE to 4:15 AM:GLD+0.20 ,SLV-1.7 ,PLAT-3.00, CP +10 London Gold Fix $333.70 +$.30 LME Copper Warehouse stks 775,000 ton -1,900 tons Comex Gold stocks 2.380 -64 oz COMEX Silver stks 108.1 ml oz Unchanged OVERNIGHT: Higher action prompted by Japanese buying but volumes were thin. GOLD: The gold market comes into the week with 52,000 spec longs, a 4,000contract increase over the prior week. However, we classify the positioning in gold to be only slightly overbought. The fact that the gold remains weak, with the SARS issue still grabbing the headlines should give the bulls only a slight edge. The June gold hovered just below a critical moving average for most of last week. Therefore, a trade back above $335.3 could turn some technicals bullish. With June gold holding $14 above the April low and the market lacking a clear fundamental focus, we can't advise a fresh long until prices dip down into a $331.4 to $327.6 range. Maybe the SARS issue will drive gold but that story could just as easily become a deflationary pressure on gold prices. Trend line support comes in at $327.0 while a critical upside pivot is seen with a trade back above $336.8. SILVER: The net spec long in silver is 27,000 contracts, which is only a moderately long position. The overnight action in silver is somewhat bearish with a minor gap down move. While US equities were showing signs of opening higher, the international markets were showing weakness. It would seem that China and Taiwan will either close some facilities or quarantine visitors over the next two weeks, in an effort to contain the SARS outbreak and that might be just enough to undermine silver from a physical demand perspective. Critical trend line support in the July silver is seen at $4.53 but this market is vulnerable considering the increased volume posted last week on the rally. PLATINUM: A major probe down overnight highlights the potentially negative Asian demand threat. In fact we would be surprised to see the platinum respect support of $598.5 in the July contract. Considering the historically high price that platinum is trading at, one can hardly argue against a moderate liquidation, especially if the Asian containment procedures serve to contract economic activity. The bears have the edge until equities signal the all clear. ---------------------------------------------------------------------- lunedì 28 aprile 2003 -- THE HIGHTOWER REPORT MORNING FOREIGN EXCHANGE COMMENT FOREX:4/28 OVERNIGHT CHANGE to 4:15 AM:$ -1 ,YEN+6 ,SF-9 ,CA+9 EU-7 DOLLAR: The Dollar is helped today because the news from the Euro zone is worse than the news from the US. That German Ifo survey serves to set the Euro off balance to start the week and with the Dollar so close to longer-term technical support we can understand a minor bounce off the recent lows. It is also possible that early US economic news provides a little incentive to bounce, especially if US corporate earnings reports can pick up where they left off last week. In the near term, we would be surprised to see the Dollar get back above a critical pivot point around 99.00. If fact, with a rise back above 98.68, in the June Dollar, we would become an interested buyer of July Dollar Index puts. EURO: The German Ifo survey showed surprising weakness, with the Ifo suggesting that they see no near term signs of a turnaround and that should dampen the outlook for the Euro. It should also be noted that the Ifo indicated that the relatively high value of the Euro has hurt sentiment and might be hurting exports from the EU. Therefore, the bulls in the Euro see the risk of being long increased slightly. It is still surprising that the SARS issue is seen as a supportive development for the Euro and that is probably because the US has close to 50 reported cases and because the US is in closer proximity to Canada. Critical support in the Euro is seen at 109.42 and we would become a buyer at that level. YEN: It would seem that the Yen will come into the week with slightly less anxiety toward the SARS virus and that is because the WHO suggested that Vietnam was able to contain the spread of the virus, after its initial infection. Therefore the Japanese don't have as much to fear off the epidemic. However, the Yen might see buying interest limited to short covering, as March retail sales readings were less than impressive overnight. Near term resistance is seen at 83.82 and support is seen at 83.01. SWISS: The trend is up in the Swiss but we doubt that the Swiss will see as much flight to quality buying as it did last week. Therefore, traders might have to wait for a correction to 73.16 to get long the Swiss. However, a buy in the Swiss at current levels, off the current fundamental mix, doesn't appear to be a strong trade. POUND: The Pound broke out to the upside overnight and looks to make a run at the March high of 160.58. The CBI report showed a decline in demand and that should limit the recent pattern of strength in the currency. CANADIAN: We suspect that the WHO statement about the SARS virus coming under control in Canada, will serve to lift the currency. If the outbreak really is under control, the break last week should set the Canadian up for a stronger rise, off a more balanced technical condition. A breakout of the up trend pattern comes in on a trade above 69.22 in the June contract. ---------------------------------------------------------------------- lunedì 28 aprile 2003 -- THE HIGHTOWER REPORT MORNING FINANCIAL COMMENT FINANCIALS:4/28 OVERNIGHT CHANGE to 4:15 AM :BONDS +4 Despite seeing slightly firmer opening indications from the US equity market, the international equity markets were down because of the SARS issue. With a number of countries moving more aggressively to contain SARS, we have to think that the economic outlook is going to suffer and that should continue to favor the bull camp in Treasuries. While some US numbers today would undermine prices early, we have to think that bonds and notes will continue to climb toward the March highs. With a German Ifo survey showing weaker than expected activity in Germany, it should be easy for the market to fear for the economic recovery. Considering the pace of activity in Germany, calls last week for a 50 basis point rate cut by the ECB, the potential economic disaster in China and somewhat sluggish economic activity in the US economy, it would not be surprising to see the June bonds regain 114-00 today (115-06 in the June Notes). Considering that the COT report showed the funds and the small specs to be net short, as of last Tuesday, suggests that most of the gains of the last week might have been short covering, instead of fresh buying. If the headlines trumpet an ongoing problem in containing the SARS virus, we suspect that fresh buying will be noted. Some traders might peg the top of the channel in the bonds to be 113-26 (June Notes at 115-22) and that suggests that bonds have less upside on this move than do the Notes. We have to think that the Treasuries will be generally supported by the week ending monthly non-farm payroll report, but this could be a classic case of buy the rumor/sell the fact, as the bull camp looks to run prices up into the employment report. Until you can fairly downgrade the threat of SARS, you can't be comfortable attacking the short side of the fixed income market, even if prices appear to be overly expensive. Those that want to get short should buy puts. ----------------------------------------------------------------------

giovedì 24 aprile 2003 -- THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS ENERGY:4/24 OVERNIGHT CHG to 4:15 AM :CRUDE -10 ,HEAT+43 ,UNGA+20 Massive crude stock builds certainly gets the attention of the OPEC members into the meeting today. While a one week rise in inventories doesn't guarantee a trend toward stock rebuilding, the magnitude of the inventory gains is quite surprising. Therefore, it will be very interesting to see how OPEC responds to the increased threat of a supply glut. Initially the OPEC meeting seemed to acknowledge the threat of a supply build, as the Venezuelan Oil Minister suggested that a 2 million barrel per day cut was appropriate. The Saudi Oil Minister suggested that the $25 level was a level that would spark additional action. It was our opinion that OPEC needed to respond with at least a 2 million barrel per day cut and maybe more if they wanted prices to rise above this week's highs. The Algerian Oil Minister suggested that OPEC would "continue to meet the world's needs provided that crude prices were within the $22 to $28 banding range. With recent price action above the top end of the band, OPEC might have had a false sense of security and that might be why some countries will fail to comply with any new cuts. As the trade went out Wednesday, it is possible that the market needed a 2 million barrel cut and that will be the benchmark for the meeting today. We suspect that OPEC will begin to get edgy if nearby prices slide below the top half of the band and the Saudi Minister basically confirmed that suspicion, with his $25 pricing comment (which now becomes a line in the sand for OPEC). Brent crude pricing overnight was $24.30 in the June contract and would put OPEC in a defensive mood. Therefore a near term slide below chart support of $26.30, (in the June crude oil) might signal a temporary loss of control by the bulls. In addition to a sharp rise in crude stocks Wednesday, the refinery rate also increased and that could take some of the upside momentum out of the gasoline market. However, with US unleaded gasoline stocks holding tight below 210 million barrels, supplies are still relatively tight. In fact, US gasoline stocks are still about 6 million barrels below year ago levels. Last year at this time gasoline prices were slightly above current levels. In other words, gas prices are cheap and one has to consider supplies to be tighter than last year at this time. The current refinery operating rate is also about 1% below year ago levels, but if the refinery rate manages to climb above 95% before mid May that could really dampen the bulls hopes for a summer gasoline rally. While we are shocked at the large crude stock builds, we would still buy a break to $26.00 if given the chance, as that could put the spec position back into a net short posture. Considering tight supplies, strong demand and ongoing uncertainty in oil production it would be surprising for the energy complex to maintain a net short speculative position for an extended period of time! NATURAL GAS: Expectations for the weekly inventory report are for a draw of 30 to 55 bcf and that will certainly expand the annual deficit. We have to think that recent cool weather will continue the draw season and that is supportive to prices. The fact that natural gas managed to withstand the weakness in the regular energy complex, suggests that the bulls still maintain control over prices. However, if OPEC fails to step forward with full consensus and strong dialogue that could leave June natural gas without solid support from theenergy complex. With the small spec long position still holding a record net long position, the natural gas is technically vulnerable. It would certainly help the bear case to see temps rise a little and for the stock market to correct sharply. June natural gas makes a bad trade with a slide below $563. ---------------------------------------------------------------------- giovedì 24 aprile 2003 -- THE HIGHTOWER REPORT MORNING STOCK COMMENT CHANGE to 4:15 AM:S&P-230 DOW -26 NIKKEI +61 FTSE -5.7 This could be an important session for the equity market, as fundamentals appear to be dimming and the market is certainly over extended technically off the recent rise. We continue to see enough disconcerting headlines on the SARS issue to think that the global economic outlook is being impacted. Since there is little one can do to forecast the odds of containment of the SARS virus, one can only keep a very close eye on the number of new cases. With the OECD suggesting this morning that they couldn't rule out a recession in the euro zone and that the ECB might still have to cut interest rates another 50 points, to insure recovery, it is clear that the macro economic outlook is becoming less favorable than it was early in the week. In other words, the market would appear to be poised for a profit taking correction. However, as long as the SARS issue doesn't get out of hand, a normal technical correction shouldn't result in a panic liquidation. Signs that the SARS issue is getting out of hand, could take the form of new travel restrictions beyond China and Toronto. It is also possible that the US economic report slate will favor the bear camp today, unless the durable goods report surprises the trade with a better than expected reading. The US Fed Beige book yesterday showed some weakness off poor weather and some pressure off the war but since the labor market showed signs of improvement in the report it is clear that the economy is holding together. Therefore, one has to think that the recent uptrend is sustainable and that prices might try to consolidate recent gains in the coming sessions. DOW: In the near term, we suspect that the June Dow could slide back to the bottom of the last 15 days trading range (8502-8156). However, some technical traders are concerned about the inability to sustain the up side breakout and are calling the formation a massive broadening top! While we can't argue against a near term slide, (a normal correction could easily put the June contract down to 8200) we don't see the coming break inflicting serious damage on the charts. S&P: In order to turn off the liquidation tilt, the S&P needs to get some surprise help from the US numbers this morning. In fact, if one takes the balance of the Fed Beige book comments yesterday, you have a good argument that the US economy remains in a position to recover. However, in the near term, a normal retracement (off the March 31st low to April 23rd high move) could give a downside target of 897.30 in the June S&P. Some longer term traders really want to see the June S&P take out the January highs on this move in order to signal an end to the secular bull market. In short, today is a critical and pivotal day for the S&P. We fear profit taking but would throw that view aside, if the market can open above 917.50, as that means the early numbers were positive! ---------------------------------------------------------------------- giovedì 24 aprile 2003 -- THE HIGHTOWER REPORT MORNING METALS COMMENT METALS:4/24 OVERNIGHT CHANGE to 4:15 AM:GLD+0.80 ,SLV+0.0 ,PLAT+5.00 CP -65 London Gold Fix $333.80 -$1.80 LME Copper Warehouse stks 778,800 ton -2,300 tons Comex Gold stocks 2.380 mil -1,355 oz COMEX Silver stks 108.1 ml oz Unchanged OVERNIGHT:Slight Asian buying interest noted as the $ resumed its recent slide. GOLD: The gold market is simply not showing a tight correlation to the ebb and flow of the SARS issue and it isn?t showing signs of correlating closely with the Dollar. While the Dollar was softer overnight and Asian action bid up gold prices, we would not expect gold to rise sharply today unless there is a new fundamental development. The SARS issue will remain the most logical force to drive gold prices up, but only if that disease begins to shows signs of a serious global spread. Some might argue that SARS could just as easily spark deflation, instead of flight to quality buying of gold. Also undermining the prospects in gold are suggestions from the OECD that a global recession can?t be ruled out and that the ECB might have to cut interest rates 50 more basis points before a recovery is seen in that economy. Therefore, our opinion is unchanged, it could be unwise to pay up $14 above recent chart support, for a market that is not showing a direct daily correlation to a definable fundamental issue. SILVER: As opposed to the gold market, the silver market is showing sustained positive price action but that would appear to be correlated to gains in the equity market. Therefore, silver seems to be feeding higher off the hope for improving physical demand but that view might take a hit today, off the ongoing fear of SARS and because of potentially weak US economic numbers. A number of calls for lower interest rates in the US and Euro zone clearly suggest that the overall economic pace remains suspect and that couldmake additional gains in the silver unlikely. Silver appears to be in an uptrend but prices might have to correct to 4.60 support just to balance the technicals after the run this week. We do think that July silver is going to settle in a $4.60 to $4.75 trading range. PLATINUM: The overnight slide in platinum prices was rejected but that still shows the platinum markets vulnerability. In fact, if the stock market were to slide aggressively today, that could mean a correction back into the $615 to $622 trading range for July platinum. All the talk about recession risk and the SARS spread has to be undermining the bull sentiment in platinum. ---------------------------------------------------------------------- giovedì 24 aprile 2003 -- THE HIGHTOWER REPORT MORNING FOREIGN EXCHANGE COMMENT DOLLAR: There would appear to be no stopping the Dollar slide. If the US equity market mounts a little profit taking slide that could simply add to the already weak posture of the Dollar. While the trade hasn?t mentioned it, we have to think that the US standing in the international community will remain negative for a long time unless coalition forces turn up weapons of mass destruction. With the OECD hinting at a recession threat in the Euro zone and calling for a 50 basis point rate cut, that could serve to dampen the selling interest in the Dollar but that certainly won?t halt the slide. In conclusion, the Dollar looks set to re-test the March lows down around 98.05. We still don?t see the scope for a break below the 98.00 level, especially with the SARS issue potentially a major global problem. If SARS spreads throughout Asia and doesn?t spread in the US that could make the Dollar a flight to quality issue. Therefore, fresh shorts in the Dollar, from current levels, should keep abreast of the progress of the disease. EURO: The OECD comments that they could not rule out a recession for the Euro zone, tempers some of the buying interest in the Euro but doesn?t alter the trend. In fact, the SARS disease would appear to pose a greater threat to North America than it does to Europe and that might be why the Euro is poised to make an upside breakout on the charts. A narrower trade surplus than was expected is a minor issue that shouldn?t impact the desire to rally the Euro. Next resistance is 110.43. YEN: It is quite clear that the SARS issue is limiting the Yen and altering what has been a positive flight to quality flow of capital toward Japan. With Industrial activity in Japan declining 0.8% the pressure would seem to be on the Japanese economy and subsequently the Yen. We see the risk to longs in the Yen rising in the coming sessions. Seeing a close below 80.00 could now project a slide to 82.68. SWISS: The Swiss has a new anxiety issue in the SARS issue and if the disease becomes a global threat, that could easily lift the Swiss toward the 75.00 level. In the mean time, the Swiss would seem to have little resistance until the 74.22 level is encountered. POUND: One can?t argue with the upside breakout on the charts. Maybe one can suggest that the Dollar and Canadian are much more vulnerable to the SARS issue and that could be why the Pound appears to be on its way to the early March consolidation highs of 160.00 to 160.58. CANADIAN: The WHO warning appears to have sunk the Canadian. We suspect that more losses are ahead and that the June Canadian might be capable of falling all the way down to the 67.00 even level. ---------------------------------------------------------------------- giovedì 24 aprile 2003 -- THE HIGHTOWER REPORT MORNING FINANCIAL COMMENT FINANCIALS:4/24 OVERNIGHT CHANGE to 4:15 AM :BONDS +9 There would seem to be ashift in macro economic sentiment. Early this week, the market was putting on an optimistic stance but today it would appear that sentiment toward the economy has soured slightly. The combination of an overbought equity market, SARS headlines and recession talk by the OECD, could give the market enough long interest to return Treasuries to last weeks highs. The OECD suggested overnight that they would not rule out a recession and that the ECB might have to cut another 50 basis points just to insure an end to the slowing. Yesterday a US Fed member suggested that the Fed can deal with the slowing and that seems to give credibility to the idea that the US economy remains in the ?soft spot?. It is possible that the earnings report euphoria has glossed over the reality of weak economic numbers, but the ability to ignore the ?numbers? might end this morning. In looking at the economic report slate today one would expect to get some support for prices, especially if the durable goods report comes in at, or below expectations. We suspect that June bonds will make a bid to breakout up at some point in the coming 7 sessions. One thing that the bulls have going for them is the potential that the next unemployment report stands as a backstop against aggressive selling. The problem with buying Treasuries at current levels is that the Dollar is discouraging international buyers. We suspect that a profit taking bout in the equity market will also provide a minor lift today, especially if the June S&P manages to fall back below 909.50. In conclusion, we would take the durable goods report to heart. If the durables come in at or below expectations, we would pull the short sale suggestions at 112-25 in bonds and at 114-17 in the June notes. On the other hand, if the durables were to surprise the trade, with a much better than expected reading (meaning a positive reading) we would possibly lower our sell orders to 112-18 in the bonds, and to 114-10 in the notes. One has to watch the SARS issue closely, as that is now the biggest short term risk to the bear camp. ----------------------------------------------------------------

mercoledì 23 aprile 2003 -- THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS ENERGY:4/23 OVERNIGHT CHG to 4:15 AM :CRUDE -6 ,HEAT+28 ,UNGA+56 The energy complex came under some pressure Tuesday because Iraqi oil production officially restarted. While the initial production total is only 10,000 barrels per day the coalition expects to increase the production to 50,000 barrels per day within days. Adding to the negative tone in prices were reports that Venezuelan was restarting RFG gasoline shipments to the US. In fact Venezuela thought that they would end up shipping 2.61 million barrels of gasoline in the month of April. While the initial trickle of gasoline probably won't result in a build of US gasoline inventories, it should at least discourage further contraction in the stock levels. We continue to get the sense that OPEC isn't exactly primed for a production cut especially since the most recent forecasts peg the over quota production at a 1.6 million barrels per day rate. We do think that OPEC will manage to come up with a 1.6 million barrel reduction agreement but that the producers won't comply with the plan. Even if OPEC does offer to cut production Iran has already suggested that it is too early to enforce the cuts. In other words, OPEC would like to have it both ways, keeping prices up by threatening a cut, but at the same time not really changing actual production levels. It should also be noted that Venezuela is expected to restart another 50,000 barrel per day refinery and that should mean an additional boost to gasoline flow sometime in early May. On the charts, June crude looks to have formed a pattern of lower highs and the reversal Tuesday might cause a multiple day slide but only if the weekly inventory reports show a slightly larger than expected build in crude oil stocks. It could take a series of builds in the inventory reports to convince the market that a rebuilding process is underway. Maybe this week's inventory numbers are too soon to expect a build, but with the US military cutting back its use and Venezuela nearly back to pre-strike production levels; the only bullish supply element left from the recent bull market, is the 1.5 million barrel Iraqi shortfall. While we would not be surprised to see a near term correction down to $26.65, in June crude we think its folly to expect a break into an OPEC meeting. Therefore, on a break in excess of 50 cents in crude oil today, aggressive traders might decide to go home long ahead of the Thursday OPEC meeting! NATURAL GAS: According to some sources the natural gas market could see a squeeze causing a significant rally and for that reason we are still very interested in a combination play (long July futures and long 3 July puts against that position. With the trade expecting another weekly draw of 30 to 55 bcf, we suspect that prices will remain supported. In fact, with recent cool temps expected to hang around until the end of the week the bulls would seem to maintain some control. In fact, as long as July isn't below 574 we would be willing to enter the long futures/long put combination. Cool weather would seem to be capable of offsetting some near term weakness in the regular energy complex. Those that want to get short should control risk and use put options. ---------------------------------------------------------------------- martedì 22 aprile 2003 -- THE HIGHTOWER REPORT MORNING STOCK COMMENT CHANGE to 4:15 AM:S&P-280 DOW -26 NIKKEI 178 FTSE +16 This market is not acting like it should. We understand the concern for the economy, as the regularly scheduled economic reports are a constant reminder of just how weak current conditions really are. Furthermore, with the market showing almost no reaction to a string of better than expected earnings reports, it is clear that investors are not primed to throw money at the stock market. In fact, considering that AMR might be able to avoid bankruptcy, at the same time that AOL is raising some cash, would seem to lower the threat against two bell weather issues. In other words, even with a number of the "threats" against the market being removed, the overall attitude of investors just doesn't seem to be that energetic. Is it possible that investors need to see some closure on the twin issues of terrorism and Iraq. In other words, maybe the market needs to see Saddam and bin laden officially dealt with, in order to get past those issues once and for all! Even the Defense Department is suggesting that Saddam is alive and managing to keep 12 hours ahead of coalition forces that are searching for him. For Saddam it would only seem like a matter of time before he is captured but for bin laden there has been a surprising void of fresh news, following the high hopes seen in early March. In conclusion, we are searching for possible bull catalysts that could combine with the minimal positive economic momentum that exists in the US economy but that near term that input is apparently lacking. We still think that the path of least resistance is up but the risk to longs has increased since the April 15th close. DOW: We suspect that a near term slide in prices is ahead, with longs banking some profits and moving to the sidelines. Near term targeting for the June Dow comes in down at 8220, but it is possible that the market manages a decline below the 8200 level. In conclusion, if favorable earnings can't drive stock prices higher, there would appear to be little else available to prop up prices. We would characterize the coming action as a "disappointment liquidation", or a pause in the recent bull tilt. S&P: If the June S&P falls below 887 that could mean a quick decline to 876.80. Trend line support off the March and April rally comes in today at 882.70. In order to throw off the bearish ilk, the June S&P needs to surprise the trade with a close back above the 898 level. Like the Dow, the S&P lacks clear bullish incentives. ---------------------------------------------------------------------- martedì 22 aprile 2003 -- THE HIGHTOWER REPORT MORNING METALS COMMENT METALS:4/22 OVERNIGHT CHANGE to 4:15 AM:GLD+0.10 ,SLV+1.0 ,PLAT+0.10 London Gold Fix $333.25 +$2.00 LME Copper Warehouse stks 785,975 ton -1,275 tons Comex Gold stocks 2.400 mil -1,004 oz COMEX Silver stks 108.1 ml oz +600,013 oz OVERNIGHT: Asian traders were unwilling to propagate the gains seen Monday. GOLD: We are not sure if the SAARS issue was the primary force driving gold higher Monday, but it would appear to be. With the Dollar higher Monday and copper prices falling sharply off the fears of SARS, it is clear that SARS was an issue for a number of other markets. With another 32 infections in the last 24 hours and the total caseload of 2,158 in China, the trade is justified in giving the situation some attention. Apparently the funds were the main buyers Monday, which means that the long fund position is rising toward the rather large level that the small spec position was already at early last week. In fact we have to think that the net spec long position is now approaching 52,000 contracts. It is also possible that the European holiday allowed the funds to boost prices further than would otherwise have been seen. While longterm technical lines on the charts were violated and the market appears to be in a breakout, we just can't chase this market without clear evidence of the focus of the gold market. With the Dollar weaker, equity prices down early and the new SARS cases, if gold were really good, or tracking off any of those issues, one would think more gains would be due this morning. We are skeptical that gold is ready to rise consistently but if you are willing to risk $12 and be very patient, overall gold prices are probably near enough to a long term low to be a position long. SILVER: We suspect that silver will attempt an upside breakout today, especially if gold can maintain any upside motion. Near term chart resistance in the July silver comes in at $4.615 with the new middle of the channel point coming in now at $4.54. Apparently the silver market doesn't need optimistic macro economic conditions to move higher. PLATINUM: Trend line resistance comes in today at $639 and it would seem like platinum is onto the same type of upward pattern as the silver market. Maybe platinum and silver are sensing the potential for improved physical/jewelry demand. Until the July platinum manages a rise to the $640 level, we expect light buying to dominate. COPPER: Apparently Chinese copper prices decline sharply Monday, because the Chinese government announced they would give copper importers a 30% rebate on the 17% import tax levied on copper concentrates. In other words, the government was making it more attractive to bring imported copper into the country. Since the import change facilitates demand for copper in China that should eventually be a positive for world copper prices. However, the copper market had to be influenced by the continued concern generated by the SARS outbreak, as that is already expected to take billions out of Asian GDP readings and that does restrain copper demand. The copper market made another probe down overnight but rejected that 72.70 low. We suspect that 72.70 will be a solid low unless the SARS outbreak shows that is it getting out of control. Considering the uncertain nature of the entire macro economic case and the unknown of SARS, traders would be best advised to play the long side of the market with long July calls. ---------------------------------------------------------------------- martedì 22 aprile 2003 -- THE HIGHTOWER REPORT MORNING FOREIGN EXCHANGE COMMENT FOREX:4/22 OVERNIGHT CHANGE to 4:15 AM:$ -71 ,YEN+30 ,SF+86 ,CA-4 EU+98 DOLLAR: A big gap down in the Dollar overnight hints at a retest of the March lows. The US economy just doesn't have what it takes to put the Dollar in a favored position. It is also clear that the US hasn't provided the world with justification of the war and at the same time it would seem like US officials have indicated that Saddam is still alive. In other words, Saddam and bin laden continue to dodge US capture and that makes the Dollar look bad. Furthermore, we have to think that the US is about to get tripped up in its efforts to rebuild Iraq, as the UN is balking at restarting oil for aid sales and is also balking at removing the sanctions against Iraq. Unless the SARS issue becomes world-wide issue the US hardly looks to get any favor. However, one must to watch the SARS issue, as we assume the US would be one of the safer places to be if the disease looks to be getting out of control. In other words, if the Dollar is at, or below the March lows and the world economy comes under attack because of the SARS issue that could interject some favor back into the Dollar. Next downside targeting in the Dollar is 98.62. Some traders are suggesting that the Dollar decline overnight is an anticipation, or fear that Greenspan might resign after his routine prostrate procedure today but that is pure speculation. EURO: An upside breakout in the Euro foils the recent topping attempt and now puts the Euro on a track to the March highs of 110.43. We suspect that the US is about to get check mated by the UN and that the Euro is being bid up as a result of that political potentiality. With European bonds coming into favor it would seem that the Euro is getting diversified capital flow from money that was usually allocated to US investments. YEN: The Nikkei got hammered overnight but that hasn't undermined the yen. In fact, the Yen seems to be a focal point of Asian investment flow. Therefore, the Yen is once again getting flight to quality buying. Near term targeting is seen at 83.90. SWISS: A massive range up extension, suggests that the Swiss is headed to the March highs along with the Euro. In the event of a global outbreak of SARS, the Swiss might be the best currency to hold and therefore traders will probably bid up the Swiss consistently over the coming sessions. POUND: The undermining of the US Dollar overnight has provided the Pound with a direct lift. Even with UK lending patterns slowing, the trade isn't concerned about the pace of the UK economy. Therefore, the Pound might be capable of rising all the way up to 157.70. CANADIAN: Even with Canada having documented cases of SARS, the Canadian doesn't seem to be too negatively impacted. However we would not like to see the June Canadian fall below 68.40 today. If SARS is going to be an issue in the US, it might have to become an issue in Canada first. Remain long but cautious toward the Canadian Dollar. ---------------------------------------------------------------------- mercoledì 23 aprile 2003 -- THE HIGHTOWER REPORT MORNING FINANCIAL COMMENT FINANCIALS:4/23 OVERNIGHT CHANGE to 4:15 AM :BONDS -4 The Treasury market is undermined by the strength in the equity market and an ultra weak US Dollar. However, even with very impressive corporate earnings reports, sentiment toward the economy doesn't seem to be improving, as much as many would have expected. In fact, in the UK, the BOE seems to be throwing around the idea of cutting interest rates. Even the US Fed suggested yesterday, that they could respond to weakness in the US economy and that would seem to hint that the Fed still sees recession as a bigger risk than inflation. To think that stocks rallied yesterday because the President suggested that he would reappoint the Federal Reserve Chairman is suspect, but the sharp rise in the stock market certainly contributed to the weakness in Treasuries. The Fed Beige book today could be mostly ignored but we think the report will disappoint longs that were hoping the report would show significant softening in the economy. If the Fed reports little change in the reporting districts, it will be clear that the economy isn't necessarily contracting as the bonds and notes have been factoring since the April low. In other words, the runup off the April low insinuates that the economy is slowing but in fact it might be holding together. Considering the improvement in early April consumer sentiment and the end of the war, we suspect that economic numbers will be set to improve. However, given the lag time of the benefit of the end of the war and the early April sentiment improvement, it might take until late May or early June for the improvement to show up in the scheduled numbers. In the mean time, bonds and notes will probably get just enough support from the numbers to countervail the potentially negative influence being thrown off by the stock market. Issues that would rescue the Treasuries would be ideas that the SARS issue is spreading enough in the US to stall economic activity and travel. In conclusion, the Treasuries might be range bound, wanting to move lower off long-term expectations, but supported because the economy is still really sluggish. We maintain our desire to sell June bonds at 112-24 (June Notes at 114-17). On a break to last week's lows, aggressive traders should get long for a ride up into the next payroll report! ----------------------------------------------------------------------

martedì 22 aprile 2003 -- THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS ENERGY:4/22 OVERNIGHT CHG to 4:15 AM :CRUDE -27 ,HEAT-57 ,UNGA-8 To summarize the posture of the energy complex, we can only suggest that the market wants to see the "actual" increase in supply before it decides to deflate prices. Apparently prompt delivery supplies were tight enough to fuel the May crude contract back to $31, which is almost a pre-war or war type price level. Citing developments quantified last week, US supply flow continues to be crimped due to the shut down of the Iraqi oil and the large percentage that supply was of the US fuel intake. It is also clear that the intake into the SPR is still siphoning off oil despite the fact that hostilities have come to an end. With a majority of US forces still in the field, it's not surprising that military use hasn't abated much. While the energy complex might not need to see US crude stock inventories rise above the minimum pipeline tally of 270 million barrels, before it restarts the downside tilt, it will need to see at least a couple weekly increases above the 3 to 6 million barrel level seen periodically in the API and DOE readings of the last month. With the May crude oil expiring today, it is possible that May crude will again provide positive leadership to the entire energy complex. We continue to entertain the idea of getting short May crude oil on a rally to $29.30. In a partially telling sign the unleaded gasoline market is showing some softening of retail prices and that might suggest a little less long interest once the OPEC meeting is past. Into the OPEC meeting it is possible that a number of OPEC members balk at the idea of cutting production, with Iraq still on the sidelines, US inventories remaining tight and prices still showing signs of strength. In other words, OPEC might not want to cut until they really have to cut. After all, it is possible that the world simply needs the oil and that higher production levels are necessary. The market did learn Monday that Chinese 1st quarter oil imports soared, which is a sign that the world's most populous country is increasing its appetite for energy. If China's key oil reserves are drying up, that could leave OPEC producing at an aggressive pace and energy prices entrenched above the $27.00 nearby price zone. NATURAL GAS: We are not sure if the market is so sensitive that it responded to reports of an early hurricane threat in the Atlantic, but we would not be surprised considering the tight supply mentality. More than likely a cold front provided the incentive to natural gas, which might have picked up some spec long interest because of the gains in the regular energy complex. Considering that the heating oil complex was firm off of cold weather we have to assume that the natural gas market was feeding off the same fundamental view. Surprisingly, the natural gas market showed no ill effects from the SARS issue, which is dampening demand projections for copper and Ag products. At times the natural gas market seems to be closely tied to macro economic conditions and at other times it behaves as if its demand structure is totally insulated from economic weakness. We continue to advocate the purchase of June or July Natural Gas puts. ---------------------------------------------------------------------- martedì 22 aprile 2003 -- THE HIGHTOWER REPORT MORNING STOCK COMMENT CHANGE to 4:15 AM:S&P-280 DOW -26 NIKKEI 178 FTSE +16 This market is not acting like it should. We understand the concern for the economy, as the regularly scheduled economic reports are a constant reminder of just how weak current conditions really are. Furthermore, with the market showing almost no reaction to a string of better than expected earnings reports, it is clear that investors are not primed to throw money at the stock market. In fact, considering that AMR might be able to avoid bankruptcy, at the same time that AOL is raising some cash, would seem to lower the threat against two bell weather issues. In other words, even with a number of the "threats" against the market being removed, the overall attitude of investors just doesn't seem to be that energetic. Is it possible that investors need to see some closure on the twin issues of terrorism and Iraq. In other words, maybe the market needs to see Saddam and bin laden officially dealt with, in order to get past those issues once and for all! Even the Defense Department is suggesting that Saddam is alive and managing to keep 12 hours ahead of coalition forces that are searching for him. For Saddam it would only seem like a matter of time before he is captured but for bin laden there has been a surprising void of fresh news, following the high hopes seen in early March. In conclusion, we are searching for possible bull catalysts that could combine with the minimal positive economic momentum that exists in the US economy but that near term that input is apparently lacking. We still think that the path of least resistance is up but the risk to longs has increased since the April 15th close. DOW: We suspect that a near term slide in prices is ahead, with longs banking some profits and moving to the sidelines. Near term targeting for the June Dow comes in down at 8220, but it is possible that the market manages a decline below the 8200 level. In conclusion, if favorable earnings can't drive stock prices higher, there would appear to be little else available to prop up prices. We would characterize the coming action as a "disappointment liquidation", or a pause in the recent bull tilt. S&P: If the June S&P falls below 887 that could mean a quick decline to 876.80. Trend line support off the March and April rally comes in today at 882.70. In order to throw off the bearish ilk, the June S&P needs to surprise the trade with a close back above the 898 level. Like the Dow, the S&P lacks clear bullish incentives. ---------------------------------------------------------------------- martedì 22 aprile 2003 -- THE HIGHTOWER REPORT MORNING METALS COMMENT METALS:4/22 OVERNIGHT CHANGE to 4:15 AM:GLD+0.10 ,SLV+1.0 ,PLAT+0.10 London Gold Fix $333.25 +$2.00 LME Copper Warehouse stks 785,975 ton -1,275 tons Comex Gold stocks 2.400 mil -1,004 oz COMEX Silver stks 108.1 ml oz +600,013 oz OVERNIGHT: Asian traders were unwilling to propagate the gains seen Monday. GOLD: We are not sure if the SAARS issue was the primary force driving gold higher Monday, but it would appear to be. With the Dollar higher Monday and copper prices falling sharply off the fears of SARS, it is clear that SARS was an issue for a number of other markets. With another 32 infections in the last 24 hours and the total caseload of 2,158 in China, the trade is justified in giving the situation some attention. Apparently the funds were the main buyers Monday, which means that the long fund position is rising toward the rather large level that the small spec position was already at early last week. In fact we have to think that the net spec long position is now approaching 52,000 contracts. It is also possible that the European holiday allowed the funds to boost prices further than would otherwise have been seen. While longterm technical lines on the charts were violated and the market appears to be in a breakout, we just can't chase this market without clear evidence of the focus of the gold market. With the Dollar weaker, equity prices down early and the new SARS cases, if gold were really good, or tracking off any of those issues, one would think more gains would be due this morning. We are skeptical that gold is ready to rise consistently but if you are willing to risk $12 and be very patient, overall gold prices are probably near enough to a long term low to be a position long. SILVER: We suspect that silver will attempt an upside breakout today, especially if gold can maintain any upside motion. Near term chart resistance in the July silver comes in at $4.615 with the new middle of the channel point coming in now at $4.54. Apparently the silver market doesn't need optimistic macro economic conditions to move higher. PLATINUM: Trend line resistance comes in today at $639 and it would seem like platinum is onto the same type of upward pattern as the silver market. Maybe platinum and silver are sensing the potential for improved physical/jewelry demand. Until the July platinum manages a rise to the $640 level, we expect light buying to dominate. COPPER: Apparently Chinese copper prices decline sharply Monday, because the Chinese government announced they would give copper importers a 30% rebate on the 17% import tax levied on copper concentrates. In other words, the government was making it more attractive to bring imported copper into the country. Since the import change facilitates demand for copper in China that should eventually be a positive for world copper prices. However, the copper market had to be influenced by the continued concern generated by the SARS outbreak, as that is already expected to take billions out of Asian GDP readings and that does restrain copper demand. The copper market made another probe down overnight but rejected that 72.70 low. We suspect that 72.70 will be a solid low unless the SARS outbreak shows that is it getting out of control. Considering the uncertain nature of the entire macro economic case and the unknown of SARS, traders would be best advised to play the long side of the market with long July calls. ---------------------------------------------------------------------- martedì 22 aprile 2003 -- THE HIGHTOWER REPORT MORNING FOREIGN EXCHANGE COMMENT FOREX:4/22 OVERNIGHT CHANGE to 4:15 AM:$ -71 ,YEN+30 ,SF+86 ,CA-4 EU+98 DOLLAR: A big gap down in the Dollar overnight hints at a retest of the March lows. The US economy just doesn't have what it takes to put the Dollar in a favored position. It is also clear that the US hasn't provided the world with justification of the war and at the same time it would seem like US officials have indicated that Saddam is still alive. In other words, Saddam and bin laden continue to dodge US capture and that makes the Dollar look bad. Furthermore, we have to think that the US is about to get tripped up in its efforts to rebuild Iraq, as the UN is balking at restarting oil for aid sales and is also balking at removing the sanctions against Iraq. Unless the SARS issue becomes world-wide issue the US hardly looks to get any favor. However, one must to watch the SARS issue, as we assume the US would be one of the safer places to be if the disease looks to be getting out of control. In other words, if the Dollar is at, or below the March lows and the world economy comes under attack because of the SARS issue that could interject some favor back into the Dollar. Next downside targeting in the Dollar is 98.62. Some traders are suggesting that the Dollar decline overnight is an anticipation, or fear that Greenspan might resign after his routine prostrate procedure today but that is pure speculation. EURO: An upside breakout in the Euro foils the recent topping attempt and now puts the Euro on a track to the March highs of 110.43. We suspect that the US is about to get check mated by the UN and that the Euro is being bid up as a result of that political potentiality. With European bonds coming into favor it would seem that the Euro is getting diversified capital flow from money that was usually allocated to US investments. YEN: The Nikkei got hammered overnight but that hasn't undermined the yen. In fact, the Yen seems to be a focal point of Asian investment flow. Therefore, the Yen is once again getting flight to quality buying. Near term targeting is seen at 83.90. SWISS: A massive range up extension, suggests that the Swiss is headed to the March highs along with the Euro. In the event of a global outbreak of SARS, the Swiss might be the best currency to hold and therefore traders will probably bid up the Swiss consistently over the coming sessions. POUND: The undermining of the US Dollar overnight has provided the Pound with a direct lift. Even with UK lending patterns slowing, the trade isn't concerned about the pace of the UK economy. Therefore, the Pound might be capable of rising all the way up to 157.70. CANADIAN: Even with Canada having documented cases of SARS, the Canadian doesn't seem to be too negatively impacted. However we would not like to see the June Canadian fall below 68.40 today. If SARS is going to be an issue in the US, it might have to become an issue in Canada first. Remain long but cautious toward the Canadian Dollar. ---------------------------------------------------------------------- martedì 22 aprile 2003 -- THE HIGHTOWER REPORT MORNING FINANCIAL COMMENT FINANCIALS:4/22 OVERNIGHT CHANGE to 4:15 AM :BONDS +8 We are really surprised that the bonds managed to forge the early break Monday, as the economic numbers were weak and the SARS issue continues to rupture consumer and investing sentiment around the globe. While the SARS issue hasn't been a major concern for the US any sign that the disease is spreading in the US, would be just enough to push Treasury prices higher. With the fixed income markets somewhat poised to rally and a string of favorable US corporate earnings reports failing to spark a big equity market rally, it would seem that the path of least resistance in bonds and notes is up. With the Fed Beige book out today, expected to reconfirm the slack condition of the US economy we have to think that more gains are ahead. In fact, if one combines the SARS headlines, with the regularly scheduled economic report pattern, a return to last week's highs looks likely. Certainly an ultra weak US Dollar undermines the up trend in the Treasuries but in the near term the Dollar impact doesn't appear to be capable of shutting down the buying pattern seen in bonds and notes into the close Monday. We are not sure if this is a fair statement but it would almost seem like the economy is not getting the expected benefits off the progress of the war and the successes in the battle against terrorism. Therefore, we have to wonder if an underlying burden to economic recovery is the fact that neither Saddam, nor Bin laden have been caught or dealt with. If one or both objectives were dealt with and then the economy didn't show signs of improving, we would have to concede that structure damage to the economy is in fact holding back the recovery. In the near term, there is little to get positive about and that should foster light gains in bonds and notes. Last week's highs are a target this week, with the April high a target for the days leading up to the April unemployment report. Near term resistance in the June bonds is seen today at 112-24, while June notes should encounter resistance up around 114-14. If the fixed income markets are really poised to rally, they should not fall back below the April 16th lows of 113-22 in the June Notes and below 111-08 in the June bonds. ----------------------------------------------------------------------

giovedì 17 aprile 2003 -- THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS NERGY:4/17 OVERNIGHT CHG to 4:15 AM :CRUDE +34 ,HEAT-19 ,UNGA+73 Apparently the energy complex didn't get too much of a sustained lift out of the 4.4 million barrel decline in API crude oil stocks. The rest of the API/DOE numbers were insignificant, unless one considers a minor build in gasoline stocks to be a negative. According to the API, US oil demand increased by 4% in March and that could be why inventories are not rebuilding in the face of recovering Venezuelan production. In any regard, it is apparent that it takes many weeks for increased production from Venezuela and Nigeria to find its way into US inventories. With Venezuela only recently beginning to ship gasoline to the US market, it's clear that the US shouldn't have expected to see gasoline inventories rise. Therefore, the bull case will continue to stand on the threat of summer gasoline shortages, until proven otherwise. In what might be an explanation of the ongoing inventory tightness in the US, the EIA indicated that Iraqi oil exports had become 11% of total US imports in the month of February. Subsequently, US crude import totals in the month of February, were the lowest since January of 2000 and that really explains why there has been no recovery of US inventory levels. The trade was lifted this week because the return of Venezuelan production and increased production from OPEC has yet to surface. We still think that massive coalition military use is siphoning off supply flow that will eventually help rebuild supplies. With US weather turning a little cooler in the April 24th to April 30th time frame, we suspect that heating oil will continue to provide support to the complex much as it did early this week. Even with the Press playing up the idea that Iraqi oil exports might be coming on line within weeks, or much faster than expected, the energy complex is showing no signs of price weakness. Maybe the market doesn't believe the US projections on the timing of the Iraqi export flow, because the world is almost discounting everything the US says under the guise of political wrangling. Therefore, the bulls seem to have control, but we suspect that gains above $28.00 in June crude could be very difficult to come by, unless Saudi Arabia shocks the trade, with a surprise cut of 1 million barrels per day. NATURAL GAS: The trade is already poised to see another draw in the weekly inventory report and that will play right into the hand of the bull camp. We suspect that an extended draw season will set the market up for a tight summer cooling season and that is apparently enough to push prices up even in the face of overdone techncials. Even without adding in the gains since the Tuesday COT mark off date, the natural gas market should post the largest ever, small spec long position. Expectations for the weekly storage report this morning call for a draw of 10 bcf to a draw as big as 45 bcf and that will certainly tighten the annual deficit reading and feed the bull tilt ---------------------------------------------------------------------- giovedì 17 aprile 2003 -- THE HIGHTOWER REPORT MORNING STOCK COMMENT CHANGE to 4:15 AM :S&P+380 DOW +34 NIKKEI -57 FTSE +34 The stock market is simply unwilling to fully embrace the positives. While equity prices have certainly risen since the fall of Baghdad, we are surprised that the market didn't respond more significantly to the recent sweep of favorable corporate earnings reports. Some traders are suggesting that the absolute levels of earnings projections were so low, that it was easy to come in above the established expectations. However, because a large portion of the market is unwilling to concede that broad market conditions are improving, it is possible that the stock market is setting itself up for an earnings surprise later this summer. In other words, if the market is going to maintain the view that the economy has a very long road to recovery, or that the consumer won't respond to the improvement in the environment, it could be proven wrong. We can remember analysts suggesting that business spending would not recover until 2004 and that was simply an overly negative view. Certainly business spending could have remained negative if political conditions didn't progress beyond the barriers holding back the economy, but it is clear that a number of problems have been mitigated or removed altogether. In conclusion, reality is that things are getting better, but investors won't accept that view, until improved consumer activity leads the way! It may not be today, but in the coming weeks the stock market should work higher! In short, the stock market deserves to return to the December 2002 and January 2003 consolidation zone. DOW: The bulls can't be happy with the failure off the highs on Wednesday, but it would seem that profit taking and not economic concerns prompted most of the selling. We suspect that the June Dow will respect support of 8180 today and will gradually work itself up toward a higher trading range of 8400 to 8800. In our view the worst-case scenario for the longs, in the coming weeks, might be a spike down to 8115. S&P: The S&P has critical trend line support coming in today at 875.90. Maybe a preholiday tilt will spark a rise to 894, but we get the feeling that this market is going to remain choppy, with investors unwilling to throw money at stocks. However, if one waits until the early April improvement in sentiment manifests itself in the US numbers, you will probably be paying up for a long play. Buy the June S&P on a break to 876.80, looking for an initial target of 899. ---------------------------------------------------------------------- giovedì 17 aprile 2003 -- THE HIGHTOWER REPORT MORNING METALS COMMENT METALS:4/17 OVERNIGHT CHANGE to 4:15 AM :GLD+0.60 ,SLV+0.5 ,PLAT+6.50 CP London Gold Fix $326.10 +$2.25 LME Copper Warehouse stks 787,250 ton -2,800 tons Comex Gold stocks 2.383 ml Unchanged COMEX Silver stks 107.8 ml oz 143,224 oz OVERNIGHT: Outside market action continued to provide light gold buying interest GOLD: While the Asian gold market was higher, it should also be noted that Asian equity prices were down, while the European and early US equity market action now look to be slightly higher. While June gold might have mounted a minor rally over the last two sessions, the gold market is probably going to post another burdensome small spec and fund long on Friday, which is a market holiday but not a government holiday. In other words, the long camp can expect to get some negative technical news between the close today and the opening Monday. In general, the gold market seems to have turned off the liquidation pattern seen for most of February and March but in order to signal a long term bottom, the consolidation might have to extend in duration, or must manage to break the down trend resistance line up around $337.2. The risk of a major washout is low but unfortunately the odds of a big rally don't appear that high either. If traders can weather a dip to $317 then getting long for a long-term bottom, is advised on a $324 June gold trade. SILVER: A better equity market opening indication could temper the selling pressure seen in silver yesterday. All week long, our re-entry point for long July plays has been $4.43 to $4.46 and the market almost got down into that zone yesterday. The silver needs a little better economic outlook in order to trend higher. In order to turn the technicals higher, July silver needs to climb above a downtrend channel resistance line at $4.56. PLATINUM: The platinum market is simply not displaying a tight correlation to outside markets and really can't hope for strong physical demand, unless the outlook on the US economy improves, or the SARS issue is brought under control in Asia. Seeing the virus brought under control takes the pressure off the Asian economy and could help jewelry demand for platinum improve in the region. Therefore, one should not be surprised if July platinum were to fall to $600 again. Seeing the July contract rise above $632 would violate a downtrend channel line. COPPER: The copper market might be short term overbought unless the US equity market manages to give traders some help in the action today. We suspect that initial claims readings will be slightly negative toward copper and with Chinese and London market action showing no direction, there could be an incentive to take profits in the US session. The trend is up in copper but the longs had to be disappointed with the collection of economic information and the response in the US equity market to a lifting of some of the economic headwinds. The SARS virus has been identified, which means that vaccine testing can begin. Aggressive traders might risk missing some of the coming rally by standing aside today, hoping to buy the July contract on a dip to 72.80. ---------------------------------------------------------------------- giovedì 17 aprile 2003 -- THE HIGHTOWER REPORT MORNING FOREIGN EXCHANGE COMMENT FOREX:4/17 OVERNIGHT CHANGE to 4:15 AM:$ -5 ,YEN+11 ,SF-13 ,CA+16 EU+6 DOLLAR: The Dollar has filled a gap on the charts but we don't get the sense that the US has filled the political or diplomatic gap that is causing a number of former allies to nit pick US policy at every junction. Therefore, the Dollar looks to remain out of favor and at this point we are not sure what event could be seen that would alter the equation. In other words, the US economy isn't looking good enough to discourage sellers and the policy front isn't making any friends either. With the Canadian Defense Minister reaching all the way into a hypothetical situation in an effort to bash the US (suggesting they wouldn't turn over Saddam if they capture him) its clear that diplomatic relations are going to keep the Dollar down. Ideas that US special forces are inside Syria looking for weapons and Iraqi leaders, under the doctrine of "hot pursuit" is simply another stance that the world won't accept. The US should give up and let the weapons from Iraq spread to the corners of the earth. More downside with a test of the March lows is likely. EURO: The Euro continues to get the benefit of the doubt and would appear to be headed to contract highs. In the near term, it doesn't matter whether or not the Euro zone offers a higher rate of return. We like a long Sept Euro futures, combined with a purchase of three September Euro 103.50 puts. You would have 231 option ticks on the table with that position. If the Euro goes to a contract high, the trader would have recouped over 1/3rd of the premium spent! YEN: Apparently the yen was capable of shutting off the selling and benefiting from the weakness in the US Dollar. If the June Yen closes above 84.00 today we will assume it intends to establish a range bound by 84.00 and 85.00. Like the Euro, there would appear to be no fundamental reason for the run up in the Yen but that is the direction of prices. SWISS: The trend in the Swiss remains up but the Swiss did reject a big rally overnight. Support should be seen at 72.75 and resistance at 73.60. POUND: The Pound appears to have reached a temporary overbought condition in the run overnight. We suspect that support of 156.80 will be respected. It is possible that weak figures from the UK housing sector undermined the Pound, but that issue is not something that is expected to alter the up trend pattern. CANADIAN: Trend line support comes in at 68.32 and that level should be bought if traders can manage to weather a risk to 67.89. The Canadian should continue to be the best trending currency, especially with the US thought to be making the wrong turn at every diplomatic junction. ---------------------------------------------------------------------- giovedì 17 aprile 2003 -- THE HIGHTOWER REPORT MORNING FINANCIAL COMMENT FINANCIALS:4/17 OVERNIGHT CHANGE to 4:15 AM :BONDS +6 Apparently economic sentiment is going to deteriorate despite the end of the war, slightly higher equity prices and even a smattering of better than expected corporate earnings reports. In other words even if a number of optimistic developments the market isn't finding enough evidence to put a happy face on the US economy. It's a little far fetched to downgrade the US economic outlook on the SARS issue and it's also folly to think that conditions are not improving. While international diplomatic relations are being trashed, as the result of a global power struggle, we still have to think that ending the fighting in Iraq, was a good thing for the economy. The fact that Iraqi citizens are grateful for the liberation should also reduce the geopolitical headwinds on the economy. Even the terrorist threat level in the US being reduced, that hasn't resulted in much of an improvement in sentiment. In short, the market is not ready to interject an improved view into Treasuries! Furthermore, we suspect that the regularly scheduled economic information this morning, will feed the bull case with the initial claims remaining above the critical 400,000 mark for what has become an extended period of time. Since the US stock market can't seem to maintain a well-defined bullish pattern, the bond market has been able to propagate ongoing concern for the pace of the recovery. We think that the break in March was the result of the market accepting a recovery view, with the current market action pricing a concern for the "pace" of the recovery process. Therefore, we just don't see the Treasuries rising above the early April highs. Position traders should look to the 112-24 level to get short June bonds and to the 114-27 level for a short in the June T-notes. This is still a prime spot to throw on a combination strategy (long futures and long multiple puts) but those positions must be placed in the September contract. ----------------------------------------------------------------------

mercoledì 16 aprile 2003 -- THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS ENERGY:4/16 OVERNIGHT CHG to 4:15 AM :CRUDE -7 ,HEAT+11 ,UNGA+2 The energy complex maintained a positive track Tuesday despite the fears of a possible build in weekly inventory readings this morning. Expectations for the weekly API/DOE crude stocks were for a build of 1.3 to 2.5 million barrels. The trade did expect to see a slight decline in gasoline stocks but with Venezuela expecting to end Force Majeure, (with the gasoline loading that took place on Tuesday) the gasoline fundamentals are becoming a little less supportive. The fact that the US forces shut down an illegal pipeline into Syria was more of a political headline than a supply and demand issue, as that pipeline only carried 250,000 barrels per day. In any respect, the Iraqi regime was thought to be receiving 1 billion a year in illegal payments. That is another example of why sanctions weren?t working but we doubt the world will see that as justification for the war. With Venezuelan gasoline shipments coming back to normal and some seasonal decline in demand ahead we have to think that the market will be limited on the upside, unless OPEC manages to surprise the trade with a massive production cut. Venezuela stood by their request to be exempted from the production cap and we still think that could cause rifts in the production talks. It's a given that Saudi Arabia will have to see massive cuts, considering their near capacity current flow. In the mean time we suspect that June crude oil will be capable of maintaining recent consolidation support above $26.26. A rising refinery operating rate in the weekly inventory reports should be a minor negative to prices, which seem to be capable of avoiding further declines up into the April 24th OPEC meeting. We do think that recent cold in the East and a couple surprise US refinery problems allowed the energy market to perform a little better than it would have otherwise. NATURAL GAS: The rise in natural gas has to bring the small spec long to a record level, but it would appear that the market is content to play off the annual deficit and not off concerns future tightness. We have to think that the slightly improved macro economic outlook is also providing some of the upside action in natural gas. Those that managed to put on the long futures/long multiple put position from the Tuesday comment are on their way to financing the put position. We would still consider buying a July natural gas futures and buying three July natural gas 5.20 puts for 189, especially when one realizes that the small spec position is probably a record long after the recent run. ---------------------------------------------------------------------- mercoledì 16 aprile 2003 -- THE HIGHTOWER REPORT MORNING STOCK COMMENT CHANGE to 4:15 AM:S&P+640 DOW +53 NIKKEI +40 FTSE -7 The overnight action has the market gapping higher and that comes expressly off favorable earnings reports from Microsoft and Intel. As we see the improvement in the high tech sector, we become even more surprised that the stock market hasn't rallied more aggressively in the last 10 sessions. In other words, we would have expected the stock market to roar on the Baghdad celebrations and now we would expect the market to rally on the macro economic improvement. In face with the war issue dissipating and some key US business sectors beginning to show improvement, we suspect that stocks prices are in for a rather consistent rise. Considering the dominatingly negative attitude toward high tech and business spending (some economists suggested business spending would remain soft until next year) we have to think that reevaluation of growth prospects is underway and that stock prices should be able to make new highs for the year. Certainly, the economy remains sluggish with the airline and auto industry needing significant discounting just to survive, but things are getting better. In fact, with an improvement in some ultra weak sectors, there is the chance that a domino effect might be seen. As we said early last week, it is not a negative that the war ended and it is not usually good strategy to bet against the US economy. If the economic pundits are right in their view, that the US economy will never achieve sustained or strong growth, then it is even more important to catch a large portion of the early recovery wave! DOW: While the gap up action overnight might discourage some would be bulls on the opening, we suspect that the housing report this morning will cause prices to set back enough to step into the long side. In fact, on a correction to 8447, we would buy the June Dow looking for an eventual return to the 8800 level. Certainly there is the risk that the June Dow will retest the bottom of the April consolidation around 8200 and that might make conservative players lower their long entry point to 8342. S&P: The biggest barrier for the S&P today will be the initial overbought status of the market on the opening peg. We doubt that the June S&P will fill the gap left by the opening (at least not today) but we do see the potential for a return to the January high of 933.50 before the end of the month. Conservative traders might wait for a correction to 894 to get long, as an appropriate support level in the June S&P isn't seen until 870.90. ---------------------------------------------------------------------- mercoledì 16 aprile 2003 -- THE HIGHTOWER REPORT MORNING METALS COMMENT METALS:4/16 OVERNIGHT CHANGE to 4:15 AM:GLD-0.50 ,SLV-0.3 ,PLAT+3.90 CP +30 London Gold Fix $323.85 +$.15 LME Copper Warehouse stks 791,975 ton Unchanged Comex Gold stocks 2.383 ml Unchanged COMEX Silver stks 107.9 ml oz -1,002 oz OVERNIGHT: Ongoing gold weakness is possibly tied to better equity mkt action. GOLD: Given the slack action in the gold since the high last week, it is clear that war and flight to quality longs continue to bail out. However, because the Dollar has generally remained weak, we doubt that gold has the momentum to violate chart support down around $320. With a series of better than expected US corporate earnings reports, countervailing the weak US economic numbers released Tuesday, the gold market is basically left without a clear trend. With the net result of the macro economic events this week supporting stock prices, the anxiety buyers in gold are discouraged. The down trend channel in gold gives resistance close-in at 326.3 but it might take a close above $329 to really shut off the selling tilt. From the political front, we doubt that the US is going to press the military option against Syria and that might have been the only factor capable of shutting off the selling pattern in gold. SILVER: The up trend pattern in the silver continues, with near term support coming in at $4.517 today. In fact, in the early overnight action the silver market actually violated the channel support and might be in for a minor correction. We would become a buyer on a break in the July contract to 4.465. Considering that Intel and Microsoft earnings were better than expected overnight, one might upgrade the potential for a return of high tech and computer demand and maybe even reason to think that overall physical demand for silver is set to improve. Therefore, silver should continue to rise up and away from the deflated price low of $4.40. PLATINUM: Coiling in the platinum market suggests that it is not as closely tied to the macro economic ebb and flow as silver and copper and that is disappointing to the bull camp. We suspect that platinum will eventually respond with higher prices, if the stock market can consistently rise but traders should remember that platinum is already trading at very expensive historical levels. COPPER: The copper market managed an impressive breakout up yesterday and that probably comes from spec traders anticipating a benefit from the equity market performance. Supposedly, the Asian trade was selling into the breakout, which is something that could temper the upside thrust. After all, China is a huge demand market for copper and might be considered the primary influence on copper prices for the last year. However, it would appear that European and US demand prospects are improving and that is a partial offset to the fear that SARS will dampen near term Asian demand. Into the end of the Shanghai session, prices did manage to trade into positive ground on the coattail of an LME rally. Therefore, the US copper market has a chance to rally to the near term 76 to 78 target. ---------------------------------------------------------------------- mercoledì 16 aprile 2003 -- THE HIGHTOWER REPORT MORNING FOREIGN EXCHANGE COMMENT FOREX:4/16 OVERNIGHT CHANGE to 4:15 AM:$ -12 ,YEN-12 ,SF+19 ,CA+0 EU+18 DOLLAR: The Dollar continues to miss out on the improved conditions being seen in the equity market. With several countries warning the US about its threats against Syria, it?s clear that the world still doesn?t get the concept of enforcement in international relationships. Even with Syria openly violating the UN sanctions (with a pipeline into Iraq) the world chooses to side with the Syrian position. Therefore, it?s clear that the Dollar is going to remain out of favor, even with improving economic prospects. Countervailing the positive benefit seen in the US equity market, are favorable Euro zone economic readings this morning. Therefore, the Dollar looks to fall toward chart support of 99.30, as the 99.85 level doesn?t appear to be able to hold up the market. EURO: With the Euro making an upside breakout overnight, it is clear that the bull camp is still in control. Overnight the Euro zone posted favorable Industrial production readings with a +0.3% gain and that contrasts with the 0.5% decline in the US. Therefore, the Euro would seem to have justification to move even higher in the consolidation. However, until the Euro rises and closes above 108.42 we will not consider the trend to be up. YEN: The fact that the Yen isn?t rising along with the Euro, means that the Yen is no longer in favor. We continue to see the SARS issue as a negative to the Japanese economy and with the war issue no longer providing flight to quality buying of the Yen, it is without a theme to drive prices up. However, we don?t see a theme to drive the Yen out below near term chart support around 83.00. SWISS: The Swiss is showing some correlation with the Euro, but only after a significant upside breakout in the Euro. We suspect that the Swiss will be dragged higher but heavy resistance is seen up around 72.75. We are inclined to become a seller of the Swiss at 72.75. POUND: A critical level was regained overnight and that could project a rise to 157.70. A rise in UK housing prices in April, confirms that its economy is still capable of expansion and with the weight of the war removed, one should not be surprised to see the Pound make an upward bid. CANADIAN: As is usually the case, seeing higher interest rates has a habit of tempering the bullishness toward an economy. However, we suspect that theCanadian will continue the pattern of gains seen since late December, with the higher rate issue possibly becoming a supportive issue. After all the interests rate differential is an important consideration. Near term support comes in now at 68.54, with the next up side target at 69.55. ---------------------------------------------------------------------- mercoledì 16 aprile 2003 -- THE HIGHTOWER REPORT MORNING FINANCIAL COMMENT FINANCIALS:4/16 OVERNIGHT CHANGE to 4:15 AM :BONDS -13 The bond market continues to be caught between opposing views. On one hand, the market is seeing consistent evidence from the regularly scheduled economic reports that the US economy is STILL very weak but that is being offset by better than expected corporate earnings reports. Considering that equity prices have posted solid gains this week, its understandable that Treasury prices have been partially undermined. One should not discount the fact that IBM, Intel and Microsoft all posted better than expected results and that suggests an improvement in high tech, computer and business spending situations. One should also realize that the negative cloud hanging over consumers and investors off the Iraq war is dissipating and that has not been given enough consideration. Therefore, we have to continue to pound the ?long term top? drum. In fact, the bond market should probably be discounting the regularly scheduled economic information as ?old news?, with the new ?feeling? at least giving the economy a temporary lift. While some economists will suggest that the economy is still in major trouble, one has to concede that things will get better at least temporarily in the weeks ahead. However, because one can expect a steady diet of soft numbers, one might have to sell high enough in the recent range to weather a temporary rise to the April 9th and 10th price levels. In the June bonds, traders should look to sell futures at 111-26 using a stop above 112-15. In the June Notes, traders might look to get short on a rally to 114-04, using a stop up at 11429. Position traders might use a dip today to buy Sept bond futures at 110-10 and buying 3 September 104 bond puts against that futures position. We doubt that the CPI reading this morning will be as hot as the recent PPI reading and at this point we don?t get the sense that inflation fears are impacting Treasuries as much as they should! However, those that buy a bond against multiple long puts should have the position on prior to the housing release this morning, as that report could help the futures position pay for part of the long term options play! ----------------------------------------------------------------------

martedì 15 aprile 2003 -- THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS ENERGY:4/15 OVERNIGHT CHG to 4:15 AM :CRUDE -8 ,HEAT+0 ,UNGA-16 The energy complex managed to recover Monday afternoon possibly because of the significant short position that was present around the lows Monday. We also saw some support off ongoing cold weather in the Northeast but the weather should no longer be supportive of prices. For the energy complex to have managed to bounce in the face of news that the northern Iraqi oil fields might come on line within weeks, hints at a possible near term bottom. We still think that OPEC will have to talk a better story on the magnitude of the production cuts, in order to firm prices away from the last two weeks lows. Expectations for the coming weekly inventory readings, call for an increase in crude and unleaded stocks. We also expected to see some early coverage on that 28 million barrel Saudi oil shipment, which isn't due in until late next week! Reports of a pipeline shut down in Colombia might have provided some incentive to short cover, but with reports that some Iraqis are returning to work in the Northern oil fields, we have to think that global production is going to climb at the same time that seasonal demand contracts slightly. It should be noted that the seasonal demand contraction might not be as apparent as in the past, as unleaded gasoline consumption has remained so strong, that a decline in heating demand, isn't nearly as significant. While the crude oil market appears to have forged a temporary bottom, the unleaded market looks a little vulnerable on the charts and a trade back below 82.20, might spark a minor liquidation wave. Unlike crude oil, the unleaded market isn't net spec short and therefore it will probably avoid a big breakout down unless of course the crude oil market drags the unleaded down. In short, we will continue to suggest entering long positions on any decline below 81.80 in the July unleaded contract. NATURAL GAS: The natural gas market surprised the trade again with ideas that inventory levels were continuing to contract and that cold in the Northeast was extending the draw season on top of an already significant annual deficit tally. The natural gas market might find some thin support at $5.57, with resistance coming in at $5.79. With the small spec position already net long, just under 30,000 contracts, coming into this week, we have to think that the small spec position might be close to the largest ever! Since the funds aren't nearly as long as the specs, we suggest that traders buy a July natural gas futures at $5.65 and buy three July natural gas 510 puts for 183 or better. Initially the position is net long 25% of a futures contract, with 570 points of option premium on the table. On a rally to 5.70, liquidate the futures and hold the puts for a position. ---------------------------------------------------------------------- martedì 15 aprile 2003 -- THE HIGHTOWER REPORT MORNING STOCK COMMENT CHANGE to 4:15 AM :S&P+270 DOW +32 NIKKEI +86 FTSE +70 At least in the near term, investors and consumers will behave as if things are going to get better. The stock market has already responded to the lessening of geopolitical headwinds and it would appear that sentiment is also improving with respect to the terrorism threat. A New York Times poll indicates that a large majority of the US now thinks that the war on terrorism is being won and that is a critical addition to the end of combat in Iraq. To round out the positive turn of events, it should be noted that crude oil prices around the April lows were close to $10 a barrel below the March highs and that should be giving consumers more disposable income than at any time since early December! However, the biggest threat to the bull case could come from internal fundamentals, as several critical earnings reports are to be released later today. With IBM earnings coming in ever so slightly below expectations, the market could have taken a negative tone, but instead it grasped on to the theme that revenues at IBM expanded. Therefore the market is in the mood to look for the positives. Intel and Microsoft earnings could help resurrect the sagging high tech outlook and that would really give the market a positive near term potential. For the stock market to rally into and through tax day would be a very telling signal. DOW: Just to keep recent chart patterns positive, the June Dow needs to get back above 8490, as that would keep a pattern of "higher highs" in place since the March lows. Given a few good headlines, the June Dow could make a bid for the 8600 level later this week. However, in order to see that kind of extension up, the market will have to see 1 or 2 of the earnings reports come in as a bullish surprise. S&P: In order to extend the pattern of "higher highs" the June S&P needs to climb above 905 on this wave up. Under the right set of reports today, the June S&P could make a bid at the 925 level, which could then become longer-term support. Unfortunately, trend line support in the June S&P doesn't come in until 869.10 today and 872.50 on Wednesday and that is a long way down from the current market! In conclusion, the market has a really good chance to rally, let's hope that the headlines remain positive. ---------------------------------------------------------------------- martedì 15 aprile 2003 -- THE HIGHTOWER REPORT MORNING METALS COMMENT METALS:4/15 OVERNIGHT CHANGE to 4:15 AM:GLD-0.40 ,SLV-0.8 ,PLAT+2.00, CP +50 London Gold Fix $323.70 -$1.70 LME Copper Warehouse stks 791,975 ton -4,525 tns Comex Gold stocks 2.383 ml +4,436 oz COMEX Silver stks 107.9 ml oz Unchanged oz OVERNIGHT: Minor selling gold against a backdrop of higher world equity mkts GOLD: The big gains in the equity markets and what would appear to be a pattern of declining anxieties might mean that gold prices continue to fall back toward chart support. Decent corporate earnings reports combine with the official end to combat in Iraq, to channel some money away from gold and other flight to quality instruments. Completing the slightly bearish mix of factors this morning is a stronger Dollar. As we mentioned yesterday, the magnitude of the small spec and fund long in gold leaves us concerned that more downside work is ahead, especially since the gold market hasn't really showed a positive correlation to the prospects of an improving economy. In other words, the gold market still hasn't transitioned from a flight to quality commodity to a physical supply and demand driven commodity market. Furthermore, metals markets like copper and silver look to perform better than the gold market, until the transition to a different focus is undertaken. SILVER: While the economic outlook is brightening, we are not sure that traders should pay up for silver above $4.55, as support could easily be revisited down around $4.50. We have yet to see a consistent decline in COMEX stocks but we suspect that prices will mount a decent rise in anticipation of that type of fundamental improvement. As the economic clouds lift from over the economy, the silver market will look increasingly more toward equities, for daily price and trend direction. It would not be surprising to see July silver make a bid at the January highs of $4.90 in the coming months. PLATINUM: Already platinum is showing signs of a making a major bottom, with a breakout above the critical $620 level possible today. In fact, with the Nikkei making a gain for the first time in 5 sessions, its possible that jewelry demand hopes begin to add to the slight amount of upward momentum in prices. We suspect the $620 level in July platinum will now become support instead of overhead resistance. COPPER: The favorable action in the equity markets overnight gives the copper market a chance to breakout up today. With LME copper stocks mounting a significant decline over the last year (down close to 100,000 tons since April of 2002) we have to think that copper has a leg up on all other industrial demand driven markets. In other words, because copper has kept its supply in a declining pattern it might not take as much improvement in demand to cause prices to rise sharply. We even see the SARS spread slowing and that is a positive for Asian copper prices. About the most negative development for copper today, is that European economic forecasts released this morning show a deterioration of conditions. We think that July copper is headed quickly back into the 76 to 78 trading range. Both London & Shanghai prices were higher! ---------------------------------------------------------------------- martedì 15 aprile 2003 -- THE HIGHTOWER REPORT MORNING FOREIGN EXCHANGE COMMENT FOREX:4/15 OVERNIGHT CHANGE to 4:15 AM:$ +27 ,YEN-23 ,SF-32 ,CA-13 EU-29 DOLLAR: Given the early setup, we should see the Dollar rise hard against the Euro. However, because the trend in the Dollar has been down for so long, it would seem that the trade isn't that interested in buying the Dollar. Overnight European economic stats continued to come in soft and therefore the US has a chance to gather some momentum. With a flurry of US corporate earnings reports fostering a better attitude, the Dollar could really make a run but again it would seem that the trade isn't easily convinced that the US is the place to be. We still think that the US will have to justify the war with evidence of mass destruction weapons and at the same time the US might have to avoid whipping up a confrontation with Syria. In other words, the world is less upset with the US over Iraq but with the potential for another action in Syria, the currency trade sees the increased reward potential of the US Dollar, being offset by increased risk. In other words, the US is just too controversial for investors to throw money at the Dollar, even when conditions seem to favor the US economy. EURO: Maybe one shouldn't label the economic forecasts from the Euro zone this morning as negative, but they do show the ongoing sluggishness of activity. We still have to worry that the Euro is holding a large portion of the flight to quality premium, interjected off the war, with the Euro 900 points above the December lows. A key brokerage firm today released a dismal outlook for European growth with extremely negative views toward the manufacturing sector and that leaves us skeptical of the Euro. Therefore, we at least think that the Euro is due to slide to consolidation support just above 106.00. YEN: The Nikkei managed to reverse a disconcerting pattern of losses and that could discourage the Yen from breaking out to the downside. However, like the Euro and Swiss, we have to think that more flight to quality liquidation is to be expected, especially if the SARS issue continues to hinder Asian more than the rest of the world. A trade below 82.95 could mean a downside adjustment to 82.60. SWISS: The Swiss is on the verge of a downside breakout. The reason the Swiss rallied from 67.00 to nearly 76.00 was mostly off the war and the war is finished. Therefore, the Swiss will need some fresh anxiety event in order to avert a liquidation slide. Near term downside projection for the Swiss is 71.00. POUND: We think that the Pound will manage to hold above 156.00 and will begin to crawl higher in the sessions ahead. However, for the Pound to transition into an up trend, it will have to manage a close above the down-trend channel resistance line of 157.36 today and a lower transition Wednesday at 157.22. CANADIAN: Because the Canadian isn't showing signs of fading off a liquidation of the flight to quality theme, it might stay in the bull trend. With reports that the Quebec Separatists look to lose the Provincial vote, more of the negative stigma that took the Canadian down sharply in the 90's is removed. In other words, the Canadian has a chance of returning to the 72.50 level, if it can get beyond the flight to quality liquidation window. ---------------------------------------------------------------------- martedì 15 aprile 2003 -- THE HIGHTOWER REPORT MORNING FINANCIAL COMMENT FINANCIALS:4/15 OVERNIGHT CHANGE to 4:15 AM :BONDS -6 Just when it seemed that the end of the war would not usher in a better feeling toward the economy, a better feeling toward the economy surfaces. In addition to the "better feelings" it would seem that corporate earnings reports are establishing a better than expected pattern and that is undermining Treasury prices. Following last Fridays better than expected economic report readings, it is possible that Treasuries fail to get a rise out of an anticipated decline in Industrial production. Therefore, considering the recent pattern of events, it could be very damaging for the bonds and notes to see the Industrial Production and capacity utilization readings come in better than the -0.3% generally anticipated. In other words, in less than 1 week the fixed income markets have gone from a position of expecting the worst from the post war economy, to a slow realization that things are going to be better. In conclusion, the bonds are vulnerable to liquidation if the pattern of the last 2 sessions continues. In fact, if the industrial production reading is down by 0.3% or more, theTreasuries might still respect the Friday lows, but if the numbers are better than expected and the S&P manages a rally above 895, then the sellers should take control. With IBM earnings followed by Microsoft and Intel earnings today, it is possible that the pattern of good feelings, takes hold in the near term. In fact, we see a retest of the April lows and a possible violation of the pattern of "higher lows" that was established off the October 2002 low! In the end it appears that the euphoria off the end of the war simply took longer to surface than many expected. It should also be noted that a poll conducted by the New York Times suggested that a large majority of the US thinks now that the war on terrorism is being won and that more than anything shows a positive sentiment shift. We suspect a slow downside prove is ahead, with June bonds bottoming at 110-14 today and June Notes bottoming around 113-14. ----------------------------------------------------------------------

lunedì 14 aprile 2003 -- THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS ENERGY:4/14 OVERNIGHT CHG to 4:15 AM :CRUDE -46 ,HEAT-100 ,UNGA-54 The energy complex managed a moderate recovery off the lows last Friday but the market remains on the ropes. While the weekly COT report showed the net spec position in the crude oil to be almost 29,000 contracts short, that reading was taken around the highs last week. Therefore, the net spec short now might be considered pretty excessive and that makes it a little tougher to attack the market from the short side. In fact, late last week we were pretty bearish toward prices because of the supply outlook and after looking at the COT report we remain bearish but simply temper the outlook slightly. We suspect that Saudi Arabia will be willing to cut production rather aggressively because they wererunning at capacity just to insure world supply and that possibly prevented an economic disaster. Over the weekend the last oil well fire was extinguished and that is psychologically a negative influence on prices. Putting additional pressure on energy prices today, are comments from Army engineers that suggest Northern Oil wells in Iraq could be producing very soon (possibly within weeks) and that is a minor negative, on top of a vulnerable market. We continue think June crude oil will be held within a trading range bound by $26.00 and $28.00. The unleaded market might have trouble avoiding further declines considering that the charts are vulnerable, product flow from Venezuela is expected to build and there is also that massive shipment of Saudi oil due in next weekend. With 28 million barrels of oil due into the US we assume that crude prices will soften and that product prices will decline. In fact, unless OPEC manages to step up the production cut talks to the 2/3 million barrel level, we suspect that prices will fall. In fact, we suspect oil prices to decline until OPEC does respond. Last week's revelation that the world might be oversupplied by as much as 4 million barrels per day' is a major issue that the producers have yet to counter effectively. Therefore, continue to sell rallies with expectations of a decline to the early December consolidation lows in crude and unleaded. NATURAL GAS: The weekly COT report showed the small specs to be holding a significant long position and that was before a pretty significant upside extension late in the week. Considering that a massive rally followed the COT report, we have to think that the small specs are now net long at least 35,000 contracts and the funds are also net long a minimal amount. With much above normal temps sitting on the majority of the United States early this week, we suspect that the market will now find it much harder to rally. In fact, it will be interesting to see how natural gas responds to another liquidation in the regular energy complex. Traders should buy June or July natural gas puts. ---------------------------------------------------------------------- lunedì 14 aprile 2003 -- THE HIGHTOWER REPORT MORNING STOCK COMMENT CHANGE to 4:15 AM:S&P+160 DOW +18 NIKKEI 64 FTSE +29 The stock market comes into the action this week in a partially disappointing position. After seeing the Iraq war go much better than expected and hostilities coming to an end, many expected Wall Street to erupt in a rally but instead the trade turned its focus toward soft earnings expectations. With a flurry of earnings reports due out this week, there is the chance that the official end of the fighting won't spark a rally in stock prices. The early earnings reports today have given the US market a positive opening tone, but the market appears to lack a strong conviction. Considering that the US saw some very favorable economic information last Friday, we are a little surprised that the trade is still favoring the bear stance. One positive that may come from the overly bearish bias, is that the market might be inclined to rally this week, if a few of the earnings reports come in as expected, or even slightly better than expected. We feel that the path of least resistance is up but the market remains out of sync. Maybe the suggestions from the President over the weekend that Syria might be harboring Senior Iraqi officials, creates concerns for additional conflicts ahead. DOW: Even with the Dow coming into the week net spec short, (roughly 7,000 contracts) the market seems to favor the downside. We still don't get the sense that the market is vulnerable to aggressive liquidation but it would seem that bull stories are being discounted and bear stories embraced. One would think that declines in energy prices would be beneficial to high cap stocks but again the bull issues don't seem to be pulling in buyers. Regardless of the anemic recent price action, we would stillattempt to buy the June Dow on a decline to 8120. S&P: We suspect that the June S&P will find support around 861.60 but like the Dow we are unimpressed with the recent reaction to political and economic headlines. With the net spec position in the S&P "net short" and the market down since the COT report was measured, we are interested in buying dips. However, fresh longs in from around 860, will have to risk the position to at least 855.00. Eventually the outlook from the economy will improve and realization of that improvement might only be a matter of days away. In fact, the University of Michigan sentiment figures for early April already show investors and consumers are feeling better about conditions! ---------------------------------------------------------------------- lunedì 14 aprile 2003 -- THE HIGHTOWER REPORT MORNING METALS COMMENT CHANGE to 4:15 AM:S&P+160 DOW +18 NIKKEI 64 FTSE +29 The stock market comes into the action this week in a partially disappointing position. After seeing the Iraq war go much better than expected and hostilities coming to an end, many expected Wall Street to erupt in a rally but instead the trade turned its focus toward soft earnings expectations. With a flurry of earnings reports due out this week, there is the chance that the official end of the fighting won't spark a rally in stock prices. The early earnings reports today have given the US market a positive opening tone, but the market appears to lack a strong conviction. Considering that the US saw some very favorable economic information last Friday, we are a little surprised that the trade is still favoring the bear stance. One positive that may come from the overly bearish bias, is that the market might be inclined to rally this week, if a few of the earnings reports come in as expected, or even slightly better than expected. We feel that the path of least resistance is up but the market remains out of sync. Maybe the suggestions from the President over the weekend that Syria might be harboring Senior Iraqi officials, creates concerns for additional conflicts ahead. DOW: Even with the Dow coming into the week net spec short, (roughly 7,000 contracts) the market seems to favor the downside. We still don't get the sense that the market is vulnerable to aggressive liquidation but it would seem that bull stories are being discounted and bear stories embraced. One would think that declines in energy prices would be beneficial to high cap stocks but again the bull issues don't seem to be pulling in buyers. Regardless of the anemic recent price action, we would still attempt to buy the June Dow on a decline to 8120. S&P: We suspect that the June S&P will find support around 861.60 but like the Dow we are unimpressed with the recent reaction to political and economic headlines. With the net spec position in the S&P "net short" and the market down since the COT report was measured, we are interested in buying dips. However, fresh longs in from around 860, will have to risk the position to at least 855.00. Eventually the outlook from the economy will improve and realization of that improvement might only be a matter of days away. In fact, the University of Michigan sentiment figures for early April already show investors and consumers are feeling better about conditions! ---------------------------------------------------------------------- lunedì 14 aprile 2003 -- THE HIGHTOWER REPORT MORNING FOREIGN EXCHANGE COMMENT FOREX:4/14 OVERNIGHT CHANGE to 4:15 AM :$ +2 ,YEN-16 ,SF+8 ,CA-10 EU-3 DOLLAR: The US certainly posted a positive string of numbers last Friday but the currency markets hardly gave the economic differential any consideration. In fact, the trade is pretty disjointed on its opinion. It would seem that no country enjoys an edge. Even with the situation in Iraq going much better than many would have expected the US Dollar is getting little benefit. Maybe the comments that Syria might be next, is undermining the Dollar, as that would certainly fuel the theme that the US is out to control the Middle East. We are simply shocked that the combination of joyous celebrations in Baghdad and much better than expected US numbers on Friday, failed to drive the Dollar sharply higher. In fact, if the Dollar were to fall back below 100.23 that could signal a significant technical and fundamental failure. On the other hand, seeing the Dollar rise above 101.47 could prompt a significant long-term short covering reaction from position players. EURO: Economic stats from the Euro zone continue to hinder the Euro. In fact, if it were not for the economic weakness in Germany, we suspect that the Euro would have mounted a rally and close back above 108.00 last week. We see no trend in the euro but we do think that the Euro is rather expensive on a long term basis, considering that it is still 10 points above where is was trading in December of 2002. In other words, does the Euro deserve to maintain the vast majority of the war premium interjected intoits price? YEN: The Nikkei made another 20-year low overnight and the SARS issue would seem to be a negative for the Yen. The BOJ did suggest that market volatility off the Iraq war is declining and that might help in stimulating consumer demand and an improvement in the world economy. We continue to see the Yen lose flight to quality, or war premium and that could mean a downside breakout this week. Near term downside targeting is seen at 82.68. SWISS: Like the rest of the currencies, it would appear that the Swiss is giving up its flight to quality premium. In fact, the overnight low in the Swiss leaves it right on critical chart support. A failure to hold above 71.71 could mean a decline all the way down to 71.15. POUND: The fact that the UK and US economies are both showing some signs of inflation, could mean that those economies have a little more momentum than was expected. We already think that the Pound has been pushed down too far, considering the circumstances and that the Pound might be set to recover to 158.00. CANADIAN: The Canadian is overbought and the need for flight to quality is lessening. At this point, the Canadian seems to be the only currency that hasn't seen its war premium extracted. Therefore, we have to be a little defensive toward the Canadian but still fully expecting the up trend to continue. ---------------------------------------------------------------------- lunedì 14 aprile 2003 -- THE HIGHTOWER REPORT MORNING FINANCIAL COMMENT FINANCIALS:4/14 OVERNIGHT CHANGE to 4:15 AM :BONDS -8 The bull camp suffered a significant blow last Friday, even though fixed income price action wasn't overly weak as a result of the economic information. However, because the US economy garnered some respect from the US numbers, we have to think that the bull camp is vulnerable. Even US inflation numbers were hotter than expected, creating a potential undertow of concern for bonds and notes! Considering the flow of news from last Friday, the earnings reports due out early this week, take on a more significant role for Treasuries. If the market were to see a couple favorable earnings surprises, on top of the stronger retail sales and consumer sentiment readings from last week, that could be enough to break the back to the bull camp. The coming end of shooting war probably adds a little pressure into the equation but only if civil unrest inside Iraq calms down. Tough talk from the US toward Syria could become a supportive issue if the world begins to speculate about another battle ahead. The President suggested yesterday that there are signs that Syria has Chemical weapons and might be harboring Senior Iraqi military officials. Therefore, bonds and notes might exhibit some weakness but that weakness might be tempered. For bonds to fall below support of 110-21 (Notes below 113-20) we would have to see the June S&P rise above 880 off the earnings report slate or some other positive revelation. In conclusion, the bias has to go to the bear camp but momentum on the downside appears to be lacking. Softer energy prices are possible this week, considering that the US Army thinks that Northern Iraqi oil fields might be back up and producing within a few weeks. Lower energy prices and a lack of significant uncertainty from Iraq, should eventually allow the economy to gather some positive momentum and that should rekindle talk of a major top in bonds and notes. Look to sell a rally to last week's highs. ----------------------------------------------------------------------

venerdì 11 aprile 2003 -- THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS ENERGY:4/11 OVERNIGHT CHG to 4:15 AM :CRUDE -16 ,HEAT+8 ,UNGA-69 The energy complex faded aggressively Thursday because OPEC might have admitted that the current oversupply might be as much as 4 million barrels per day. After the initial forecast that 1 or 2 million barrels of production might be cut, the potential that up to 4 million barrels might have to be cut is a daunting task. In fact, the market must think that OPEC is incapable of cutting 4 million barrels per day in a quick fashion. In looking at past OPEC performance we suspect that only a threat of the lower end of the banding mechanism price of $22 will result in wholesale production cuts. Saudi Arabia will probably have the most to reduce and we suspect that they will be forth coming with a production cut offering ahead of the April 24th meeting. Reports that a Nigerian refinery was shut down Thursday failed to provide much support to prices as the talk of a "glut" has a way of chasing the longs out of the market. In another negative item US military sources indicated that Iraqi oil production would be between 200,000 to 800,000 barrels per day within 3 months but that really isn't any sooner than what the market was expecting early in the week. More normal weather is expected in the US and that could begin to press North America toward the slack spring demand window. Reports that US troops are shifting toward Peace keeping roles should be bearish to energy prices as that would seem to suggest that repair and maintenance on the wells is either under way or soon to be underway. If the news from OPEC producers wasn't enough to swamp prices Thursday, the US moved to open some of the Alaskan National wildlife Refuge to drilling and that should lower the dependence on foreign oil. We have to think that nearby crude oil prices are set to decline below $26.00 and with the revelation that OPEC might be overproducing by 4 million barrels per day, we have to think that nearby crude could fall to $25.00. We would withdraw buy orders for unleaded considering the rising tide of supply facing the energy markets. In fact, until the June unleaded market falls markedly below 81.00, we would stay on the sidelines. NATURAL GAS: The natural gas market made a lot more out of the 9 bcf draw in inventories than it should have. Furthermore, with weather warming significantly in the days ahead and crude oil prices fading late Thursday, we suspect that natural gas is a "prime short" around current levels. Those that fear the markets action strong Thursday should sell futures and buy a cheap May Natural gas call as protection against the short. While the annual deficit remains support that deficit should begin to repair thereby taking away some of the bullish interest in natural gas. ---------------------------------------------------------------------- venerdì 11 aprile 2003 -- THE HIGHTOWER REPORT MORNING STOCK COMMENT CHANGE to 4:15 AM :S&P+50 DOW +7 NIKKEI 163 FTSE +23 Asian stock prices were weak overnight but European stocks were trying to be positive as of this writing. The Street continues to voice concern over earnings and growth and that is apparently enough to discourage would be buyers. With the Chinese reporting 1,300 SARS cases, it would seem that the epidemic is not coming under control, as was thought early in the week and that could begin to play on Wall Street, if the disease continues it spread. However, we continue to think that getting beyond the war, seeing sharply lower energy prices and less intense hatred for the US, will eventually give the economy a boost. In the near term the market is simply not willing to accept the bullish view. The US Fed remains confident in the recovery but about the best look the private economists are willing to give is that the US economy looks to avoid falling all the way back into a recession. Therefore, the retail sales reading today could be a critical report, as it is possible that the market is assuming that the economy is dead in the water. In fact, some economists are forecasting an +0.8% increase in retail sales, which isn't a bad number. After seeing a -1.6% decline in retail sales last month, anything close to a +1% reading (for the month of March) has to temper some the negative tilt. Until the market decides to see the glass as half full, instead of half empty, the bears look to have weak control over prices. However, on another decline today we see stocks prices moving into a value zone! DOW: We had hoped to see the June Dow slide to 8120, to become a buyer and we would at least hold out for the early numbers today, before paying up for longs above the 8120 level. With energy prices significantly weaker and expected to see even more declines, the end of the war only a matter of time and proof that retail sales are still showing positive progression, it is time to look for a bottom. After all, seeing a slow "recovery" isn't the end of the world! S&P: We had hoped for a quick and aggressive slide to 856 and that could still happen today. We do expect the bear camp to begin losing its control over the market and that could take place today. Give the market at least another half session with the 856 "buy-price" but realize that the clouds are lifting, instead of becoming darker. ---------------------------------------------------------------------- venerdì 11 aprile 2003 -- THE HIGHTOWER REPORT MORNING METALS COMMENT ETALS:4/11 OVERNIGHT CHANGE to 4:15 AM:GLD-1.40 ,SLV-2.5 ,PLAT+1.90 London Gold Fix $325.05 -$.05 LME Copper Warehouse stks 798,550 ton -1,725 tns Comex Gold stocks 2.379 ml -200 oz COMEX Silver stks 107.8 ml oz +800,256 oz OVERNIGHT: Tighter ranges this morning with almost no upside direction posted. GOLD: Apparently concerns for ongoing slow economic activity is serving to undermine the recent strength in gold. We also have to think that the SARS issue could become an additional undermine to gold, as a Malaysian cruise line had two crewmembers come down with SARS. Overnight China reported that they have 1,300 people sick with SARS and that is certainly a drag on consumer and investing sentiment. We had hoped to see economic optimism increase the prospect of inflation and improving physical demand but with the muted response to the events in Iraq and the SARS issue, the gold market is fighting the threat of deflation. The gold market looks to waffle in a range of $328 to $320 with a slight bearish tilt. In other words, one should not be surprised to see June gold slide over the coming sessions. If gold were really in favor, the SARS issue would be something that supports prices instead of undermines prices. SILVER: Consolidation action under the recent highs, suggests that silver has lost its driving force. While the up trend might return in the weeks ahead, given the downgrade of earnings and the downgrade of growth by Wall Street, we are concerned that silver will correct to $4.40. In fact, with an 800,000-ounce increase in COMEX stocks overnight there are a few reasons to suspect a correction. Those that took our suggestion to buy July silver at $4.37 should take a profit at $4.50 on that position and look to reset on a correction next week back down to $4.40. Like gold, the SARS issue is a negative for silver, as it serves to slow growth in Asian economies and that in turn hurts the prospect for a recovery in high tech and communication demand. PLATINUM: The double top around $622 looks to hold as resistance with the middle point of the trading range coming in at $609.7 and the bottom coming in at $602.5. Because platinum remains in a downtrend pattern we have to favor the downside but one would expect the liquidation of flight to quality positions to have run its course. Seeing platinum recoil off the lows this week seems to suggest that a solid bottom might have been forged. However, the market could still revisit the lows. COPPER: We are really disappointed in the charts and the performance of copper this week but with the equity market so weak and the economic outlook less than optimistic, the market is right in tracking back to the recent lows. Shanghai copper stocks declined a sharp 11,219 tons in the latest week and have fallen for five straight weeks. The trade is also seeing strong premiums for copper prices in China and that hints at good demand and tight supplies. However, reports overnight were that a state owner company might have dumped some copper overnight and that could spark a move to new low ground in the futures over the coming sessions. We still think that copper prices will be a big buy at some point in the coming weeks if the western world could get its economic act together. However, with the US stock market acting like the end of the war is a negative, we have to think that copper prices are vulnerable. We continue to be interested in buying July copper but would suggest that traders wait for at least a new low for the move at 70.40 before getting long. In fact, buying at the money copper calls is still preferable to long futures. ---------------------------------------------------------------------- venerdì 11 aprile 2003 -- THE HIGHTOWER REPORT MORNING FOREIGN EXCHANGE COMMENT FOREX:4/11 OVERNIGHT CHANGE to 4:15 AM:$ +19 ,YEN-20 ,SF-27 ,CA+7 EU-26 DOLLAR: The charts would make it seem like the Dollar found temporary support around the 100.00 level and in fact it almost seems like the Dollar rejected the sub 100 level. With US retail sales readings due out today expected to show a minor expansion, it is possible that aggressive Dollar shorts rethink their positions or decide to take profits. While some traders might buy the Dollar off the prospects that the coalition forces have found weapons of mass destruction, we have to think that buying in the Dollar will be restricted to short covering buying. In any regard, a near term bounce to 101.18 is possible but getting beyond that level might require some other landmark development. Two weeks ago we would have expected wild and happy Iraqi celebrations with US troops, to be something that drove the Dollar sharply higher, but that simply hasn't happened so the Dollar might need a real shocking story to alter its current bearish tilt. EURO: The Euro has lost momentum and might be primed to take some profits off a technical balancing act. However, one can't rule out the potential for France to get a black eye over its business dealings with Iraq. Many sources are already suggesting that evidence is available to prove that France was violating the UN sanctions in its oil dealings with Iraq. Therefore, some of the gloss looks to come off the Euro. However, it would seem unlikely that the Euro would fall further than consolidation support of 106.58 unless something really shocking surfaces. As we move forward in time, the state of the European economy is expected to show its much worse than the US and that could also undermine the Euro. YEN: The Nikkei was down moderately overnight and that is made worse by the fact that the SARS issue is not going away. A G7 meeting this weekend probably won't have much impact on the Yen but if there is an impact, it could be for the Yen to fall. Near term support in the Yen is 82.90. SWISS: We think the Swiss is without a driving force and remains a little expensive in the big scheme of things. In fact, given such poor chart action overnight, the Swiss appears to be primed to slide into a new low for the move. Near term targeting is seen at a gap area down at 70.80. POUND: We have to wonder if the Pound will continue to rise, as it is now in a critical technical area on the charts. UK companies are pushing hard for a bigger share of the Iraq rebuilding program and that could be seen as a potential lift for a struggling UK economy. Therefore the path of least resistance is up, but gains might be hard won. CANADIAN: The breakout is impressive and the political and economic reasons to buy the Canadian remain in place. Near term upside targeting is seen at 69.20. ---------------------------------------------------------------------- venerdì 11 aprile 2003 -- THE HIGHTOWER REPORT MORNING FINANCIAL COMMENT CHANGE to 4:15 AM :BONDS -4 Considering the negative tone of economic dialogue and the economists rushing to lower earnings and growth projections, it is surprising that Treasury prices haven't acted better this week. We continue to think that long-term top mentality is robbing the bonds and notes of fresh buying interest, as the trade understands the near term sloppiness of the economy but in a way thinks that things are set to get better. The SARS issue is also an issue that could end up driving bonds higher. Overnight the Chinese reported up to 1,300 cases of SARS, while a Malaysian cruise line reported two infections and that is a blow to consumer confidence. In other words, the SARS issue hasn't become a dominating world issue yet, but it is restraining Asian activity and is more than likely another drag on the global economy. Since the market is primed for negative news, we have to think that PPI will come in closer to the hot end of the scale, than it will to the normal end of the inflation scale. However, whatever Treasury selling will be prompted by the PPI report should be countervailed by the retail sales report. While most economist think that retail sales will rise by just under 1%, that would seem to be a high bar in the current environment and that could set the market up for a "minor" bullish surprise especially if the reading comes in under the current range of expectations. Seeing a retail sales reading above +0.9%, could serve to temper some of the overly pessimistic views on the economy and justify the bond market sluggishness since the highs early this week. We had hoped to see the June bonds rise to 112-24 this week in order to get short but we now doubt that will happen, as the market simply lacks the long interest. We had also hoped to see the June notes rise to 114-27 but that probably won't happen unless the June S&P slides below 856 and the retail sales is "negative" instead of positive. We do expect to see inflation evidence in the PPI but that is not a critical issue for Treasuries unless the recovery view begins to take hold. Look to be short the fixed income market between the current market level and the highs this week, but realize the market might take a number of days to work back down to the March lows. -CHANGE to 4:15 AM :BONDS -4 Considering the negative tone of economic dialogue and the economists rushing to lower earnings and growth projections, it is surprising that Treasury prices haven't acted better this week. We continue to think that long-term top mentality is robbing the bonds and notes of fresh buying interest, as the trade understands the near term sloppiness of the economy but in a way thinks that things are set to get better. The SARS issue is also an issue that could end up driving bonds higher. Overnight the Chinese reported up to 1,300 cases of SARS, while a Malaysian cruise line reported two infections and that is a blow to consumer confidence.In other words, the SARS issue hasn't become a dominating world issue yet, but it is restraining Asian activity and is more than likely another drag on the global economy. Since the market is primed for negative news, we have to think that PPI will come in closer to the hot end of the scale, than it will to the normal end of the inflation scale. However, whatever Treasury selling will be prompted by the PPI report should be countervailed by the retail sales report. While most economist think that retail sales will rise by just under 1%, that would seem to be a high bar in the current environment and that could set the market up for a "minor" bullish surprise especially if the reading comes in under the current range of expectations. Seeing a retail sales reading above +0.9%, could serve to temper some of the overly pessimistic views on the economy and justify the bond market sluggishness since the highs early this week. We had hoped to see the June bonds rise to 112-24 this week in order to get short but we now doubt that will happen, as the market simply lacks the long interest. We had also hoped to see the June notes rise to 114-27 but that probably won't happen unless the June S&P slides below 856 and the retail sales is "negative" instead of positive. We do expect to see inflation evidence in the PPI but that is not a critical issue for Treasuries unless the recovery view begins to take hold. Look to be short the fixed income market between the current market level and the highs this week, but realize the market might take a number of days to work back down to the March lows. ----------------------------------------------------------------------

giovedì 10 aprile 2003 -- THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS ENERGY:4/10 OVERNIGHT CHG to 4:15 AM :CRUDE -48 ,HEAT-76 ,UNGA-146 With the results from the weekly inventory reports showing a decline in US crude stocks, the issue of tightness continues to be a factor that will support prices. In our opinion, the refinery operating rate jumped significantly and that serves to countervail the decline in crude stocks. We continue to think that significant amounts of oil could now show up on the open market, as sources that are not comfortable holding the extra war supply push those supplies back into play. In other words, maybe the SPR and the IEA won't release their buffer stocks, but a number of other entities (large companies, utilities, foreign governments) could either sell that oil or slow future purchases to work through their supply. On top of the buffer stocks, the world production level has to be running significantly above demand. In fact, the Venezuelan Oil Minister suggested that the world oil market might be oversupplied by as much as 2 million barrels per day. Therefore, OPEC will probably be gunning for at least 2 million barrels in cuts in the April 24th meeting. Venezuela also raised their production total again to the 3.2 million barrel per day level and that is most certainly adding to the surplus tally. However, with the US crude oil stocks not showing a build in the weekly inventory reports (as was expected) it is clear that extra oil isn't finding its way to the US yet. Because a large portion of US oil imports come from Iraq, its clear why US inventories are not rebuilding under higher OPEC production. We also expect OPEC to push for higher compliance but we doubt that they can cut production by 2 million barrels and expect compliance to be high. Saudi Arabia suggested that OPEC would be prepared to defend the pricing band, which is bound by $22 and $28 per barrel. In other words, OPEC might try defend prices but they might not react aggressively until nearby crude prices slide to the lower end of the band around $22. We would become a seller of the June crude oil on a rally above $28.00 if given the chance, as OPEC talk shouldn't be worth more than $2 off the recent low of $26.00. A triple bottom around 80.30 looks to be solid support in the July unleaded contract, but we suspect that unleaded could rally to fill the gap up at 85.91 to 86.40. While OPEC might try to drive the market consistently higher into that April 24th meeting, we doubt they will be successful, as there is certainly more oil on the market, than the mkt has been considering this week. NATURAL GAS: With the regular energy complex providing bullish direction to the natural gas market, it has managed to climb to the upside breakout point on the charts. We also have to think that natural gas prices were given an added boost by the lingering cold weather the US. The weekly inventory report calls for a draw of 20 bcf, with some expecting to see a build of 25 bcf and that is a mixed forecast. Apparently the funds were seen buying the market Wednesday, but we doubt that support will continue once the regular energy complex settles down. In fact, we would not back away from the interest in the short side of the market around the $5.26 to $5.30 level in the June contract. ---------------------------------------------------------------------- giovedì 10 aprile 2003 -- THE HIGHTOWER REPORT MORNING STOCK COMMENT CHANGE to 4:15 AM:S&P+160 DOW +10 NIKKEI -77 FTSE -10 The market is simply in a bear posture when it discounts euphoric images from Baghdad, in favor of earnings concerns. While one should not fight the tape, we think that market is wrong in thinking that the rebuilding phase of the Iraq campaign is as perilous as the fighting. Certainly the fighting isn't over, but we would have to think that anxiety levels are declining and that some of the geopolitical headwinds are being eliminated. However, in the near term the market looks to pay full attention to the sweep of soft earnings reports flooding the street. With a couple of noted economists predicting that the US was already in a recession, or would soon fall back into a recession, its understandable that some investors fret but we have to think that not having war should eventually take the pressure off the economy. If traders and investors believe that businesses and consumers are completely tapped out and that the end of the war is too late, then they should dump holdings and become net short this market. However, while it might not happen until next week, we have to think that investor and consumer confidence will improve soon. Unfortunately, the Press is still managing beat down sentiment with biased reporting. In fact, the British Navy actually banned the BBC telecasts from at least 1 ship, because the troops were sick of the slated views being broadcast by the BBC. While we hardly think that trouble off the rebuilding process in Iraq are responsible for holding back the stock market, the Press appears to be laying that prospect down as the newest burden to global recovery. In conclusion, the stock market is not ready to launch into a strong upside thrust, unless some new tilt is adopted. DOW: In the near term, we would not be surprised to see the June Dow contract slide back to 8113 but at that point we would be willing to build a long position. In fact, we see no reason for the Dow to encounter panic selling and fall below closein support of 8164. S&P: The bulls just don't seem to have the numbers to spark a big rally in prices. We suspect that a sloppy trade will unfold with the June S&P possibly touching 857. However, close-in support of 861 has a decent chance of supporting prices today. Maybe the market will eventually rally under the official end to the war, but that would seem to be at least a few more sessions off into the future. ---------------------------------------------------------------------- giovedì 10 aprile 2003 -- THE HIGHTOWER REPORT MORNING METALS COMMENT METALS:4/10 OVERNIGHT CHANGE to 4:15 AM:GLD-0.30 ,SLV-0.8 ,PLAT+0.40, CP +40 London Gold Fix $325.10 +$1.00 LME Copper Warehouse stks 800,275 ton -1,450 tns Comex Gold stocks 2.379 ml -643 oz COMEX Silver stks 107.0 ml oz -100 oz OVERNIGHT: With the Dollar remaining weak, the Japanese were buying gold. GOLD: While outside market action looks to be a little less supportive to gold today, we would not rule out an attempt to return to the late March consolidation up at $328 to $332. However, in order for the gold to reverse the downtrend pattern in effect since the February high, the June gold would need to close above $331.1. Weaker Euro zone growth for the 4th quarter might undermine the gold market, especially with global stock markets performing poorly following the spectacle in Baghdad yesterday. While serious fighting continues we have to think that the uncertainty off the war is falling by the day. Some might suggest that critical oil fields in the North of Iraq are still in peril and indeed some well fires were set overnight in that area. However, we caution the bulls that are seeking support for gold prices off the anxiety front, as anxiety off the war will probably end soon and the market will then have to find other reasons to rally. We continue to think that the best track to higher gold prices is to see the threat of deflation, or double dip recession reduced and true growth anticipated. Yesterday a couple key economists predicted that the US would fall back into a double dip recession and that is limiting to gold. We still think a fair value low has been forged and that the technical position is balanced enough that gold will probably stay above $320. SILVER: With silver 14 cents above the April low, the trade remains bullishly biased but there would seem to be significant overhead resistance for the market around $4.52. If the stock market can?t show some positive progression today, we would suggest that traders consider taking a profit on long July positions from $4.37. In other words, aggressive longs might look to bank profits on a rally to $4.49 today and then look to re-enter the long side on a correction to $4.40. In order to play for an upside breakout, outside information needs to be more significant, or COMEX stocks need to show a trend of declining supplies. PLATINUM: A double top around $622 might serve as temporary resistance with a correction back to $610.5 possible in the coming sessions. As in the other metals markets the mention of recession is a negative for platinum. Some might suggest that $600 is a solid fundamental price zone but platinum needs to see the global economy begin to show improvement quickly once the drag of the war is finally removed. COPPER: The copper market appears to be suffering from lackluster economic views and certainly from the SARS issue. We continue to think that copper has already forged a critical bottom around the April lows and that the market will eventually claw its way toward the February and March consolidation lows up around 75.00. What the market doesn?t seem to be considering is that LME copper stocks have declined significantly and that hints at a more bullish posture than the market is currently factoring. With both London and Shanghai copper prices weaker overnight, the uptrend doesn?t look to start today in the US session. Therefore, traders might expect a minor decline to 72.00 in the July. ---------------------------------------------------------------------- giovedì 10 aprile 2003 -- THE HIGHTOWER REPORT MORNING FOREIGN EXCHANGE COMMENT FOREX:4/10 OVERNIGHT CHANGE to 4:15 AM:$ -4 ,YEN+3 ,SF-11 ,CA+10 EU+8 DOLLAR: The Dollar continues to be out of favor, even though the Russians and French might soon be exposed as close economic partners with Saddam. With rumors circulating that something sinister was going on between Russia and Iraq, we suspect that the negative focus toward the US might be diverted. In other words, once its becomes clear that those opposed to the war held that position to protect oil interests, maybe there won?t be as many attacks on the US stance. In the near term, the failure to see the Dollar rally off the Baghdad euphoria on Wednesday is a pretty telling sign. Furthermore, with the US economy souring and Wall Street unable to put on a happy face, it is clear that few buyers will surface for the Dollar unless something significant changes in the headlines. Therefore, while we expect the Dollar to respect support of 100.00, we do expect it to test that level. EURO: Euro zone numbers this morning show that the economy in Europe was almost showing negative growth toward the end of last year. With the additional slowing this spring, we have to think that the Euro zone is flirting with recession. However, in the short term that outlook doesn?t appear to discourage the buyers from pushing the Euro toward resistance of 108.00. We don?t know why the market likes the Euro, but its best not to fight the near term trend. A reversal takes place with a trade back below 106.58. YEN: The Yen is simply stuck in a consolidation zone. The market can?t decide if money should move to the Pacific Rim and the Yen, because of the SARS threat and it can?t decide it if needs to get away from the US. Therefore, expect the Yen to waffle in a range bound by 83.29 and 84.18. SWISS: We still don?t get the sense that coming conditions will be cause for flight to quality buying of the Swiss. Therefore, on a rally to 72.69 become a seller, looking for the bottom of the range down at 71.82. POUND: We still think the Pound is going to get a benefit from being the diplomatic voice of reason, between the US and France. In fact, considering the sharp rise off the recent low, the Pound looks to forge a rally to 156.80. CANADIAN: The chart really looks good in the Canadian. We suspect that an upside breakout will be seen before the end of the week, especially if the US outlook remains cloudy. However, considering the distance to support on the charts, the longs should prepare to weather volatility. ---------------------------------------------------------------------- giovedì 10 aprile 2003 -- THE HIGHTOWER REPORT MORNING FINANCIAL COMMENT FINANCIALS:4/10 OVERNIGHT CHANGE to 4:15 AM :BONDS +2 While the end of the war isn?t officially in place, we should be close enough to the end of the war, for the market to anticipate an improvement in sentiment. However, with Wall Street denying the euphoria potential off Iraq, in favor of renewed earnings concerns, it is clear that the bull camp in bonds still has a bit of control over prices. In our opinion, seeing poor earnings reports should be no different than seeing poor economic reports, which the bonds have been discounting consistently for almost a month. In the case of the economic reports, the bond market has discounted them, saying that things would get better once the geopolitical headwinds were removed. Apparently, the market sees the geopolitical headwinds remaining in place! While we doubt that Treasuries will be able to climb above the early April highs, we do expect to see more attempts to rally in the coming sessions. We suspect that the US Midwest manufacturing report, or the retail sales report Friday will provide the Treasuries a lift over the coming two sessions, especially if the June S&P falls below 864 today. Apparently a number of key economists suggested yesterday that the US was already in a double dip recession or would return to one soon and that sparked some fixed income buying. It would seem that the end of the war is only enough to cause some economists to ditch the deflation forecast, in favor of a recession forecast. We have to admit that the stock markets failure to post a good run in the face of the televised images of the Baghdad celebrations is indicative of an economy that isn?t primed to recover. While something might change sentiment-wise in the coming sessions we would not expect that change to come from the US numbers. Therefore, the path of least resistance for the rest of this week is up, but we doubt that the gains will be impressive. In the June bonds expect a pulse up to 112-24 under optimal conditions, while June Notes might be capable of rising to 114-28. We might turn bearish on bonds if the June S&P surprised the trade with a quick rise and close above 881 today. In the near term, slow hard fought gains are expected until some new focus surfaces on the direction of the economy. ----------------------------------------------------------------------

mercoledì 09 aprile 2003 -- THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS ENERGY:4/9 OVERNIGHT CHG to 4:15 AM :CRUDE +40 ,HEAT+145 ,UNGA+56 With the trade buffeted by the ebb and flow of war news and by OPEC dialogue, it is clear that energy prices are attempting to make a key decision. We have to think that the bounce off this weeks lows, confirms a near term low but we are not convinced that prices will be able to mount a consistent run higher, in the face of oversupply anecdotes. For instance, OPEC itself is talking up the idea that many producers are running way above their listed quota limits. In fact, Saudi Arabia is thought to be running in close proximity to its apacity, while Venezuela is running above the 3 million barrels per day tally. If OPEC ends up raising their production cut total, closer to a 2 million barrel total in the coming sessions that could add an additional buying interest to the trade. However, we have to think that the weekly inventory readings this morning will be a slight offset to the bullish production cut talk. In the end, if OPEC can send a strong message, then the partial rise in US inventories will be mostly discounted. In the event that US crude stocks rise by more than 5 million barrels that would certainly be a headline type increase that could in turn put prices down for the session. In the event that US nventories rise significantly OPEC might be forced to become more aggressive with cuts. In fact, late Tuesday some OPEC oil Ministers were already suggesting that 1 million barrels per day was just a starting point and that 1.5 million barrel or more cut might be seen from that April 24th meeting. Even US Department of Energy officials suggested that world oil fundamentals remain tight and that prices might avoid sustained declines until after inventories rise markedly above current levels. The trade also saw some pipeline problems in the US on Tuesday and continues to see prices supported overnight off much colder than normal weather in the Northeastern US. We suspect that $26 June crude oil pricing will be solid support and that the trade might attempt to regain the $28.00 level into the April 24th meeting. All bull bets come off if the crude oil inventory data shows builds in excess of the upper end of the range of estimates. In a longer-term note, the EIA thinks that Iraqi production could rise to 2.78 million barrels per day by the 3rd or 4th quarter and that is higher than was allowed under the UN oil for aide deal. NATURAL GAS: With the NWS forecast calling for cool and wet conditions and the regular energy complex showing support off the theme that OPEC is preparing to remove some supply, we expect prices to consolidate just below the recent highs. The charts do depict a pattern of lower highs but with partially unimpressive momentum we suspect that the upcoming action will be nondescript. We still view the $5.26 level as an area to get short in, but would give the market a little time to consolidate before expecting weakness to prevail. ---------------------------------------------------------------------- mercoledì 09 aprile 2003 -- THE HIGHTOWER REPORT MORNING STOCK COMMENT CHANGE to 4:15 AM:S&P-430 DOW -15 NIKKEI -73 FTSE -38 The action in the stock market is very disappointing but when one considers the uncertain status of the "end of the war" its not surprising that prices are sloppy. We would suspect that the market will be made aware of the "Saddam status" in the action today, or certainly in the action Thursday and that might serve to clear up the current confusion. With some traders and investors suggesting that beyond the war, the US economy will still be confronted with difficult times, one gets the impression that there will be very little sustained euphoria off the actual end of the war. However, we have to think that some type of euphoric reaction in stock prices will be seen over the next 36 hours, but considering the markets capacity to embrace the bear tilt, we have to temper our bullish opinion slightly. Weak German economic figures this morning combine with a soft Dollar for a weak start to the session. After the close today many analysts think that Yahoo earnings will be supportive but we are not sure if the market is ready to react to earnings reports, as the war issue continues to dominate. Maybe the stock market won't launch into a massive rally following the news that Saddam is no longer of this earth, but we certainly don't feel compelled to be short the market into that type of news. Even if the bombing didn't take out the Iraqi leadership, it would appear that Saddam and his sons have fewer and fewer places to hide. In other words, if they didn't get him, the odds he will be found again very soon is high. DOW: Economic growth concerns are undermining the Dow's attempt to maintain a positive trend. Seeing the June Dow fall below 8200 now, could result in a quick slide to 8120. Even if the Dow fails to hold critical support on the charts, we hardly see conditions sparking a hard liquidation wave. Being disappointed in the economy isn't a new issue and one has to concede that the outlook for the economy has to improve slightly with the end of the war, even if the euphoria off the end of the war is minimal. We would become a buyer of a dip to 8206. S&P: Typically the S&P doesn't launch into a significant rally off the type of chart pattern seen over the last week. However as we suggested before, we would much rather be long and assume the risk that the euphoria kick will be short lived, than to be short and assume that no euphoria will be seen at the end of the war. Critical chart support levels come in at 873 and 870.90, basis the June S&P. Seeing the 870 level fail could project a decline to 856. Resistance is now seen at 884.30. ---------------------------------------------------------------------- mercoledì 09 aprile 2003 -- THE HIGHTOWER REPORT MORNING METALS COMMENT METALS:4/9 OVERNIGHT CHANGE to 4:15 AM:GLD+1.90 ,SLV+0.7 ,PLAT+7.80, CP -20 London Gold Fix $324.10 +$1.80 LME Copper Warehouse stks 801,725 ton -1,600 tns Comex Gold stocks 2.379 ml -525 oz COMEX Silver stks 107.0 ml oz -304,132 oz OVERNIGHT: Minor gains off a weak Dollar & increased Japanese purchasing power. GOLD: Unless something breaks today in the war, delaying the outcome further into the future might result in deflationary conditions creeping back to the forefront and that in turn could undermine the gold market. While a large amount of economic uncertainty is present due to the delay in ending the war, the fact that the stock market slid yesterday could have dampened some of the positive action documented in both gold and silver on Tuesday but apparently had no effect. However, with gold prices showing positive early morning action, it would appear that the bull camp remains in charge of gold for another session. For both silver and gold to show positive action in the face of weak equity prices and the anticipated end of the war, is a sign that the majority of the flight to quality liquidation has run its course. We still get the feeling that gold and silver will need a solid economic recovery view, to mount a sustained rally. In order to turn the trend back up the June gold will need to forge a close above $326.3. SILVER: The action in the silver market is very impressive, with either recovery hopes or out right short covering providing the bullish tilt in prices. The fact that COMEX silver stocks have declined considerably, should also be supportive of silver prices. In fact, the extension above the last month's consolidation pattern is quite impressive given the macro economic environment. However because silver failed to maintain prices above $4.50, the market might be lacking the necessary near term momentum to move firmly up into the $4.50 to $4.70 trading range. Seeing a close back below $4.45 now, would be very damaging to the bull camp but it will be important to determine if the silver is going to correlate positively, or negatively with the equity market. PLATINUM: An apparent gap higher move overnight might suggest that the downtrend of the last month has in fact been reversed. A rise back to the late March high of $634 might be seen but the July contract will probably find some significant resistance around the $622.2 level. Prior to the last 24 hours we suspected that platinum needed a stronger stock market in order to turn off the selling pattern but now it would appear the market is back to trading its own fundamentals. COPPER: While we saw favorable price action in China overnight, that didn't serve to support US copper prices yesterday. Considering the weakness in international equity markets overnight and the ongoing and unclear status of the SARS issue, we can understand another down day in New York copper prices. Near term support should hold around 71.90 and then again down at 71.55. Weak German manufacturing readings overnight and the extension of the end of the war in Iraq should keep a minor bear track in place. However, we see no reason for July to make a new low for the move, off the current slate of fundamental news. Singapore is supposedly moving to revise its annual economic forecasts downward because of the SARS issue and that is a prime example of the type of negative macro economic impact that copper is seeing against its key demand region (Asia). We do get the sense that SARS will begin to migrate to second tier news, which in turn should begin to reduce the selling pressure on copper prices. ---------------------------------------------------------------------- mercoledì 09 aprile 2003 -- THE HIGHTOWER REPORT MORNING FOREIGN EXCHANGE COMMENT FOREX:4/9 OVERNIGHT CHANGE to 4:15 AM:$ -19 ,YEN+1 ,SF+25 ,CA-2 EU+38 DOLLAR: The Dollar is almost in the same disjointed position as the equity market, as the trade is uncertain what to make of current events. While the end of the war should not be seen as negative thing for the Dollar, the fact that there isn't a widespread euphoria waiting to surface, has caused many Dollar longs to exit. In fact, with a number of UN members meeting in Russia, it would seem that those opposing the war, are now preparing to mount a diplomatic charge against the US. The Russians are attempting to steal a portion of Iraqi reserves claiming that a deal signed with Saddam over a year ago gives them rights to one of the largest oil reserves in Iraq. The French are also ranting because they had favorable oil deals with Iraq and now will have to pay true market prices. In conclusion, as long as the majority of the world sees the Russian and French anti war position, as a stance against violence, the Dollar is going to suffer. However, once it becomes clear that the US won't budge on the reconstruction process, maybe the Dollar will get a lift. We also have to think that the dollar might mount a temporary rally to 101.47 on the end of the war, or the end of Saddam but will then run out of gas quickly. EURO: While the Euro is higher overnight it had to absorb another weaker than expected German manufacturing reading. We suspect that French statements about becoming involved in Iraq will become a critical pivot point for the Euro in the coming sessions and we doubt that the Euro will be able to rise above 107.95. YEN: Japanese economic numbers continued to show weakness but did show some signs of life and that is a slight change from the past. Furthermore, we continue to see the SARS issue fading from the headlines as control is asserted in affected regions and that should take some of the resistance off the Yen. Near term resistance is documented at 83.85. SWISS: We see almost no flight to quality potential in the coming 36 hours. In fact, while euphoria off the end of the war might be less than originally expected, we would not want to be long the Swiss when the war officially ends. POUND: We suspect that the Pound will get some credit for the position of Blair in the upcoming UN showdown. The UK favors UN involvement, while the US opposes given the UN control and that should improve the status of the Pound. However, for the Pound to turn off the selling pattern, it must avoid a slide below 154.48. CANADIAN: We really like the chart pattern in the Canadian but we understand the high risk of being long at such lofty chart levels. We also have some fear of being short into the potential official end to the war. In any regard, traders should be long but should carry a put for the next 2 sessions. ---------------------------------------------------------------------- mercoledì 09 aprile 2003 -- THE HIGHTOWER REPORT MORNING FINANCIAL COMMENT FINANCIALS:4/9 OVERNIGHT CHANGE to 4:15 AM :BONDS +9 The bond market has simply been revived by views that the economy will remain sour after the war concludes. In fact, the headlines yesterday suggested that investors were looking beyond the war and seeing many difficulties and that is exactly why bonds have mounted a recovery. With Treasury prices returning to the previously designated sell zone, we see no reason to back away. However, we do suspect that the war is virtually over and that the fate of Saddam will be known within the next 24 hours. Therefore we think risk and reward setup still favors a short play. We suspect that UN wrangling could dampen the euphoria off the official end of the war. However, seeing the June bonds rise above 112-24 would suggest that something more significant is in play and that the short position is wrong. In the June Notes a move back above 114-28 would also be a sign that something new and significant has entered the fray. With the economic report slate pretty thin, war issues and equity market action will continue to be the primary driving force for Treasuries. We did see softer than expected German manufacturing numbers overnight and generally weaker international equity prices and that should give bonds and notes a firmer opening. However, it would also seem like the SARS issue is becoming a less anxious situation and that has been a bullish catalyst for the past 5 sessions. We would not rule out a return to the April highs but that only takes place if the war extends into the coming weekend. In the end, if international stock markets can't mount a strong rally on the official end of the war, then our long term topping view in bonds might have to be altered. Trades can be short the June bond futures from 112-04 and long a May 113 call for only 40 ticks and that should result in a narrow risk window. In the Notes traders might get short futures around 114-17, looking to buy a May Note 115 call for only 29 ticks. The May note and bond options only have 16 days until expiration and that serves to keep the cost of hedging the futures position to a minimum. There is a Fed speech today but the market is simply not expecting movement from the Fed and that pretty much leaves the bonds to track outside developments. ----------------------------------------------------------------------

martedì 08 aprile 2003 -- THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS ENERGY:4/8 OVERNIGHT CHG to 4:15 AM :CRUDE +21 ,HEAT+105 ,UNGA+109 As we suggested the energy complex wasn't going to forge a bottom until OPEC decided to stop the slide with threatening production talk. During the session Monday, OPEC indicated that they would meet April 24th but that production could be easily reduced with a telephone conference call. Apparently the Iraqi opposition suggested that they would respect the production agreements with OPEC and that must have been meant to build support for their cause because we can hardly see the coalition giving up control of Iraqi oil fields for at least 6 months. In the mean time, we have to think that a US dominated Iraqi management structure would turn the production on full force. We suspect that OPEC is aware of the loose cannon that Iraq might become in an effort to finance significant reconstruction expense. OPEC is already charging that an oil glut is likely to unfold in the near term, even if fears of land mines hinder a quick return to significant Iraqi production. Adding to the negative tilt in prices is the fact that Venezuelan production has recovered to 3 million barrel per day. It is also bearish that a 2 million barrel shipment of gasoline is on its way from Venezuela to the US for arrival in 5 to 7 days. OPEC did suggest that they would act before oil prices fell to the bottom of the banding range, but we have to think that Brent crude prices below $25 (overnight May Brent traded $24.70) really motivates OPEC to pull back supply. In fact we suspect that the lows posted Monday, might become some type of psychological point, where producers will certainly increase verbal support of prices. With early expectations for the weekly inventory report, calling for a 3 to 5 million barrel build, the market might attempt to test the resolve of OPEC into the API/DOE readings Wednesday morning. The products are also expected to see the stocks rise slightly but probably not enough make a major splash in prices. News that the Iraqi leadership might have been killed in a bombing run last night could serve to check what appears to be a firmer early tone in prices. However, in addition to the supportive talk from OPEC, it should also be noted that cash diesel and heating oil prices in the US have been on the rise, which suggests that prices in general have found a near term bottom. Spec traders could make a nice play of selling June crude $25 puts for $1.00 or more. NATURAL GAS: The rally Monday failed to hold, as the weather was initially supportive but can't be expected to carry prices consistently higher in the face of directionless action in the crude oil market. Those that get short the June natural gas around $5.25 should use a stop up at $5.34, with a downside objective of $4.75. With US temps starting to turn back up, at the same time that crude oil looks to have found some support, the natural gas market might be primed to consolidation before another downside thrust is seen. In fact, we would try to wait to become a seller until closer proximity to the weekly API/DOE inventory readings on Wed. ---------------------------------------------------------------------- martedì 08 aprile 2003 -- THE HIGHTOWER REPORT MORNING STOCK COMMENT CHANGE to 4:15 AM:S&P+370 DOW +32 NIKKEI -118 FTSE -43 Considering that intelligence sources are hopeful that Saddam was taken out with a late night bombing in Baghdad, we are a little disappointed with the magnitude of the rally this morning. In our opinion, it is very critical that the stock market show a significant upward thrust, off the end of the war, or the weakened state of the economy could re-take center stage. While some might suggest that the market has already factored a good portion of the end of the war, the economy needs a sentiment kick to countervail the deterioration seen over the last month. Maybe the news that 18 health care workers in Hong Kong have contracted the SARS disease is undermining sentiment. It is also possible that the market wants more concrete proof that Saddam and his sons have been dealt with, as that would certainly serve to truncate the end of the war. Because the President indicated this morning that he didn't know if Saddam survived the attack, the trade has tempered its optimism for the end of the war. We also think that a soft German Industrial production number this morning in Europe, also served to highlight the vulnerability of the world economy. In the end, the bulls have the favored hand, despite the weakness of the economy and the confusion over the fate of Saddam. DOW: We suspect the headlines are accurate in suggesting that the stock market is waiting on confirmation that the Iraqi regime has ended. However, it would not bode well for the June Dow to slide back below 8205 during the session today, as that could spark a sell the fact type mentality. On the other hand, if the June Dow doesn't manage to take out the Monday high on the news that the war has wrapped up, one should become very skeptical toward equity prices. S&P: Seeing a slide back below 873 today would be very disconcerting for the bull camp. In fact, if this market is any good for the long haul, it should not trade back below the March trend line support down at 862.95. In fact, to really send a bullish signal, the June S&P needs to make a new high for the move, before the end of the week, with a trade above 905. ---------------------------------------------------------------------- martedì 08 aprile 2003 -- THE HIGHTOWER REPORT MORNING METALS COMMENT METALS:4/8 OVERNIGHT CHANGE to 4:15 AM:GLD+0.80 ,SLV+1.7 ,PLAT-1.20, CP -10 London Gold Fix $322.30 +$2.55 LME Copper Warehouse stks 803,325 ton -2,075 tns Comex Gold stocks 2.380 ml -96 oz COMEX Silver stks 107.3 ml oz -1.30 million oz OVERNIGHT: With a weak Dollar, gold liquidation appears to have halted. GOLD: It would appear that gold has forged a double bottom around the $320 level. However, we would not rule out a temporary slide to $318.10, especially on the final word that the war is completed. The idea that Saddam was killed last night in a bombing attack doesn't seem to be impacting gold this morning but an end to the war might cause a final wave of liquidation. It is entirely possible that seeing an end to the war will actually begin to support gold, as that reduces the threat of deflation and in turn could increase physical demand for gold. Its unfortunate that June gold didn't become completely deflated with a slide to the lower end of the September through November consolidation pattern as that would have been a great long term buy. However, we get the sense that gold might have already forged a bottom, but we are not convinced that the market will do anything other than carve out a sideways consolidation. On the other hand, if gold begins to exhibit a tight correlation with daily equity market action maybe prices will rise. Therefore, we suggest that traders consider selling a June gold $315 put for $500. SILVER: The silver market almost managed to forge an upside breakout overnight, as it clawed above resistance of $4.44. Seeing the silver avoid a correlation with the sagging gold market is impressive and indicative of a commodity driven by the prospect of improving demand. With COMEX silver stocks dropping an impressive 1.3 million ounces last night it could be easier to talk improving demand. While good demand might be a long way off, we can't help but think that some traders are anticipating an improvement in high tech and communication demand. However, demand driven rallies aren't usually impressive in their scope and volatility. Near term support is seen at $4.38 and critical resistance is seen at $4.47. Open interest is starting to rise, which might indicate a build up of long term positions. PLATINUM: With platinum pricing peaking out below the even numbered $600 mark overnight, we have to think that a slide to $593 is underway. Apparently the platinum market isn't going to track closely with the favorable stock market and that means to a degree that platinum is still seeing flight to quality liquidation. Therefore we need to wait for a moderately short spec position reading before assuming that this market has bottomed. Because platinum prices are at such historically high prices, the liquidation of flight to quality is a much bigger impact on prices. Therefore, a slide to $575 can't be ruled out. COPPER: The "SARS" issue is holding the copper market back, as travel to Hong Kong and to other Asian destinations is being curtailed by the disease. In other words, economic activity is being hurt and that in turn causes copper buyers to go hand to mouth. With both London and Shanghai copper prices higher overnight and the potential toppling of the regime in Iraq possible during the session today, it is possible that copper will track higher even with the sloppy early US action. However, if the euphoria off the end of the war doesn't drive stock prices consistently higher, the drag off the SARS outbreak and the fear off the economy might make a quick run to 76 cents less likely. We would be long until proven wrong, with a trade back below 71.55 in the July contract. Near term upside targeting is now 74.85. ---------------------------------------------------------------------- martedì 08 aprile 2003 -- THE HIGHTOWER REPORT MORNING FOREIGN EXCHANGE COMMENT FOREX:4/8 OVERNIGHT CHANGE to 4:15 AM:$ -39 ,YEN+49 ,SF+22 ,CA+12 EU+44 DOLLAR: Usually a gap down move into the opening is not a positive sign for the Dollar. We have to think that the Dollar has now entered an extremely critical junction, especially with the UN attempting to gain a role in post war Iraq. Others are suggesting that the war is coming to an end and no chemical weapons have been found and that could become a major issue, as the UN attempts to interject its control over Iraq. In fact, those opposed to the war in the UN Security Council, might attempt to hammer the US over the weapons of mass destruction issue, until significant patronage contracts are awarded to France and Germany. In the mean time, it would seem that the Dollar is set to slide to 100.00. In order for the Dollar to reverse the selling wave we would think that US stocks would have to explode, creating a sense that money not in the US, might miss out on a significant near term rate of return. For the Dollar to continue higher after the end of the war, means that the US has to regain lost prestige and we are not sure that is a reality in the international community. EURO: A possible near term bottom is in place, despite the fact that German Industrial production declined for the second straight month. We thought that the end of the war would result in the June Euro sliding to 105 but now that seems unlikely. Those that got long puts should bank profits and wait for a recovery bounce in the Euro to 106.56 to get short again. YEN: A gap up move overnight appears to be a technical short covering bounce. With the Nikkei lower overnight and the SARS issue still dampening Pacific Rim mentality, the Yen has significant overhead resistance. In fact, we would be surprised to see the Yen rise above 84.00. SWISS: The massive decline and reversal yesterday in the Swiss, sends a loud signal that the decline is over. In fact, we now see a recovery bounce to 72.84 and then a very major trend decision will have to be made. POUND: The Pound chart is pretty damaged and with the overnight weakness in the Dollar, the Pound is showing no recovery potential. Therefore we have to assume that the Pound is a sell on a rally to 155.00. CANADIAN: A massive rejection of the probe down Monday, suggests that the Canadian has already made it through the flight to quality liquidation, without ending the up trend pattern. Traders should become buyers of the Jun Canadian on a dip to 67.20 in the action today. ---------------------------------------------------------------------- martedì 08 aprile 2003 -- THE HIGHTOWER REPORT MORNING FINANCIAL COMMENT FINANCIALS:4/8 OVERNIGHT CHANGE to 4:15 AM :BONDS +7 The consumer credit report Monday did show a rise, but the increase was smaller than expected and that is generally a negative for bond prices. In other words, bond bears didn't want to see consumer credit explode, as that could have suggested consumers were close to being tapped out. On the other hand, if the consumer credit figure had come in sharply lower, that could have indicated consumers were totally shut down off the war anxiety. As it stands, the US economy comes into the end of the war injured, but not incapable of recovering and that eventually favors the bear camp. We suspect that euphoria off the end of the Iraqi regime, will restrain bond gains in the coming session. In fact, if the June S&P were to forge a rally back above 902, that could put enough pressure on Treasuries to revisit the lows posted Monday. We suspect that the Richmond Fed readings to be released this morning, will provide light support to bonds, but the main focus looks to come from political headlines and not economic headlines. ù Seeing the Dollar slide this morning countervails a recent trend in the Dollar and could be a slight negative to Bonds and Notes. An issue that might become gradually more important in the weeks ahead is inflation, especially with a critical inflation report due out at the end of the week. The February PPI report showed an increase of 1% and that was in a month where fear of the coming war was exerting a significant deflationary pressure on many sectors of the economy. In our opinion, fixed income markets have to at least consider the potential that price pressures will drift back toward more normal levels instead of constantly teetering on deflation. Therefore, we would continue to be a seller of moderate rallies. We would sell June bonds on a rally to 112-02 and also become a seller of June Notes on a rally back to 114-15. If the stock market falters and slides back below 870 (June S&P) that means the euphoria off the end of the war has failed to turn the economic tide and that would make us significantly less bearish toward Treasuries in the near term. ----------------------------------------------------------------------

venerdì 04 aprile 2003 -- THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS ENERGY:4/4 OVERNIGHT CHG to 4:15 AM :CRUDE -76 ,HEAT-167 ,UNGA-252 It would seem that energy prices can?t even find a temporary bottom, even with the war lingering on and international tensions off the war still running hot. Apparently, just expecting the end of the war is enough for sellers to continue to press energy prices. US Central Command suggested that two oil wells continue to burn in Iraq but that work on many wells might start next week. A Wall Street Journal article suggested that Iraqi production might take months to bring back on line and that provided the initial strength Thursday. However, the trade late in the session began to discount that view and this morning the trade once again thinks that part of the supply will be back within weeks. Apparently a lack of replacement parts and ongoing fear of war, is keeping many workers from returning to the fields. In our opinion, the estimates of many months would seem to imply that it could take many months to bring back all, or a large majority of the production. Considering the historically tight standing of world supplies, just seeing gradual supply flow recovery on top of very high OPEC production could be enough to keep prices under pressure. However, if OPEC begins to suggest they will reign in production, that could give prices a reason to find a near term bottom. In other words, if OPEC manages to cut production back, before a large portion of Iraqi oil is flowing, that could insure tight US inventory conditions into the coming summer. It would seem that the product market will continue to outperform the crude oil market, as the gasoline story seems to have a solid following. In fact the products in general look to be supported, as the tightness story is thrown about. Thursday there were reports that Midwest Diesel prices were rising sharply because of expanding Ag use, which highlights the bull tilt. In other words, we suspect that gasoline will avoid the type of weakness that could be seen in crude oil. If the war appears to be set to end over the weekend, we suspect that energy prices will show a little weakness into the close today and or on the opening Monday. NATURAL GAS: We have to think that the weekly injection of 37 bcf Thursday was a little larger than expected and the rebuild might hint at a swifter than expected rebuilding of tight inventories. The trade is correct in avoiding an aggressive attack of natural gas prices, as inventories remain tight. However, with the regular energy complex beginning to show signs of stock rebuilding, we have to think the same is possible in natural gas. The bulls can effectively argue that storage levels of only 680 bcf are still less than half of last year's total of 1500 bcf and therefore remain tight. However, with trend line support failing at $4.98 Thursday, it would seem like the June natural gas market is headed down to $4.73. ---------------------------------------------------------------------- giovedì 03 aprile 2003 -- THE HIGHTOWER REPORT MORNING STOCK COMMENT CHANGE to 4:15 AM:S&P+640 DOW +64 NIKKEI -52 FTSE +42 It would appear that the coalition will prevail soon and stock prices are certainly on their way to factoring that outcome. Therefore, the big risk is that the victory might be delayed a little longer than expected. We have to think that the market is expecting a culmination by the end of the week, or certainly over the weekend. If the coalition decides to pause for a complete encirclement of Baghdad, or the coalition sees the Iraqi command collapsing, it is possible they slow their assault rather than suffer needless casualties right at the end of the war. Even if the coalition leadership has done a masterful job in the campaign thus far, it would be a bitter pill to suffer significant losses needlessly at the very end. Fortunately, for the bull camp the hope for a quick end to the war has masked over evidence of significant weakening in the world economy and other macro economic threats. For instance, if the headlines weren't being dominated by the war, the SARS issue could have undermined investor sentiment significantly over the last two weeks. This diverted attention was even more apparent overnight as Germany reported the highest unemployment rate in 5 years and the European stocks showed no ill affects. In conclusion, unless the current track of news is altered by a significant event, the path of least resistance should be up with a return above the March highs likely. One warning, we suspect that aggressive news reporting from Iraq will result in some wild and disconcerting headlines into the final stages of the conflict and that could mean that coming gains will not come without violent price action. DOW: Near term targeting in the June Dow is seen at 8480, but we would not rule out a rise to 8600 if the world Press captures significant Iraqi rejoicing in the wake of coalition advances. For a massive upward thrust we still think that coalition forces will have to find evidence of weapons of mass destruction so that a justified victory is achieved. Maybe the brutality of the regime will suffice as justification but the real smoking gun is preferred. Unfortunately, one way to find the illegal weapons is for them to be used! Assume the trend is up, as long as the June contract holds above 8110. S&P 500: Near term targeting in the June contract comes in at 8957 but the market should not fall back below 860.50, or a bigger correction might be in order. In our mind, the biggest risk to the bull track is that coalition forces pause and wait for the Iraqi leadership to implode. If coalition leadership sees the collapse coming, they might attempt to save lives by arresting forward motion. ---------------------------------------------------------------------- giovedì 03 aprile 2003 -- THE HIGHTOWER REPORT MORNING METALS COMMENT METALS:4/3 OVERNIGHT CHANGE to 4:15 AM:GLD-5.00 ,SLV-2.7 ,PLAT-4.40 London Gold Fix $324.70 -$5.55 LME Copper Warehouse stks 809,025 ton -3,100 tns Comex Gold stocks 2.383 ml Unchanged COMEX Silver stks 108.5 ml oz Unchanged OVERNIGHT: More selling off potential war end and because of technical signals. GOLD: Considering the magnitude of the overnight slide, we have to revise downward our ultimate downside target from $323 to $309. When one considers the magnitude of the net spec long coming into this week (60,000) then it is not shocking to see prices slide so aggressively. In fact, using the 10,000 contract per $10 price move rule, we would think that June gold might have to fall to $309 before a bottom is forged. We would see a slide to $309 as a long term buying zone but until the war has run its course and the war longs have been washed out we have to respect the markets ability to decline. In order to make the lower $300 price range a value zone, the economy has to transition into recovery and inflation has to be given a consideration. Currently it would seem that deflation is a bigger fear than inflation and that means the trend is down. We suspect that the events of the last three years will insure that gold retains some investment interest but during the rotation of focus, one should expect significant price weakness. Next downside target in the June gold is $318.1. SILVER: With the gold market breaking out to the downside, the negative pull on silver should not be ignored. However, as we suggested yesterday, the silver market probably entered the week net spec long about 20,000 contracts. Therefore we have to think that the speculative position in silver is getting pretty close to a leveled position. In the energy complex we actually saw the net spec position go "net short" and that came after a period of extended bullishness. We still have to think that $4.35 is initial support but a slide to the contract low of $4.33 can't be ruled out if gold is leading the way down. PLATINUM: We thought that it was a little too early to transition into a physical demand driven market and with the July contract close to a downside breakout on the charts, we have to think that more downside is ahead. The net spec position in the platinum is probably getting very close to flat but a slide to $600 should not be ruled out. The problem with picking a bottom in platinum is that prices are extremely expensive on a historical basis. Until economic recovery is probable and fully accepted, platinum prices will remain weak and choppy. COPPER: The final stages of the war with Iraq are ahead and therefore some industrial demand driven markets might suffer some light liquidation. We don't see any fresh significantly negative SARS news this morning but that issue remains a negative for copper prices. Fearing a contraction in Asian business activity hits right at the strongest demand zone in copper. The direction of the stock market will remain key to copper prices. We stand by the desire to hold July calls but are still not inclined buy futures. Chinese copper prices were down overnight, which suggests to us, that China is following New York and London instead of the other way around. LME copper stocks continue to decline, which should set the market up for a good bottom sometime in the near future. Be long the July 74 calls but hold off on fresh futures buys. ---------------------------------------------------------------------- giovedì 03 aprile 2003 -- THE HIGHTOWER REPORT MORNING FOREIGN EXCHANGE COMMENT FOREX:4/3 OVERNIGHT CHANGE to 4:15 AM:$ +38 ,YEN-23 ,SF-29 ,CA-2 EU-46 DOLLAR: Until the Dollar rises back above 101.00 many will assume that the Dollar simply remains in a consolidation pattern. Extremely weak German employment figures overnight would seem to lower the bar for the US numbers Friday morning. We continue to think that few traders have a strong opinion on the Dollar, as the presence of long-term short covering is making the Dollar look better than it probably would otherwise. In our opinion, we think that politics and not economics might determine where the ultimate trend in the Dollar heads. For instance, it will be important for the Dollar bulls to see strong support from Iraqi citizens in the wake of the advance on Baghdad. It could also be necessary for the US to find evidence of weapons of mass destruction, in order to get the international community off the back of the UK and US. Some on the Arab street will never accept the evidence, even if it is found but the Europeans might be easier to convert. In other words, for the Dollar to overcome the entrenched downtrend pattern and the depreciation in US prestige, the US will need to justify the war! Therefore, on a rally above 102.00 in the June Dollar, we would begin to suggest that longs take futures profits or swap long futures for long calls. EURO: The Euro zone left interest rates unchanged this morning, despite a much weaker than expected German employment reading. March jobless figures increased by 55,000, which was above expectations. Apparently some European foreign Ministers are willing to get beyond the war decision and focus on the rebuilding of Iraq and that reduces the need for a flight to quality premium in the Euro. We suspect that the June Euro will begin to find support once prices fall to 105.93. YEN: Near term downside targeting in the June Yen comes in at 83.26 and unless the Yen manages to climb back above 84.41 we would assume that the trend is down. SWISS: Near term targeting in the June Swiss is 71.89 and we would expect to see more flight to quality war premium to be extracted today. Unless the Swiss manages to climb back above 72.84 we assume that the path of least resistance is down. POUND: The Pound should be close to solid support of 155.08. However, considering that the March UK Services PMI came in the weakest in 1 1/2 years it would seem like the UK economy is not getting a pass like the US economy is. Therefore, we assume that the Pound is vulnerable to a downside breakout. CANADIAN: Trend line support in the June Canadian comes in at 67.11 today but seeing the Canadian avoid a quick return to the 67.00 level indicates that the currency isn't as weak as it could have been. There is still significant risk to the longs but that can be easily managed by selling a June 69 call and buying a June 67 put against futures longs. ---------------------------------------------------------------------- giovedì 03 aprile 2003 -- THE HIGHTOWER REPORT MORNING FINANCIAL COMMENT FINANCIALS:4/3 OVERNIGHT CHANGE to 4:15 AM :BONDS -11 Losses in the bond market are being tempered slightly by the potential for an extremely soft payroll report Friday morning and because the battle for Baghdad could create some anxiety. However, it would seem that the trade is fully convinced that the war will be coming to and end, possibly by the end of the coming weekend and that certainly emboldens the bears. In fact, if the trade is fully convinced that the war will come to an end, then the monthly payroll report can be discounted. Initial projections for the payroll report don't point to anything significant but we caution that the expectations last month didn't call for much and we saw a 308,000-job loss. Even though the bonds are sliding aggressively we get the sense that the market is expecting, or is able to absorb an extremely soft set of numbers from the jobs report. However, if the war progress were to suffer a significant setback, or it seemed like coalition forces were going to entrench around Baghdad, the bonds might be able to get a slight bounce off of the payroll report. It is also possible that the trade is expecting an extremely soft number Friday and those expectations won't be fulfilled. In our mind, if the trade were really expecting weak numbers, the range of expectations would have reflected that sentiment. We also have to note that we have seen some evidence of much better than expected initial claims readings and that could mean that the economy is really better than the market is expecting and that the Friday payroll report won't show any worsening of the US economy. Therefore, the bears should be able to control the market and the best that the payrolls can do is spark a temporary but fleeting respite from the selling pattern. Near term targeting in the June bonds is 110-14 and 113-03 in the June Notes. Over the coming 36 hours we would use a bounce to 112-00 in the June bonds and to 114-07 in the June Notes to get short. Quick execution of the war is the driving force for prices and therefore the stock market action will be the best guide. In fact, Treasuries should begin a very tight correlation with the equity market. Until the March lows are retested, expect more losses. In the action today the initial claims are probably insignificant, unless there is another big decline posted, as that could embolden the bear camp despite the key reports due out tomorrow. ----------------------------------------------------------------------

mercoledì 02 aprile 2003 -- THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS NERGY:4/2 OVERNIGHT CHG to 4:15 AM :CRUDE -109 ,HEAT-199 ,UNGA-263 The fact that Saddam didn't show up on Iraqi TV to address the nation yesterday seemed to send a message that he was no longer in control. Considering that the stock market seemed to think that the war was coming to an end, we understand the long liquidation seen Tuesday. It should also be noted that labor tensions in Nigerian were thought to be calming down and that is another negative development. OPEC has already indicated that they would not discuss production unless both Iraq and Nigerian production came back on line. With a major battle raging around Kirkuk (a major oil center in Iraq) the market might be correct in checking further declines until another major supply zone in Iraq is brought under coalition control. We have to think that US inventory readings this morning will be slightly bearish but possibly ignored by the trade as more significant developments are unfolding internationally. It is our opinion that nearby crude oil prices could easily slide another $2 if the end of the Iraqi regime is anticipated soon. Much warmer than normal temps is probably taking some of the support away from the heating oil market but we suspect that warm weather will probably be a greater impact on natural gas than on heating oil. Just to emphasize that Iraqi production is still generally intact, a Press report yesterday indicated that Iraqi crude oil flow to the Ceyhan terminal has been slowed because storage facilities there are "filled" and now hold close to 8 million barrels of oil. In other words, Iraqi supply might be capable of returning to normal, quicker than the market has been factoring. Since the overnight trade is anticipating the beginning of the ground battle for Baghdad, we suspect that prices will fight against a total liquidation simply because the end game in the war could be quite bloody. We do think that prices will continue to slide as uncertainty is declining and we expect to see partially negative weekly inventory readings from both the API & DOE readings. Until nearby crude oil falls back to levels below $28.00 we suspect more selling is ahead. NATURAL GAS: The market managed to mount a minor gain Tuesday, as reports of lingering cold weather in the East supported prices. Apparently the natural gas market expects the weekly inventory readings on Thursday, to show a draw and that helped the natural gas market to avoid the same type of losses seen in the regular energy complex Tuesday. We are actually surprised that the slide in the regular energy complex didn't result in weaker natural gas prices but today may bring about a "catch-up" wave of selling. We would continue to look to buy June natural gas puts on a rally back to $5.10. downside target is now $4.70. ------------------------------------------------------------ mercoledì 02 aprile 2003 -- THE HIGHTOWER REPORT MORNING STOCK COMMENT CHANGE to 4:15 AM:S&P+800 DOW +61 NIKKEI +83 FTSE +40 Unfortunately the stock market isn't going to make it easy for those that want to get long, as it is already factoring a quick end to the war. The fact that the worst part of the battle is still ahead and that coalition forces have just moved inside the "red-line" (the point where experts suspect that chemical weapons could be employed) means that risk and reward for the bull camp isrising in unison. In the background, US economic stats continue to fall away, suggesting that not ending the war quickly will surely bring about major problems for the US economy. With energy prices beginning what appears to be another liquidation wave, it is possible that some additional economic relief is seen from declining energy prices and that in turn helps to justify some of the recent stock gains. So far, the SARS threat in Asia hasn't been that much of an influence on equity prices but one should be quick to respond if it appears that the disease can't be contained. Surprisingly, the Challenger layoff report on Tuesday showed less job loss in March than in the February readings and that could mean that the Friday morning payroll report isn't as much of a threat to the current bull tilt. Make no mistake, a quick end to the war is absolutely necessary for stock prices to add to current levels and might even be needed to avoid giving back all the gains posted this week. In fact, with moderate gains today, it would be our opinion that the stock market wants to see an end in sight before the close Friday! Elite Iraqi forces on the outskirts of Baghdad might already have been reduced by 50% and therefore the chance to end the war quickly is certainly rising. There are also reports that the elite forces are simply an ineffective fighting force and that means the odds are high that an end game has already begun. There is a growing chance that the remaining troops will give up, especially since Saddam was a "noshow" yesterday and there is another message from the "ruler" to be delivered today! If the Iraqi troops aren't motivated by their leader and they face certain annihilation that could be enough to increase the surrender rate. DOW: We see a near term objective of 8273 in the June Dow, with critical support coming in today at 8058. A key trend line is taken out on a rise to 8420. The 200-day moving average indicator would turn the trend up, if the Dow managed to regain 8391 in the cash Dow. S&P 500: The 200-day moving average in the June S&P turns up if a trade above 886.45 is seen today. We see the market attempting to forge an upside breakout but volatility could become quite excessive, if the Iraqis decide to pull out all the stops in the final stages of the battle. Be long futures but it might be prudent to carry some April puts for protection against chemical weapons reactions, or from a shocking amount of suicide attacks on coalition troops. The April options have only 16 days until expiration (which lowers their cost) but for those options to be effective one must use "close-in" strike prices. ------------------------------------------------------------ mercoledì 02 aprile 2003 -- THE HIGHTOWER REPORT MORNING METALS COMMENT ETALS:4/2 OVERNIGHT CHANGE to 4:15 AM:GLD-3.50 ,SLV-3.2 ,PLAT+3.90 London Gold Fix $330.25 -$5.40 LME Copper Warehouse stks 812,125 ton -825 tns Comex Gold stocks 2.383 ml +855 oz COMEX Silver stks 108.5 ml oz -169,383 oz OVERNIGHT: Residual from Saddam's failure to show Tuesday results in selling. GOLD: The gold is already seeing traders exiting positions ahead of what appears to be the end of the war. Even with coalition forces just now crossing into the "red-zone" (where chemical weapons might be used) it would appear that gold isn't going to be supported. It is always hard for the gold market to see widespread flight to quality buying when the stock market is rising aggressively and that looks to be the case in the action today. The Dollar is also showing a big range up reversal overnight and that is also a limiting influence for gold. Critical chart support is seen in the June gold at $329.1 and a failure below that level could begin to prompt a portion of the overly long small spec and fund position to exit and that could easily push gold toward a downside breakout. With the siege of Baghdad just getting started, it would be a little surprising for gold to fail right away. Therefore, we see June gold putting up a strong effort to hold above that first critical support point of $329.1. No matter how one looks at it, the bull camp is just not getting the play out of the tail end of the war! SILVER: A failure on the charts in July silver looks to project liquidation down to the $4.375 level but with the last COT report showing only a minimal small spec and fund long, its possible that the market manages to hold above the March lows, even into the news that the war has ended. In fact, if there is a liquidation wave off the end of the war, we would like to be a buyer of that slide as a return to normal could mean more silver demand is to be seen off an improvement in high tech and communication business. In order to turn the trend back up, the July silver would need to regain $4.51 on a close basis. PLATINUM: We suspect that platinum will find a bottom quicker off the hope for revived physical demand than either gold or silver. Therefore, we would become a buyer of $619 if given the chance in the coming sessions. Significant liquidation in open interest in platinum would suggest that the market could make a solid technical bottom with only a minor slide in prices. Since the high of $684, open interest has declined from 9,202 to 6,429 and that should have resulted in the overbought condition being tempered significantly. COPPER: Considering that Chinese copper prices were higher overnight and global equity prices are stronger, we have to see copper with an upward bias today. The Chinese trade was seen buying the market after the market climbed above critical resistance on the charts. Apparently the theme that the war is coming to an end is going to fuel long interest in copper. We suspect that the recent consolidation will support prices as long as the equity market stays positive. We think traders should be long July copper calls but are not interested in being long futures. The ebb and flow of the war and the threat of the SARS in Asia make the purchase of copper futures unattractive from a risk control stance. ------------------------------------------------------------ mercoledì 02 aprile 2003 -- THE HIGHTOWER REPORT MORNING FOREIGN EXCHANGE COMMENT FOREX:4/2 OVERNIGHT CHANGE to 4:15 AM:$ +47 ,YEN-37 ,SF-58 ,CA-22 EU-52 DOLLAR: The Dollar is simply getting the benefit of the doubt on the duration of the war. It is also possible that long-term shorts in the Dollar are simply banking profits rather than be forced to give back significant profits on wild volatility swings. While most of the US economic reports this week have been very weak, it should be noted that the Challenger layoff report did not show more layoffs in March when compared to February. The Dollar is already showing a rather large overnight range with an upward bias. While a strong rally in the Dollar would seem to be a speculation that the end of the war will go very quickly, we would have to play the long side as opposed to the short side in the coming sessions. However, to turn the trend up the June Dollar would have to rise above 102.07 and that is an unlikely event in the very near term. If suicide bombers have an effect on the end game, or chemical weapons are used that could temporarily smash the Dollar, so beware of sudden prices shifts ahead. EURO: A massive failed auction rally overnight would seem to project a slide in the Euro to 106.41. We suspect that the harsh tone of the EU toward the war, will begin to temper, as they attempt to position for the reconstruction of Iraq. In the near term the Euro should continue to see some flight to quality value come out of prices but at this point we do not expect a slide all the way down to the March lows of 104.70. YEN: A critical moving average turns down today if the Yen falls below 83.99 and that level would appear to be the mid point of the coming trading range. Negative sentiment thrown off by the tankan survey and a temporary reversal of the flight to quality buying pattern last week could mean that the Yen falls all the way down to 83.40. SWISS: A double top and an aggressive rotation away from flight to quality means that the Swiss is in for some aggressively declines in the coming sessions. Near term downside targeting is seen at 72.00. POUND: A short-term up trend in the Pound should extend as the coalition success lifts the Pound and the Dollar. Near term resistance is seen at 158.26 while support should be firm down at 156.02. CANADIAN: Unfortunately for the long-term trend players, the Canadian will have to see a moderate correction off flight to quality liquidation, before the strength of the Canadian economy manages to right the ship. Therefore we suspect that a correction to 67.00 is possible. Maybe the June Canadian will see a slide all the way down to 66.56. ------------------------------------------------------------ mercoledì 02 aprile 2003 -- THE HIGHTOWER REPORT MORNING FINANCIAL COMMENT FINANCIALS:4/2 OVERNIGHT CHANGE to 4:15 AM :BONDS -15 Like a number of other markets the Treasuries are anticipating an end to the war. If there is a near term end to the war, that at least creates the impression that the economy will improve. While some suggest that the period following the war will present a false dawn, one has to concede that ending the war does take the pressure off consumer sentiment. Since the last month has brought significant declines in sentiment readings, we have to think that lifting some of the geopolitical headwind will allow the numbers to improve. With energy prices looking to return to the March lows, another burden on the recovery is reduced. We are a little surprised that the markets are leading off on the end of the war, with the roughest battles still to be fought. Certainly seeing Iraq use chemical weapons would surprise the trade and temporarily injure sentiment, but it would seem as if the outcome is pretty much fixed. Traders should be advised of the threat that 5,000 suicide bombers are making their way toward the battlefield. If these death squads show up in mass (unlikely) that could result in extremely harsh treatment of all civilians coming out of Baghdad. In other words, it would be surprising for bonds to fall away aggressively, until the regime is fully removed. In other words, if the coalition advance had to halted in order to avoid massive civilian casualties that could create a complication for the economy. As long as the market is expecting a quick end to the war, the factory order weakness expected to be documented in the report today could be partially discounted. Furthermore, with the Challenger report Tuesday showing a 38% decline in job losses (in March as compared to February) that certainly serves to temper the concern for a really bad number from the Friday morning payroll report. We suspect that bonds are primed to fall back to the 110-00 level in the June and to 112-28 level in the June Notes. Put options are preferred as they control risk into the end of the war and into the volatile employment report. ------------------------------------------------------------

martedì 01 aprile 2003 -- THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS ENERGY:4/1 OVERNIGHT CHG to 4:15 AM :CRUDE -67 ,HEAT-108 ,UNGA-155 The energy complex continued to show strength Monday despite news that coalition forces were garnering more and more control over Iraq. In other words, the security of Iraqi oil wells is improving dramatically. However, we can't speak for the security of oil facilities around the world, particularly with ethnic tensions seething over the assault of Iraq. In Iran, a vehicle apparently crashed into the gates of the UK Embassy and that highlights the volatile state of affairs that exists worldwide. Against the bullish tilt that is factoring the odds of another supply incident, are forecasts that US crude stocks might be set to climb. In fact, it would seem that some seasonal increase is underway and that could be exaggerated toward the end of the month, with the anticipated special Saudi crude oil shipment. While a several million barrel build in crude oil inventories won't markedly narrow the tightness in the US, just seeing the tightness abate might be enough to quell the current upside tilt. It would seem that May crude is attempting to hold above the late January consolidation zone bound by $30.37 and $31.35. OPEC for its part supported prices Monday by reconfirming that no production cut talks would be undertaken until the situation in Iraq is under control and Nigerian politics are closer to normal. Apparently, Nigerian oil exports continue to be holding at roughly 40% of normal and that means that the Nigerian incident is still a supportive issue. In conclusion the market appears to be building in a premium for "another supply incident" and that is completely different from the original war premium. Maybe the "other incident" premium has a longer shelf life than the war and could remain in effect for several days after the war ends. It is our general opinion that current prices won't hold much longer and that a return to the late March consolidation zone is likely in the weeks ahead. If the war with Iraq grinds to a halt we see a strong impetus to push nearby crude prices down $2 a barrel. API/DOE Crude Oil Stks Est +2 to +3.0 ml bls Actual chge due out at 9:30 cst Wed API/DOE Distillate Stks Est -1 ml to +1 ml bls Act chge due out at 9:30 cst Wed API/DOE Gasoline Stks Est +1 ml to +2 ml bls Act change due out at 9:30 cst Wed API/DOE Refinery Operating Rate Est +.8% Prev 90.1% Act level due out 9:30 Wed. NATURAL GAS: Apparently bear factors are still being discounted by the natural gas market and that is specifically because the regular energy complex is providing support to gas. With the coming three days expected to bring much above normal temps, followed by normal temps late in the week, we have to think that the natural gas is seeing its foundation of support erode. In other words, a bounce to $5.26 in the May contract could be a sell for aggressive traders. We think that without another supply incident in the regular energy complex, that natural gas is primed to breakout to the downside. Don't forget that the macro economic outlook is deteriorating as the war drags on and that could come back to haunt the natural gas, which continues to trade at rather expensive levels. ------------------------------------------------------------ martedì 01 aprile 2003 -- THE HIGHTOWER REPORT MORNING STOCK COMMENT CHANGE to 4:15 AM:S&P+180 DOW +46 NIKKEI +14 FTSE +41 While stock prices appear to be coming in a little firmer this morning, we don't see technical or fundamental evidence to suggest that a major bottom was put in place yesterday. We do think that the market is approaching what could be one of the most critical junctions in modern times. In our opinion, not ending the war this week could easily result in a significant degradation of the global economy and certainly a massive escalation in the hatred against the "US". In other words, the time to dispense with the war is at hand and not being able to get beyond the uncertainty very soon might begin to breakdown institutional confidence. We already think that individual confidence is shattered and without an abatement of "war anxiety" we fear another round of layoffs from corporate America. However, it should be noted that the economic recovery potential isn't totally lost yet! For instance, the market continues to discount most economic readings, which could easily be taken as a sign that the economy is already sliding back into a recession. In fact, if the end of the war isn't in sight into the Friday morning payroll report, we suspect that stock prices will forge a massive downside spike but that spike could become a "major" bottom. So far the SARS threat hasn't become a major issue for stock prices, but if the disease spreads beyond Hong Kong or gives the slightest hint that containment has failed, stocks could see yet another reason to liquidate. DOW: Critical long term moving average support is seen in the June Dow at 7920 and we now suspect that a major bottom could be formed with a slide to 7850, in the coming three sessions. The current situation would seem to be conducive to buying a May Dow 8100 call at 1800, after a break to 7850. S&P 500: We would really like to see a massive spike down reversal in order to confirm a major low but that formation might not manifest itself without significant war developments in the coming 72 hours. Critical moving average support is seen at 841.30 whereas a critical upside pivot is kicked off with a rise back above 856 in the June contract. Major bottoms in the S&P rarely come quietly and therefore we expect some wild price gyrations in the coming sessions. ------------------------------------------------------------ martedì 01 aprile 2003 -- THE HIGHTOWER REPORT MORNING METALS COMMENT METALS:4/1 OVERNIGHT CHANGE to 4:15 AM:GLD-0.70 ,SLV-1.0 ,PLAT+2.10 CP +95 London Gold Fix $335.65 +$.15 LME Copper Warehouse stks 812,950 ton -1,750 tns Comex Gold stocks 2.383 ml +22,375 oz COMEX Silver stks 108.6 ml oz -315,566 oz OVERNIGHT: Only minor buying in Asia with gold lacking fresh incentive overnight GOLD: While the energy complex is softer this morning, it has been showing strength off the fear that another supply incident might be seen. The trade thinks that the ongoing war increases the chance of some surprise terrorist action against oil facilities and that same type of sentiment has been partially responsible for fueling gold and silver higher over the last five trading sessions. In other words uncertainty being throw off by the war is partially supporting gold prices. Therefore, we continue to think that gold has a weak upward bias but as the battle for Baghdad draws near, we suspect that an anticlimactic ending might be seen directly ahead. Already Saudi Arabia is calling for a ceasefire, which might mean that pressure is going to be put on the US to stop the bloodshed. We also have to think that SARS could become a dampening influence for gold, if the spread of the disease results in widespread travel restrictions. Near term resistance is seen at $340 with support seen at $332.6. Mexican gold production for in January increased by over 66% to 1,746 kilos but that increase in supply comes on top of some very erratic production figures last year. In conclusion, the bias remains up but momentum is unimpressive. SILVER: Near term resistance is seen at $4.495 in the May contract with support tagged today at $4.43. Unless gold manages to provide stronger leadership we could see the silver consolidate at slightly lower levels on the charts. We still think that economic recovery is the shortest path to a bull market in silver and that flight to quality is only a short term driving factor. In order to alter a long-term downtrend pattern the May silver needs to regain a key moving average up at 4.56. PLATINUM: Surprisingly April platinum managed to shut off the fears of deflation overnight. A two-week old strike at the Impala mine might have resulted in some 16,000 ounces of lost supply and that is evidently supportive in a relatively small market. Near term resistance in the July platinum contract is seen at $640 but support should be close in at $625. COPPER: Weaker Chinese copper prices were seen overnight as concern for the global economy rises and the war in Iraq contributes to that anxiety. We continue to think that copper is being influenced by the SARS disease, as there has to be concern that travel to and from China might be restricted, if Hong Kong can't contain the spread of the respiratory illness. We also see continued weakness in European economic numbers and that combines with fears that today's US auto sales figures will show weakness to limit the bounce potential in copper. However, with European equity prices starting the session off weak but excessively so we don't see as much pressure on copper prices today. Basis the July contract, the market pulled down to the vicinity of the December lows and then managed to bounce. Therefore, we think July copper is now within a longterm value zone but if the war is going to continue another week it is probably just a little too early to get long. However, traders could attempt to pick a long-term bottom in copper through the purchase of a long July 74 copper call. PRECIOUS METALS TECHNICAL OUTLOOK #P-METALS 04/01/03: SILVER (JUL): With the close higher than the pivot swing number, the market is in a slightly bullish posture. Initial support for silver is at 446.2 and below there at 444.1 with resistance likely at 447.9 and 449.7. The market's close above the 9-day moving average suggests the short-term trend remains positive. Daily stochastics are showing positive momentum from oversold levels which should reinforce a move higher if near-term resistance is taken out. The next upside target is 447.9. GOLD (JUN): Support for gold today comes in near 334.70, while resistance is pegged at 338.70. Dailymomentum studies are on the rise from low levels and should accelerate a move higher on a push through the 1st swing resistance. The near-term upside objective is at 338.70. The market's close above the 2nd swing resistance number is a bullish indication. The market's short-term trend is positive on a close above the 9day moving average. The gap up on the day session chart gave a bullish indicator and more follow through could be seen this session. ------------------------------------------------------------ martedì 01 aprile 2003 -- THE HIGHTOWER REPORT MORNING FOREIGN EXCHANGE COMMENT FOREX:4/1 OVERNIGHT CHANGE to 4:15 AM:$ -1 ,YEN+9 ,SF-8 ,CA+7 EU+2 DOLLAR: The Dollar might see a pause in the selling but not a turn in the trend. Worldwide hatred for the US attack of Iraq continues to undermine investment flow into the US and therefore we suspect that a rally in the Dollar to 98.71 should be sold. We have to think that the majority of US economic numbers due out today will highlight the weakening of the US economy. If the war can't be thrown off quickly, we suspect that earnings downgrades and massive job losses will be seen. In fact, if the war can't be ended by the Friday morning unemployment report, we suspect that the Dollar will be headed directly back to the March lows down around 98.20. Unless there is some surprise geopolitical development today the Dollar might mount a weak technical bounce and then head lower for the rest of the week. EURO: If it were not for concern over Euro zone numbers the Euro would probably already be above 109.00. Apparently March Consumer sentiment in France continued to fall and that is joined by forecasts for record unemployment figures for the month of March. In other words, the Euro zone economy is really undermined and the flight to quality issue is allowing the trade to mask over the problems with the economic structure. In other words flight to quality buyers have the advantage, but risks are rising. If the war ends, the Euro could make a critical top later this week! YEN: So far, the fear of SARS has not directly influenced the Yen and with Japanese auto sales rising for the 7th straight month, we have to think that the Yen could forge an upside bounce. However, if the June Yen can't regain the 85.00 level today, we might have already forged a critical top in the Yen. SWISS: One has to be impressed with the technical action in the Swiss, we also think that current conditions are nearly ideal for the Swiss but we have to question how long that will last. Position traders should consider buying a June Swiss put today and putting that position away as an investment. POUND: Unless the Pound can regain the critical moving average at 158.24, we doubt that the trend is going to turn up. With the CBI reporting an extremely weak March retail sales reading, we have to think that recent Pound gains will stall at current levels. CANADIAN: We are now beginning to fear a broadening top formation in Canadian, especially if a majority of the flight to quality reasoning is gone by the end of the week! Longs should exit the Canadian and wait for a large correction or confirmation that the up trend is something more than simple flight to quality buying. ------------------------------------------------------------ martedì 01 aprile 2003 -- THE HIGHTOWER REPORT MORNING FINANCIAL COMMENT FINANCIALS:4/1 OVERNIGHT CHANGE to 4:15 AM :BONDS +17 It should be difficult to shut off the upward track in bonds, as US economic numbers look to reconfirm the slowing trend and world equity markets are still under the gun. Already the trade is anticipating a weak auto sales readings from the afternoon reports and that should be piled on top of a soft ISM reading from the morning trade, to lift bonds to even higher levels. The biggest threat to the bull camp in Treasuries is probably the lack of significant upside momentum and a slightly overbought short-term technical condition. It might be possible that bonds soon begin to sense the end game in Iraq and that could make the bonds stall their upside swing. Critical moving averages come in right under the current market at 112-17 in June bonds and at 114-12 in the June Notes and getting back above those averages could mean a trend change will be seen with even a slight correction. While significant damage has been done to the economy as a result of the war, we also think that a true end to the war will take the upside momentum out of bonds and bring back into play the long term top sellers. In the early going today, the economic numbers should foster a return to the overnight highs but traders need to be very careful with bonds over the coming 36 hours, as we get the sense that the market stands at an extremely critical crossroads. We are not sure that coalition forces can lay siege to Baghdad, cause massive loss of life and not permanently damage the economic recovery but if that process is carried out quickly it might be possible to avoid major repercussions. The bias is up but longs might want to consider implementing or forming long exit strategies. We suggest that bond and note longs bank profits on a return to the overnight highs and look to buy puts. So far the market hasn't paid much attention to what appears to growing inflation signals and that could really add some topping pressure to prices. For instance, the Chicago purchasing managers report Monday showed the prices paid reading jumping despite a very weak economy and that seems like inflation to us. Furthermore, traders might also want to take a look at recent PPI readings as they have also registered some inflation. ------------------------------------------------------------