Commodities Report

lunedì 31 marzo 2003 -- THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS NERGY:3/31 OVERNIGHT CHG to 4:15 AM :CRUDE +5 ,HEAT+76 ,UNGA+35 We doubt that energy prices will be able to mount the type of gains they managed last week unless there is some significant backslide in the coalition control of Iraqi oil regions. In fact, overnight some energy market sources suggested that some Iraqi exports might resume from the South by the end of the coming week! MEES (Middle East Economic Survey) has confirmed that Iraqi oil works suffered only minimal damage in the attack to date and they also expect to have all well fires out by the end of the coming week. Over the weekend, the US suggested they saw that Iraq was preparing to destroy the oil wells and that is why they attacked sooner than might have been planned originally. Therefore, one might think that the Iraqis didn't have the time to wire the infrastructure as the energy market feared a couple weeks ago. In the weekly COT report the crude oil position showed a net short position by the funds and small specs. However, we suspect that the $2 rally since the report was measured probably pulled the speculative position back into the long camp. Therefore, considering that the specs have a nearly balanced position, the near term trend is really up for grabs. While it would seem that energy prices are historically high, it should be noted that US crude oil inventories remain tight and so far there has not been a noticeable rebuilding of those supplies. Supposedly by the end of April, a massive 28 million barrel tanker shipment is set to reach the US and that could dampen long interest considerably. It is possible that the trade continues to shift its speculative focus onto unleaded instead of crude oil. With U.S. unleaded stocks standing moderately above 190 million barrels (a historically tight zone) we are not ready to grant the bull camp control on the theory of a "summer gas shortage". Even if the market begins to factor in gasoline tightness we have to wonder if that big oil arrival in late April/early May will take the edge off the "tightness" argument. We suspect that more coalition control will be manifest over Northern oil facilities and that could really take some of the upside momentum away from the market. The unleaded showed a COT spec position of 4,200 contracts long but since then, gasoline has rallied 600 points, which probably means that the net spec long is closer to 10,000 contracts long. We see no reason why energy prices can't forge a rise to the vicinity of the last January's consolidation but into that zone we would become interested in selling futures. Currently we are interested in buying long June or July crude oil puts. On a rally to 95 cents in the June unleaded, we would be a buyer of June unleaded puts. NATURAL GAS: The weekly COT report showed the small traders to still be long nearly 27,000 contracts and since then the market has mounted only minor upside action. Therefore the Natural gas is vulnerable to long liquidation but only if chart support is violated at last weeks lows, or if the regular energy complex begins to show a resumption of the weakness seen in early March. Weekend weather brought slightly below normal temps and that might provide a little increase in late season use. However, with the market already showing an injection in supplies last week, we doubt that the inventory situation is going to be the impetus behind an upside thrust. Define the range in the May contract as $5.45 and $5.03 with a downside breakout more likely than a rally. ------------------------------------------------------------ lunedì 31 marzo 2003 -- THE HIGHTOWER REPORT MORNING STOCK COMMENT CHANGE to 4:15 AM:S&P-1220 DOW -105 Nikkei 307 FTSE -75 The question for the stock market this week is whether or not the trade will panic, or if traders will move to the sidelines in an orderly fashion? With the COT reports showing both the Dow and S&P to be "net short" in the spec position, we have to think that the threat of panic liquidation is mitigated. However, if the war situation throws off extremely disconcerting developments (because of massive casualties or the use of Chemical weapons) one shouldn't rule out the potential for a punishing sell-off. Considering the negative impact of extending the war for an indefinite period of time, we expect to see disappointment manifest itself in persistent selling. With the Euro zone posting a confidence slide almost equal to the slide seen following the September 11th terrorist attack and the rising concern over SARS (severe acute respiratory syndrome) the bears have plenty of information to back up their case. In fact, given the aggressive price declines registered overnight, we have to think that downside momentum will surprise a number of players today. In conclusion, we have to think the stock market is going to rush to factor in a long war and a recessionary threat. Maybe the war won't last long and maybe the world won't fall back into recession, but we suspect that the market will act that way, until proven otherwise. DOW: Considering the gap down slide overnight and the magnitude of the overnight slide we have to think that aggressive stop loss selling will be documented today. In fact, we see a downside target today of 7950 and possibly 7750 before the end of the week. If it becomes clear that the coalition is going to sit outside Baghdad for 5 or 6 days until a complete encirclement is accomplished, the market will simply fall away under the uncertainty. The only way to avert a slide in the near term is for evidence to surface that Saddam is dead and that the remaining leadership wants to negotiate a settlement (which is a very unlikely development). By Wednesday we expect a probe below 7750 in the June Dow. S&P 500: With the net spec position in the S&P short, we have to expect the downside to be less aggressive but not avoidable. In fact, we suspect that the June S&P will slide to 825 and possibly lower by Wednesday. Thin support at 850 means nothing and one can only hope for a reversal of the downside thrust, off a surprisingly shocking shift in the headlines. Right now, the trend is down, with little chance of change. ------------------------------------------------------------ lunedì 31 marzo 2003 -- THE HIGHTOWER REPORT MORNING METALS COMMENT METALS:3/31 OVERNIGHT CHANGE to 4:15 AM:GLD+3.80 ,SLV+3.2 ,PLAT+6.80 London Gold Fix $335.50 +$5.40 LME Copper Warehouse stks 814,700 ton -1,000 tns Comex Gold stocks 2.360 ml +2,015 oz COMEX Silver stks 109.0 ml oz +211,665 oz OVERNIGHT: Upward bias in Asian gold prices because of increased war activity. GOLD: The net spec long in the gold market coming into this week might be close to 60,000 net long, considering that gold has rallied about $3 since the report was measured. Therefore, we are not totally convinced that the gold market is going to be able to mount a sharp rally without some really hot headlines. We are not even sure if the use of chemical weapons against coalition forces will be enough to spark widespread speculative interest in gold but there should be enough initial interest in gold to fuel some gains. We do think that the gold market continues to see light buying off the weakness in the US Dollar and off the uncertainty of war. Considering the upside breakout over night, it would seem that gold has the potential rise above $340 and possibly to $350 if the fighting gradually intensifies into a full-scale attack of Baghdad. In short,it would appear that the Dollar will be soft and that conditions this week will support gold prices for most of the coming week. We wouldn't rule out a return into the $350 to $360 trading range if fighting is really intense and chemical weapons are employed by Iraq against coalition forces. SILVER: The net spec long in silver comes into this week at only 19,000 to 20,000 contracts, which is only a moderately long position. However from the overnight action, it would seem that silver will trade in lockstep with gold and could be headed to back to the $4.50 to $4.60 trading range. Silver will continue to be held back by the deflationary threat, especially with the Euro zone confidence readings overnight coming in markedly weaker. Critical support is seen at $4.43 and initial resistance in the coming upward thrust is $4.50. We would really be shocked to see May silver manage a climb above $4.70 on this wave, but in the near term the path of least resistance is up. PLATINUM: With net spec long position last Tuesday only 2,200 contracts and platinum now trading several Dollars below the level seen into the COT report, we suspect that the net spec position is mostly leveled. Considering the slide and reversal in platinum Friday, maybe a near term low was forged around $6.20. We still think that a fear of deflation rules the platinum market and could cause more losses, especially if equities fall hard. We continue to get a sense that platinum is not a flight to quality metal. ------------------------------------------------------------ lunedì 31 marzo 2003 -- THE HIGHTOWER REPORT MORNING FOREIGN EXCHANGE COMMENT FOREX:3/31 OVERNIGHT CHANGE to 4:15 AM:$ -84 ,YEN+74 ,SF+82 ,CA+19 EU +114 DOLLAR: The Dollar looks to be under aggressively pressure for at least the first three days of this week and could possibly be under pressure all week long. War protests, a weak economy and the talk that the coming days of battle will be very bloody, leaves the Dollar in an aggressive slide. While anti war protests will certainly leave the pressure on the Dollar, the Dollar is sliding because the world thinks that the US underestimated the Iraqis and that the Iraqis are going to deal a blow to coalition forces. In the mean time, it might even seem like the coalition forces are expected to lose, with the magnitude of the losses in the Dollar. Therefore, expect the Dollar to slide but also expect the market to get caught short the Dollar, when the ultimate outcome is known. There is an old gap area down at 99.26 to 99.02 that could easily be filled this week. If economic numbers from the US are ultra weak and coalition forces are initially rebuffed at the gates of Baghdad, then the Dollar might slide all the way down to the March lows just above 98.00. EURO: Even with extremely weak confidence numbers from the Euro zone, the Euro is in position to garner underserved flight to quality long interest. Certainly their stance against the war bolsters their standing when the battle enters the tough stage and for now we have to expect that the Euro will rise without resistance. The first upside target for the June Euro is 109.44 and then again at 110.20. YEN: With the Yen streaking higher overnight, it would seem that the Yen is in fact back into the flight to quality role. Furthermore, with Japanese housing figures overnight continuing to show contraction it is clear that economic differentials are taking a back seat to anxiety investing. It seems that investors want to be as far away from the US (maybe even Europe) and the Yen is seen as a port in a storm. Near term upside targeting and a nice sell point later in the week is seen at 85.14. SWISS: This should be the classic flight to quality period for the Swiss. Therefore, we see no reason why the Swiss couldn't make a new contract high before the end of the coming week. In fact, until the Swiss falls back below 73.62 we assume that the trend is aggressively higher. POUND: Surprisingly the Pound isn't being lumped into the same political and economic mess that the Dollar is in, or the Pound would not have been able to breakout to the upside overnight. We think the most likely reason for Pound strength in the face of Dollar weakness, is that Tony Blair is attempting to bring all sides together and has shown the desire to compromise for a solution. Near term resistance is seen in the Pound up at 158.02. CANADIAN: For some reason the Canadian isn't behaving as one would have expected. Is the SARS threat cause to be concerned about the Canadian, or is the Canadian economy simply too closely tied to the US economy? In any regard, something seems to have changed against the bull camp. Traders should stay long but seek the comfort of long put/short call option protection. ------------------------------------------------------------ lunedì 31 marzo 2003 -- THE HIGHTOWER REPORT MORNING FINANCIAL COMMENT FINANCIALS:3/31 OVERNIGHT CHANGE to 4:15 AM :BONDS +18 The Treasury market should continue to see supportive conditions. Not only is the war expected to enter a dangerous phase but we also get the sense that global economic readings are really beginning to show evidence of a slide back toward recession. As long as the US Dollar doesn't come under massive attack, we assume that the Treasuries will be able to feed consistently higher. In fact, considering that the market will see monthly unemployment figures at the end of the week, we see no reason why Bonds wouldn't return to the early March consolidation above 11400 and the Notes to prices above 115-25 in the June contract. Even if the US economy manages to post some decent numbers early this week, it would seem that the uncertain end to the war and the proximity to deadly battle will keep economic sentiment on the rocks and fixed incomes on a rise. Therefore, we have to assume that the path of least resistance in the Treasuries is up, even with long-term top players still attempting to stand in the way of the rally. We also have to note that SARS (severe acute respiratory syndrome) is becoming an issue that is undermining economic sentiment, as the disease might result in a forced shut down of air travel. Since Hong Kong has 213 cases of the disease and is seeing evidence that the syndrome is transferred through the air, one can expect drastic measures and a negative impact on the world economy. Maybe the Chicago purchasing managers report this morning can surprise the trade with a better than expected reading, but any decline in the fixed income prices early this week should be seen as a buying opportunity. With the funds and small specs both net short bonds (as of early last week) we could easily see short covering joined by fresh outright buying. We currently see no reason why prices wouldn't run to new highs, but until something changes the trend of the headlines, there should be little preventing prices from getting back to the vicinity of the old highs. Therefore, hold off all sell orders, until later in the week, as being short into the monthly payroll report, with the prospect of extremely disquieting war news could be very painful. If you are compelled to get short, migrate to long put plays, because the risk of being short futures from current levels would seem to be greater than 2 points! ------------------------------------------------------------ Modificato da - Giorgia on 3/31/2003 15:31:48

venerdì 28 marzo 2003 -- THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS ENERGY:3/28 OVERNIGHT CHG to 4:15 AM :CRUDE +40 ,HEAT+111 ,UNGA+79 The energy complex for some reason is set to firm prices off the theory that oil prices will remain firm and above $30.00 because the duration of the war is expected to be long. We can understand that philosophy in the early stages of the war but we suspect that victory and changing the regime are much further down the time line than is achieving security for the oil fields. Forecasts that the end of the war might not come for a couple of months is a wild guess and could be subject to a three or four week standard of error. The IEA suggested that they were surprised that Iraqi production was hardly changed from the levels seen two weeks ago. The IEA also suggested that demand must be pretty much in balance because the trade noted an absence of bidders for Kirkuk oil (an Iraqi oil outlet) but that could have be because those buyers are concerned about fulfillment of the obligation during the military action. In other words, the worst-case shutdown, off the Iraqi situation might already be in place and could see some supply come back on line over the coming month. A private contractor hired to repair the wells, suggested that the majority of the production will be back on line in 3 months. However, private contractors also suggested that the infrastructure in Iraq is largely intact but might be sabotaged. Therefore, we can understand the upward bias in prices until that infrastructure is cleared. Keep in mind Iraq might have a production capacity of 4 or 5 million barrels per day if the facilities are given repairs and new equipment. Iraq was only producing 2 or 3 million barrels per day because of the oil for food deal limitation. In fact, the UN is supposed to be debating a restart of the oil for aid sales, which means in 12 years they might get to a solution. We suspect that the UK and US will allow the flow of oil sooner than the UN can act. The IEA is correct in suggesting that oil prices might remain above $30 because of the fear of another supply incident. In other words, more problems in Nigeria or a surprise attack against the Iraqi oil fields could add to recent gains if such an incident is seen. We think the energy complex is a sale, but realize the potential for surprise developments and sharply higher prices. Therefore, we suggest that traders consider selling the May crude, buying a May crude 33 call for 1.30 and selling a May crude 2700 put for 50 to pay for part of the call cost. NATURAL GAS: The natural gas market had to weather an injection to the weekly inventory levels on Thursday but because the regular energy complex was so firm, buyers were easy to find in the natural gas market. However, overall storage levels do remain historically tight and that should provide direct support to natural gas prices. Since natural gas prices flirted with a downside breakout earlier this week it is important that crude oil provide constant and positive leadership. Weather looks to be mostly normal and the economic outlook if sagging so natural gas would ordinarily see some selling pressure if it were not for the action in crude oil. ------------------------------------------------------------ venerdì 28 marzo 2003 -- THE HIGHTOWER REPORT MORNING STOCK COMMENT CHANGE to 4:15 AM:S&P-410 DOW -37 NIKKEI -88 FTSE -20 It would appear that the US Administration has slowly begun to lower expectations for a quick end to the war and the stock market has reacted accordingly. If it ends up taking months to end the war, we have to think that massive job losses will be seen and that the US economy will more than likely fall back into recession. The fear that American Airlines will file bankruptcy over the weekend combines with the extending duration of the war for a pretty negative start today. Considering the disappointment off the duration of the war and the ongoing verification of weakness in the economy, we suspect that stock prices will be moving back down into the February and March consolidation. Just to emphasize how the market is fashioning most of the news into a negative, it should be noted that Iraqi oil production is not markedly reduced from two weeks ago and as of this hour, only three wells are on fire in the country and yet crude prices are soaring! With the Bush Administration striking out on the tax cut stimulus, it would seem that the odds of a single term are rising rapidly. It is pretty discouraging that the Military elite spent months working on the war plan and that war plan surprisingly underestimated the amount of troops needed by almost 50%. With the US supposedly deploying another 100,000 troops to the region, one could easily conclude that the war will take months to dispatch, as the final assault might not unfold until all power is in place. Another flaw in the planning is that troops will now be encountering extreme heat. We don't see panic selling but we do see a number of longs moving to the sidelines, rather than holding long for an extended period of time. DOW: Critical chart support levels could be tested today and if they don't fail today, they will probably fail next week. A return to the 8,000 level looks probable unless US troops surprise the world with a quick advance into Baghdad. Embedded Press reports suggest this morning that a lull seems to have set in on the ground, while air attacks have expanded to the highest levels of the war. In other words, ground troops are waiting for reinforcements and that leaves the US economy roasting on the spit. Initial support is seen in the June Dow at 8075 but we don't expect that level to hold next week. S&P 500: Until something changes in the headlines, we suspect that the path of least resistance is down. Fortunately, we can expect to see a COT report tonight that shows a fairly leveled small spec position and a net short fund position. In other words, the S&P doesn't appear to be particularly vulnerable from a technical perspective. First downside support is seen at 856 and below that level the June contract could see a slide all the way down to and below 850. ------------------------------------------------------------ venerdì 28 marzo 2003 -- THE HIGHTOWER REPORT MORNING METALS COMMENT METALS:3/28 OVERNIGHT CHANGE to 4:15 AM:GLD+1.60 ,SLV-0.3 ,PLAT-9.90 London Gold Fix $330.15 -$2.85 LME Copper Warehouse stks 815,700 ton -2,175 tns Comex Gold stocks 2.358 ml -2,016 oz COMEX Silver stks 108.7 ml oz -122,677 oz OVERNIGHT: More light buyers in Asia, short sellers apparently fear the weekend. GOLD: We suspect that some shorts are uncomfortable with the idea of being short into the weekend when it is possible that an offensive could be launched against Baghdad. We also think that some light buying is being undertaken off the concern that Iraq might use chemical weapons on the invaders. Apparently there are mixed opinions on when the offensive might be launched, with some thinking 72 hours and others thinking as much as a month. Therefore, buying of gold of the siege of Baghdad theme probably won't be as concentrated as the bulls would have hoped. Considering that the start of the war really didn't spark a massive gold rally, we have to think that the Battle for Baghdad will be mostly uninspiring. Near term chart resistance is seen at $335.5 while a down trend line could be reversed if the June contract manages to climb back above $337.3. Since it would appear that the US Dollar is prepared to breakout down we have to think that gold support will firm and the market will respect the recent lows of $327.1. SILVER: So far, the silver market has managed to respect the consolidation low of $4.35 and that would appear to be a solid low unless the economy is thought to be falling back into a recession. The current range in the May silver is 443 to 435 but long term value players probably have to risk long positions to the October low of $4.32 in the event that the war is expected to last a couple months. The biggest hurdle in being long silver, might be the need for patience. PLATINUM: The fear that war might last for at least another month has apparently undermined platinum and seems to have pushed the platinum into a downside breakout that might have a downside target of $607. Initial support of $620 already looks to have failed, especially since the trade is giving no consideration to the potential for labor problems in South Africa. We suspect that April platinum will settle into the consolidation formed back in mid January and that zone is bound by $607-$617 in the April contract. COPPER: The copper market saw the small spec and fund long throw in the towel yesterday and we suspect that more losses are ahead, as the outlook for the economy continues to deteriorate. The next downside target is seen at the December lows just above 70.00. However, if the war in Iraq does take two months that could leave the world economy in shambles and demand for copper seriously pinched. Shanghai copper prices were moderately to sharply lower, but that negative influence on prices is mitigated by a -6,594 ton decline in exchange stocks. Considering that copper has seen production curtailed, prices might not have to slide all the way down to the October lows around 68.00. More losses. PRECIOUS METALS TECHNICAL OUTLOOK #P-METALS 3/28/03: SILVER (JUL): The market tilt is slightly negative with the close under the pivot. Initial support for silver is at 437.7 and below there at 434.9 with resistance likely at 441.5 and 443.7. A negative signal for trend short-term was given on a close under the 9-bar moving average. A bullish signal was given with an upside crossover of the daily stochastics. The next upside objective is 441.5. The market could take on a defensive posture with the daily closing price reversal down. GOLD (JUN): Support for gold today comes in near 325.53, while resistance is pegged at 335.33. Momentum studies are still bearish, but are now at oversold levels and will tend to support reversal action if it occurs. The next downside target is now at 325.53. Short-term indicators on the defensive. Consider selling an intraday bounce. The market setup is somewhat negative with the close under the 1st swing support. The close below the 9-day moving average is a negative short-term indicator for trend. The outside day down gives the market a bearish tilt. The daily closing price reversal down is a negative indicator for prices. ------------------------------------------------------------ venerdì 28 marzo 2003 -- THE HIGHTOWER REPORT MORNING FOREIGN EXCHANGE COMMENT FOREX:3/28 OVERNIGHT CHANGE to 4:15 AM:$ -21 ,YEN-9 ,SF+37 ,CA-4 EU+38 DOLLAR: There is very little in the way of positive factors for the Dollar. In fact, the Dollar will be lucky if it can avoid some extreme negatives in the coming weeks. Because Euro zone numbers continue to soften that tends to take away some of the selling interest from the Dollar but doesn't alter what seems to be a downtrend. Near term downside targeting in the Dollar comes in at 100.00 but a slide to the March lows shouldn't be ruled out if the UN attempts to order the attacks halted. We doubt that the US will stop attacking but it could take a public relations pounding in the process. This morning we would not expect US numbers to be surprisingly weak, but soft enough to put the June Dollar down to 100.56 before the end of the session. In order for the Dollar to avert a slide, Iraq has to use chemical weapons, or there has to be verification that Saddam is dead. EURO: Even though the trade saw some weaker than expected Euro zone numbers this morning it would appear that money is flowing to European bonds in a flight to quality move. Therefore, we have to think that the Euro will continue to rise with a near term target of 108.00. If the pressure to stop the war at the UN finds footing, that could really stimulate buying in the Euro and put the June contract back to the March highs. YEN: Already Japanese officials are bracing for another economic threat. We have already seen BOJ officials expressing concern over the inflationary spiral resuming in the event of a long war and that should prevent the Yen from forging a strong upside bid on Dollar weakness. In other words, the June Yen might be a sale on a rally to 84.00. SWISS: As we suspected, the Swiss just isn't getting the type of high anxiety that results in aggressive flight to quality buying. However, we still think the trend in the Swiss is up and that 74.00 will be seen in the coming week. POUND: While confidence readings in the UK appeared to hold together, it would seem that the bulls have given up on the Pound and that a down side breakout is possible in the coming week. We at least see a slide to the March low of 154.48. CANADIAN: We are a little shocked that the Canadian hasn't already forged a new contract high, considering the extension of the war and the ever-expanding disdain for US policy. The fact that the Euro zone economy is weakening should mean that the Canadian economy is viewed in even more favorable light. Considering the potential for economic differential buying and flight to quality buying, the Canadian should make a solid bid at 68.50 next early week. ------------------------------------------------------------ venerdì 28 marzo 2003 -- THE HIGHTOWER REPORT MORNING FINANCIAL COMMENT FINANCIALS:3/28 OVERNIGHT CHANGE to 4:15 AM :BONDS +8 We have to think that the generally accepted view is that the war is going to last "a while". If in fact, the war is going to last well into April, the bond and notes should be able to feed off macro economic concerns. Already we see signs that American Airlines might declare bankruptcy over the weekend and that is just the tip of the ice burg when it comes to supportive anecdotal evidence that is to be expected off the extension of the war. Like we said a number of times early this week, a host of companies were holding off on layoffs, because they thought the war would end quickly and demand would recover. In other words, the economy is back on the ropes again and that should fuel the Treasuries back up to the late February and early March consolidation zone. Economic reports Thursday did not come in as weak as many expected, but the pattern in the numbers is clearly toward slowing and the news that the war could take months to end, is enough to break the back of optimistic economists. When things go bad, they all go bad, as energy prices are soaring again, even though there was much less damage to Iraqi oil facilities than was initially anticipated. In conclusion, it would appear that the trade is going to assume the worst until proven otherwise and that should serve to get short sellers a nice re-entry point, at levels close to the historical highs posted in early March. We suspect that the economic numbers to be released today will provide more buying but not aggressive buying, as the Treasury markets are still having trouble forging big gains and holding those gains. If there is a big surprise today it will be that University of Michigan numbers are much weaker than expected! Despite the revived bull tilt, it still seems like the long term top players are constantly positioning for the eventual top. In the June bonds we suspect that prices will now be able to mount a rally to 112-25, while June Notes might see a pulse up to 114-24. ------------------------------------------------------------

giovedì 27 marzo 2003 -- THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS ENERGY:3/27 OVERNIGHT CHG to 4:15 AM :CRUDE +94 ,HEAT+267 ,UNGA+228 We are actually surprised that the energy complex managed to hold the gains posted Wednesday, as several negative supply stories should have weighed on prices. First of all, Venezuelan oil imports into the US were reported to be back to normal. Since early December Venezuelan imports into the US were shut down because of strikes in the oil industry. In another negative, the DOE showed a moderately large increase in US crude oil stocks and the refinery rate jumped up in the latest weekly stats. Lastly the trade found out that the Iraqi pipeline continues to flow oil despite what was thought to be an official end to the UN oil for aide sales. As if the bearish supply news from Venezuela wasn't enough, it also appears as if the Nigerian rebels agreed to a ceasefire, which could allow production in that country to resume. However, against the backdrop of the war it would seem that uncertainty will remain high enough and remain in place long enough, that energy prices will remain strong. Apparently the trade is doing the classical switch in fundamental focus and is factoring for potential tightness in gasoline stocks. Recently US gasoline stocks stood 6.1 million barrels deficit to year ago levels, but in our opinion a moderately tight inventory deficit would be something in excess of 10 million barrels. In fact unless overall US gasoline stocks decline below 190 million barrels, we would not think that prices would be able to run far off the tightness theme alone. However, as we mentioned before, given the extension of war uncertainty and the reports that Iranian gunboats are intercepting Iraqi boats loaded with explosives, the bulls will be able to hold an edge because of the shipping threat. In fact, overnight the US Navy reported finding mines in the northern portion of the Gulf and that should support prices today. We are surprised that US crude oil stocks didn't show a bigger increase considering that Venezuelan production began to increase production in early February. For longer term considerations remember that supply from Venezuela began to rise in early February and a massive crude shipment was reported to be on the way from Saudi Arabia before the war started. However, for another couple weeks one can't expect to see a noticeable increase in supply but one might expect to see seasonal demand decline. We continue to advocate a short in May crude oil but only after a rise above $30.25. Furthermore, if unleaded is going to assume the leadership role, one might sell crude oil and buy unleaded on a spread play. NATURAL GAS: Expectations for the weekly inventory report call for a draw of 30 to 40 bcf, but many suspect that the draw will come in on the lower end of the range of expectations. We continue to be surprised that the regular energy complex is providing such support to natural gas but that could change before the end of the week. Therefore, the May natural gas should have a critical pivot point support around $5.05 and a trade below that level could spark some technical stop loss selling. While the last COT report suggested that the small spec and fund trade might still be long enough to result in margin or stop loss selling we have to think that the regular energy complex strength will discourage a downside breakout from unfolding this week! Resistance is $5.33. ------------------------------------------------------------ giovedì 27 marzo 2003 -- THE HIGHTOWER REPORT MORNING STOCK COMMENT CHANGE to 4:15 AM:S&P-600 DOW -57 NIKKEI +16 FTSE -46 We would at least wait for the coming 24 hours before assuming that the end of the war will be delayed for months. As the weather clears today, it might be possible for coalition forces to reestablish momentum and keep the potential for a quick end to the war alive. However, if coalition leadership decides to shore up positions, wait for more troop deployments or turns its attention to humanitarian efforts in the South of Iraq that could signal a long delay in the end to the confrontation. It is our opinion, that a delay of weeks could be enough to yank the rug out from under the US economy and in turn send the stock market skidding back toward the March lows. As we suggested yesterday, it is imperative that traders utilize risk control measures as the current set of conditions could easily put stocks down hard if they fail in the near term. For the past three weeks, regularly scheduled US economic reports have been very weak but the trade managed to discount those readings because they felt that the geopolitical cloud was to be lifted soon. While the Press seriously underestimated the US military in Afghanistan, it would seem that Iraqi resistance is real and sustainable. Furthermore, the US can't seem to do anything but fail in the public relations battle. Even more troubling is the potential that guerilla tactics by the Iraqis might require killing citizens or subjecting coalition forces to high casualty rates. The Bush Presidency seems to be swirling down the drain and one can expect the European block to assist in the degradation of US status and a degradation of the US typically weighs on stock prices! There is only a 24hour window for the current track of events to reverse before the stock market throws in the towel again. DOW: We think the Dow could easily see a slide down to 7750, if the coming 24 hours don't produce a surprising recovery of momentum by coalition forces. It is even possible that coalition forces won't even attempt to forge ahead and instead choose to consolidate forces. In the event that a week or two delay in any forward military motion becomes a reality, the Dow could easily fall well below 7750, as the US economy was already hanging by a weak thread. If you are long, secure protection of "at the money puts", or exit the position entirely. S&P 500: The 856 in the June S&P might become the most critical pivot point the stock market has seen in the last three years, as we suspect that a host of companies were desperately attempting to hold on (before slashing jobs) for a quick end to the war. While a quick end to the war still seems to hang in the balance time is growing short. Those that got long with short call and long put protection, should be fine, but those outright long without coverage, should exit considering that risk is rising and reward is contracting. Coalition forces might still be able to pull a rabbit out of their hat, but the market won't react favorably to news that the war in fact will continue for another month. ------------------------------------------------------------ giovedì 27 marzo 2003 -- THE HIGHTOWER REPORT MORNING METALS COMMENT GOLD: The fact that many senior US military officials now expect the war to last months, means that gold could see its upside potential extended. While it seems that the coalition has become bogged down, we might caution that the Press was onto a similar theme in Afghanistan but then the situation suddenly cleared. However, the Iraqi situation would seem to be significantly more complicated than the situation in Afghanistan. Considering the projection of a protracted war, we have to wonder whether gold will be able to assume the bullish posture or if the deflationary tilt will creep into the equation. We suspect that the bulls will prevail because few expect the US to pull back from the attack of Baghdad. We suspect that the Dollar will begin to slide considering the disappointment from the extension of the war but if the war is significantly extended that could mean that the US economy slides back into recession. It would seem like gold could manage to climb back into a range bound by $335 and $341.6. If the threat of deflation weren't capable of presenting itself, the gold market would have a more significant upside track in the current scheme. SILVER: While silver was showing some signs of breaking out to the upside, we have to think that concerns toward the recovery will dampen the upside and possibly eliminate the upside. For the silver market, we would think that the direction of the stock market becomes the most critical leading indicator. Moderate resistance around $4.43 will probably contain the market but a temporary rise to $4.45 is not unlikely. PLATINUM: As the stock market slides off the disappointment from the war front, we have to think that platinum will also fail. Near term downside targeting in the April platinum comes in at $630 and possibly to $621. We have to think that platinum has become almost exclusively a physical demand market and not flight to quality market. Near term resistance in April platinum is seen up at $642 but no clear trend is seen. ------------------------------------------------------------ giovedì 27 marzo 2003 -- THE HIGHTOWER REPORT MORNING FOREIGN EXCHANGE COMMENT DOLLAR: The Dollar could be set to slide all the way down to the March lows, with the war track hinting at a protracted war. We are sure that the French and German stance will be to reduce the status of the US by an "I told you so attitude". In fact, the greatest victory for the German and French block would be to setup a UN resolution to "stop the killing" thus leaving the US status in shambles and the regime in place in Iraq. In other words, the longer the war extends the more opposition will mount efforts to stop the attacks. In the mean time the US economy is about to fall back into a recession, especially if the war doesn't come to an end in the near term. In the near term, we mean four or five days. Maybe the heat will come off the US Dollar if it is learned that Saddam is no longer in power but we doubt it. Those that get short the Dollar do run the risk that coalition forces finally unveil shock and awe and dash toward Baghdad under clearing skies, but if the Iraqi resistance repels such a daring move, the Dollar will gap toward the March lows. If you want to stay long the Dollar, buy April calls instead of futures as they have 8 days until expiration and they could reduce your loss and could still give the coalition a chance to prove it is a superpower coalition. EURO: The euro is primed to return to the March highs even though the ifo survey yesterday showed the economy staggering into the start of the war. The trade should be pushed upward by mocking statements from France and Germany and by the fear that the euro is once again a true flight to quality favorite. Initial resistance is seen at 108.00 but that will be a target if the coalition forces don't surprise the world by the close Friday afternoon. YEN: Some traders might rush in to buy the Yen because the war looks to extend and the US status deteriorates but we would in no way rush money to the yen if the war is going to extend for months. In fact, if the war extends for months, the Japanese economy is in for a major problem. Therefore we would be looking to buy some June Yen 82 puts on a rally to 84.00. SWISS: Because the upcoming situation looks to be deflationary instead of anxiety ridden, we are not sure that the Swiss is set to rise sharply. We do think that the Swiss will mount a rally but the aggressiveness of that rally might be lacking. Near term resistance is seen at 73.15. POUND: The lack of progress in the war and the uncertainty on the timing of the end of the war might stall the recent rise in the Pound. The June Pound should have support at 156.00 but consolidation looks to be the rule. CANADIAN: The Canadian currency is the big winner, if the current situation extends far into the future. In fact, given the overnight rise in the Canadian, a new contract high is very likely unless a surprising turn of events is seen. Next upside targeting is 68.70. ------------------------------------------------------------ giovedì 27 marzo 2003 -- THE HIGHTOWER REPORT MORNING FINANCIAL COMMENT FINANCIALS:3/27 OVERNIGHT CHANGE to 4:15 AM :BONDS +21 The bonds might be refactoring the last two weeks US economic information, as the realization that the war in Iraq might extend for months, makes the market reconsider the weakness documented in past reports. In other words, the trade can no longer discount the weaker than expected economic evidence, especially if fear and uncertainty over the war is going to hang in place for another month. We can't imagine that the US economy will be able to avoid a return to recessionary conditions, if the current situation maintains its current track into late spring. In fact, given a mere week or two extension in the war, we have to think that several US industries will let go with mass layoffs. We are aware that the Press was completely wrong on the Afghanistan campaign, as the Press suggested that the attacks were becoming "mired" or "bogged down" only to discover shortly thereafter that a complete break through was being made. However, the situation in Iraq appears to be significantly more complex and not easily overcome. With Iraqi soldiers dressing as civilians and the civilians themselves hostile to the troops, it would seem that a horrible misstep has been made. We thought early this week that the Treasury markets would have the capacity to rally back to the mid February highs, but if the war is truly going to take "months" we have to think that upside targets will have to be revised upward. In fact, it might even be possible for the Treasuries to rekindle a bull trend. After all, the Fed took a pass on lowering rates and Congress is soundly rejecting the tax cut proposal. In the end, the US economy may get what it deserves and that is a return visit to recession. The Fed by its own admission suggests that stimulus applied to the economy takes many quarters to actually be felt, but evidently the Fed would rather run the economy into the ditch than create any chance of inflation. If it becomes an accepted view that the war will take months and that the coalition forces will back and fill for a couple weeks (waiting on another Division from Texas to arrive) Notes and bonds might be capable of returning to the late February and early March consolidation pattern. Expect the claims data to support bonds with signs that the employment situation is deteriorating! ------------------------------------------------------------

mercoledì 26 marzo 2003 -- THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS ENERGY:3/26 OVERNIGHT CHG to 4:15 AM :CRUDE +62 ,HEAT+201 ,UNGA+144 While the weekly inventory readings today might show another increase in crude stocks we doubt that the increase in supply will have a big impact on prices. With traders concerned about a deterioration of political conditions inside Nigeria it is fair to think that Nigerian supply might be off the market for a sustained period of time. With the Nigerian military moving in to restore calm there could be backlash reaction from protestors. Apparently Nigerian oil output is now 40% of normal and Nigeria is roughly responsible for 6.28% of total world exports. In the mean time, the market might be supported by the Nigerian situation and the ongoing uncertainty in the Middle East but we doubt that the complex will be able to rise sharply unless something fresh surfaces. The weather in Iraq was so poor Tuesday that the coalition progress was probably stalled by at least a day and that could mean that the assault on Baghdad is delayed until late in the week. We have to think that the continuation of the war keeps global tensions high and the potential threat against oil shipments equally disconcerting. Almost totally ignored Tuesday were reports that Venezuela made a billion barrel oil discovery and that is understandable considering the near term focus on the tightness of supply. We continue to look for a rally to the vicinity of $30.00 basis the May become a buyer of June crude oil puts, especially since the Iraqi Ceyhan pipeline is apparently still pumping and more and more of the Iraqi oil fields are being secured. Therefore, it would seem that Nigerian concerns and anxiety from the war will continue to fuel gains even though production doesn't look any more threatened than it was last week when prices were falling very sharply. It is possible that last weeks lows in crude were solid support until supply in the US rises to a more comfortable level. Therefore we define the coming trading range as $26.50 to $30.00 (May). ------------------------------------------------------------ mercoledì 26 marzo 2003 -- THE HIGHTOWER REPORT MORNING STOCK COMMENT STOCKS:3/26 OVERNIGHT CHANGE to 4:15 AM:S&P-120 DOW +1 NIKKEI +113 FTSE +38 The stock market is fearful of the coming siege of Baghdad, but at the same time many longs are filtering into the market in hopes that a quick end to the war will materialize. Certainly the coalition saw events shift in its direction Tuesday, by the "uprising" in Basra. However, we also suspect that antiwar protests will reach a zenith in the coming 36 hours, as the coalition softens up Baghdad and civilian deaths are played to the hilt in countries where the war is strongly opposed. In fact, we now suspect that vulnerable regimes could begin to see a breakdown of control, as protests reach a fever pitch. About the only positive about the headline focus on the war, is that attention is directed away from some extremely weak US economic stats. Today for instance, the durable and new home sales readings could be shockingly weak and the market will probably discount those readings. The only way the market is capable of discounting such weak numbers, is that the trade sees the economic tide shifting dramatically if the war ends quickly. We continue to think that the war ends quickly and that "quickly" means by the end of the week. Ending the war can simply mean that the "end" is in sight! We see the stock market recoiling in the event that chemical weapons are used in the final defense but then we would expect prices to recover. Considering the current environment, one has to utilize bullish strategies that give traders the ability to sustain volatility. DOW: The Dow comes into the session today almost dead in the center of a 8120 to 8480 trading range and considering the economic report flow, the US economy has to have a victory to avoid an ugly slide back toward recession. With an impending clash between US forces and 5,000 Republican Guards around Nasariyah the headlines today could temporarily resemble those seen Monday but by the end of the week, the headlines should resemble those seen late last week! Be a buyer of a correction to 8120 but anticipate wild price swings. Once again the April call options seem to be a logical choice over long futures. S&P 500: The rally in the S&P stalled partly because news from the war front stalled along with the weather. As mentioned before, a series of major battles are underway or are expected to be underway soon and the market will uncomfortably wait for the outcome. We wouldn't wait for the outcome to get long, because the market offers the tools to manage risk. For instance, buy the June S&P at 873 ob and buy an April 865 put for 2170 and sell an April 900 call to finance the put cost! ------------------------------------------------------------ mercoledì 26 marzo 2003 -- THE HIGHTOWER REPORT MORNING METALS COMMENT ETALS:3/26 OVERNIGHT CHANGE to 4:15 AM:GLD+1.40 ,SLV-0.3 ,PLAT+4.00 London Gold Fix $329.60 -$3.40 LME Copper Warehouse stks 819,525 ton -1,950 tns Comex Gold stocks 2.36 ml +26,603 oz COMEX Silver stks 108.1 ml oz -460,644 oz OVERNIGHT: Buying interest in Tokyo and Sydney lifted gold slightly overnight. GOLD: In our opinion the gold market hasn't completely reversed the downtrend pattern in effect since early February and certainly hasn't altered the aggressive liquidation tilt seen since the first of March. We suspect that the sand storm in Iraq stalled the timing of the assault of Baghdad and therefore the anxiety and flight to quality buying of gold on that event hasn't been totally interjected into prices. However, we suspect that the coming rally will run out of steam quickly and only after minimal price gains. It is possible that gold might rally aggressively if Iraq uses chemical weapons against the coalition forces. However, if Iraq uses chemical weapons that will instantly justify the war and that in turn could give the Dollar a massive boost and that might finish the war benefit toward gold. In other words, we would be more inclined to sell a rally to $341, than to buy a break to $327. In order to buy gold for a long-term value play, or for the hope that inflation might surface in a recovery we have to make sure that most of the war longs have been liquidated. While we may not get the chance we would be looking to buy June gold down in a range bound by $323-$325. Buying gold deep in the September through December consolidation range with a risk of $7 might give an investor a long look at the potential for inflation. Many think inflation is unlikely or impossible but considering the threat against insurers, rising security costs, very high energy prices and 45 year lows in interest rates all we are missing is a reason to see food prices rise and we would have a full slate of inflation factors. Look at a monthly PPI bar chart (of monthly changes) and inflation can't be ruled out. SILVER: With the slight pause in fresh war developments and the tax cut proposal being cut down to almost nothing, we can understand the negative drag on silver prices from the macro economic situation. Unlike gold, silver is already much closer to long term fair value levels on the charts and may not have as much war liquidation to wade through. Therefore we are interested in picking up a long silver play around the $4.35 level in the May contract. PLATINUM: A partial double low in April platinum around $632 looks like thin support. However like silver, platinum needs a positive economic view in order to justify its already lofty historical price level. Until the siege of Baghdad is underway and the end of the war in sight, we suspect that platinum has a liquidation tilt. We suspect that Apr platinum has initial support on the charts down at 630 and then at 620. ------------------------------------------------------------ mercoledì 26 marzo 2003 -- THE HIGHTOWER REPORT MORNING FOREIGN EXCHANGE COMMENT FOREX: 3/26 OVERNIGHT CHANGE to 4:15 AM: $ -7, YEN -9, SF -7, CA +26 EU +5 DOLLAR: The Dollar continues to hold up at a higher consolidation than was seen for most of February. While the Russians suggest that only the UN can verify weapons of mass destruction and France is getting hot under the collar to be part of the reconstruction process in Iraq, it is clear that the US Dollar could see victory in the coming 72 hours and could certainly find evidence of weapons of mass destruction. As mentioned in the stock comment this morning, the Dollar is very lucky that war coverage is masking the overtly weak stream of US economic numbers, or the Dollar might not have been able to hold its gains from last week. We have to think that the market is partially expecting a US victory and from that they are thinking that US economic numbers will improve from their current state. Near term support in the June Dollar comes in at 101.20 but there may be no small bets in the Dollar in the coming three sessions. Utilize strategy over opinion, buy a June Dollar and buy an April Dollar 101 put for 45 ticks. The April options only have 9 days left, so buy close to the money. EURO: German Ifo readings overnight were softer than expected and by the close Friday those soft numbers will matter, as it will become clear that the Euro gambit against the US wasn't the best track. The power block in the Euro zone could be reduced to bickering over being involved in the reconstruction of Iraq and we are sure that the coalition forces will manage the lion's share because possession is 9/10ths of the law! Therefore we have to think that the Euro will attempt to rally but the extent of that rally might be 106.50! YEN: We see the yen as a high beta stock. If the war ends quickly, the Japanese economy will benefit, if the war drags on, the Yen might continue to see flight to quality buying. However, due to the recent rally off the low, we hate to buy the Yen above 82.98. SWISS: If there ever were a 24hour period in which flight to quality interest in the Swiss should be high, it would seem to be the coming 24 hours. However if the Swiss can't regain 72.96, we suspect that a major top has unfolded. POUND: Unless there are horrific losses by the UK military or widespread anti war violence, we suspect that the Pound will be able to respect support of 155.66 and possibly prepare for a return to 158.00. CANADIAN: The coming two days could be an extremely critical time frame for the Canadian as the flight to quality influence will either be massive or non existent. A failure below 67.26 would now be very damaging to the bull trend. However, the trend is up and the Canadian economy comes into this decision point with a strong standing. Those that are long should probably seek long put coverage. ------------------------------------------------------------ mercoledì 26 marzo 2003 -- THE HIGHTOWER REPORT MORNING FINANCIAL COMMENT FINANCIALS:3/26 OVERNIGHT CHANGE to 4:15 AM :BONDS -1 The bond market appears to have lost whatever positive momentum it had accumulated early in the week. It would seem that the ebb and flow of the war is a direct influence on prices, with the regularly scheduled economic information only a sideshow. The bond market might have been cheered by the idea that the tax cut plan was going down to defeat, as that means no stimulus will be applied and that the deficit might not be exaggerated. In the economic report slate today the durable goods report could easily post a shockingly weak reading but the question is will the Treasury market even care about the numbers. It is even possible that February new homes sales post a shocking double-digit contraction, as some surveys are suggesting that consumer confidence was collapsing even before the war officially kicked off. In conclusion, the fundamental path of least resistance in the Treasury market is up, but the psychological tilt seems to be hunting for an end to the war and a major long-term top in bonds and Notes. We continue to see the Note market leading on the downside and appearing to be more vulnerable than bonds. With some internal opposition being seen in Iraq yesterday and news reports this morning suggesting that 5,000 Republican Guards have been spotted the tide of the war could easily begin to flow rapidly toward the coalition goal of ending the war quickly. However, in order to get to a swift end, the worst part of the battle is upon us today or will be upon us in the coming 36 hours. Therefore, bonds and notes could expect to get some flight to quality support from the headlines but at any time the bullish headlines could shift and become the death knell for the bull camp. Up for the near term but we suspect that sellers are waiting in the wings. Slightly weaker Ifo numbers from Germany suggest that the Euro zone economy started to soften like the US economy and that provides some measure of support for Treasuries. In the event that the war "bogs down", the softness in the economy could spark a temporary rally to 112-16 in June bonds and to 114-09 in June Notes. We really like the idea of selling futures on a 1/2 to 1 point rally and using a long but cheap May calls as protection against a protracted war. ------------------------------------------------------------

martedì 25 marzo 2003 -- THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS ENERGY:3/25 OVERNIGHT CHG to 4:15 AM :CRUDE +73 ,HEAT+138 ,UNGA+121 The energy complex managed to bounce Monday and then followed through with upside action in the evening trade Monday might. With OPEC suggesting that their production tally had declined by 500,000 barrels per day due to Nigerian and Iraqi losses, prices were justified in forging upside gains. The first logical upside retracement point off the November to March rally in the May crude oil was regained Monday with the rise above $28.63. The next retracement point of $30.21 will be the next target for the bull camp and could be a place that we would consider getting short. However, because the attack of Baghdad might be at least a couple days off we have to give the edge to the bulls for at least two more days. Overnight the Iraqi Vice President called for the Arab league to boycott oil shipments to the US because of the attack on Iraq and the call was ignored by the league. Despite the Arab league rebuff on the oil boycott, Iraq called on Arab nations to close UK and US Embassies. The 6 to 10 day weather forecast called for cool weather in the East and mild temps in the Midwest, which means that the bull camp won't get too much help from the demand front. With the war expected to continue in a cloud of uncertainty for at least the coming 36 hours, the energy complex might not see conditions change materially in the near term. The Nigerian situation is something that should not be discounted considering the magnitude of the product flow into the US from that country and the fact that two other principle US suppliers (Iraq & Venezuela) are seeing production levels vary significantly means that oil prices will favor upside momentum until things settle down politically. With the mere explosion of a propane tank in Bahrain yesterday afternoon driving energy prices higher and equity prices lower, it is clear that the energy complex is well aware of the potential threats to oil shipments and that is also supporting prices. The fact that work on repairing Iraqi oil wells in the South of Iraq has been halted or slowed due to the threat of sabotage or booby traps is also supporting prices. In our opinion, the coming weekly inventory readings will show another rise in crude stocks but with the market focused exclusively on psychological issues, the market will probably be in a mode to discount bearish fundamental information. We stand by our opinion from Monday morning that nearby May crude might have the capacity to rally to at least $30.25 and may remain strong until the war culminates and or all the Iraqi oil fields are firmly under control. NATURAL GAS: Slightly cooler temps follow the much above normal temps Sunday and Monday, so the net effect of the weather is mixed or slightly bearish. However, the outlook for the coming 6 to 10 days is for cool in the East and mild in the Midwest and that is a neutral to bearish forecast. The May natural gas market should continue to have solid support at $5.10 but we would not be surprised to see a rally to $5.50 in the coming two sessions. Right now the natural gas market needs solid bullish leadership from the regular energy complex in order to launch another upward thrust. We will be ready to buy June puts on a rally. --------------------------------------------- martedì 25 marzo 2003 -- THE HIGHTOWER REPORT MORNING STOCK COMMENT CHANGE to 4:15 AM:S&P-250 DOW -36 NIKKEI 196 FTSE -38 We sense that anxiety isn't running as high today as it was Monday. Therefore, stock market losses might be less significant today. We have to think that the action Monday was particularly negative because the market was rushing to factor in the fact that the war didn't end quickly. In the event that stock prices slide aggressively in the coming sessions, that will in effect "price in" a protracted war and moderate damage to the economic recovery. Forecasts that call for a protracted war and a significant hit on the economy are still premature. In fact, significant selling in the coming three sessions could be aggressively reversed later in the week if the coalition forces manage to take Baghdad this week. Reports that Saddam is injured and receiving medical treatment in a bunker inside Baghdad certainly increases the chance that a war could end quickly. Unfortunately there is a sand storm that has slowed the approach to Baghdad and that means the uncertainty and anxiety will be seen for at least another couple sessions. We also have to think that the accidents that befell the coalition troops over the last four days played a role in the equity market slide and therefore we might expect prices to consolidate today, as the market waits for the next phase in the battle. The fact that a number of economists are downgrading their outlooks will have a negative influence on prices until the current political track shifts direction. The best-case scenario for today is consolidation, but once the direct assault on Baghdad begins, we suspect prices will initially slide to new lows for the week. DOW: We have to think that the market was a little over reactionary to the weekend events and with the sand storm stalling progress in Iraq, the bears still seem to have the upper hand. It would seem like the market is waiting for a clearer view on the duration of the war, especially given such poor Wall Street prognostications that were floated this morning. We would not rule out a slide to 8075 but we are now of a mind to begin to fish for a bottom with some long April Dow 8600 calls. The coalition is getting entrenched with protection to supply lines and will more than likely be prepared to strangle Baghdad by Friday. S&P 500: It should be noted that the S&P might have the "least long" small spec and fund long combination in the last three years (when one adjusts the latest COT reading for the declines logged after the report was measured). In other words, the S&P is not nearly as vulnerable to stop loss selling as many might expect it to be. We think that the decline Monday erased the spec long buildup late last week and that the market can now withstand the initial ugliness of the Baghdad attack. However, make no mistake about it, if the war can't be dispensed this week, then the sagging macro economic concern could transition into fears that the recovery is set to fail and a wave a fresh selling could fall on the market. Therefore, time is of the essence for the bull camp. In the near term we would expect support of 856 to hold and would be looking to buy some April S&P 905 calls for 970 today, in an attempt to play for an end to the war! April options have 24 days until expiration but the calls might not be any good if some resolution to the war isn't seen by Friday afternoon. As we saw last weekend, the weekend Press has a way of whipping up mass anxiety and that in turn undermines the recovery. --------------------------------------------- martedì 25 marzo 2003 -- THE HIGHTOWER REPORT MORNING METALS COMMENT METALS:3/25 OVERNIGHT CHANGE to 4:15 AM:GLD+3.90 ,SLV+3.7 ,PLAT+8.00 London Gold Fix $333.00 +$2.85 LME Copper Warehouse stks 821,475 ton -3,150 tns Comex Gold stocks 2.334 ml Unchanged COMEX Silver stks 108.5 ml oz -600,450 oz OVERNIGHT: Apparently significant losses in the Dollar sparked Asian buying. GOLD: The gold market appears to have added to the gains posted Monday in the overnight action. While we doubt that the coalition forces will see the same magnitude of bad luck they encountered over the weekend, the unpopular view of the war is expected to keep the Dollar down and gold up. We do think that a rising number of coalition casualties will correlate positively with gold pricing. In fact the cost of taking Baghdad looks to boost anxieties and gold prices in the process. Therefore, we would expect June gold to attempt to regain a critical pivot point at $335, with a secondary resistance point seen coming in at $341.6. Gold buying doesn't seem to be overly aggressive but with energy prices higher, the Dollar lower and European stocks weak this morning, we expect that gold will see more step-wise gains. Considering the pace of the coalition progress toward Baghdad, we suspect that the bulls will control at least until Thursday. SILVER: Thus far, the silver market hasn't shown much response to the gold recovery and that is because the outlook for the economy and therefore physical demand is deteriorating. Significant overhead resistance is detected around the $4.50 consolidation. Considering that the war looks to run longer and cost more than expected, many economists are now suggesting that the recovery will now take much longer to unfold and could still be derailed altogether. In other words, deflationary conditions are undermining silver prices. While we think that silver prices below $4.40 are an attractive longterm value zone, we also realize that the holding period for those that are long could be quite considerable. PLATINUM: In the overnight action, April platinum slid below critical chart support formed by the February lows and looks to fall below even numbered $640 support sometime today. Like silver, platinum is behaving like an industrial commodity fearful of deflationary conditions. At this point we would not be surprised to see a slide down to $632 basis the April contract. COPPER: With European stocks weaker and concerns growing that a long war could stall, or prevent economic recovery, the copper market enters the session vulnerable. Chinese copper futures were basically unchanged, which suggests that copper won't be overly weak. Reports that Chile saw its copper exports rise 10.9% for the latest month, is a minor negative when combined with the sluggish economic outlook. We see near term support in the May copper at 76.00 with a possible downside adjustment to 74.60 possible in the event that the war truly becomes "bogged down". Aggressive traders might buy a dip down into the zone bound by 76.00 and 75.45, but risk on that trade must be at least 74.30. SILVER (JUL): With the close higher than the pivot swing number, the market is in a slightly bullish posture. Initial support for silver is at 436.7 and below there at 435.4 with resistance likely at 438.7 and 439.7. The market's close below the 9-day moving average is an indication the shortterm trend remains negative. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 435.4. The 9-day RSI under 30 indicates the market is approaching oversold levels. GOLD (JUN): Support for gold today comes in near 329.03, while resistance is pegged at 332.03. Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 329.03. It is a mildly bullish indicator that the market closed over the pivot swing number. The market's short-term trend is negative as the close remains below the 9-day moving average. --------------------------------------------- martedì 25 marzo 2003 -- THE HIGHTOWER REPORT MORNING FOREIGN EXCHANGE COMMENT FOREX:3/25 OVERNIGHT CHANGE to 4:15 AM:$ -52 ,YEN+73 ,SF+50 ,CA+20 EU+57 DOLLAR: We suspect that accidents to coalition forces will be less likely for the coming 24 hours and that could serve to take some of the pressure off the Dollar. However, until the war is totally dispatched we seriously doubt that the Dollar will mount anything more than a technical bounce. With US economic numbers resuming their flow today and a number of economists fretting that the war might extend far into the future, the Dollar is expected to remain weak. Furthermore, with the attack on Baghdad expected in the coming 48 hours, we have to think that the Dollar is set to return to the bottom of the February consolidation around 100.00. In the mean time things that could suddenly turn the Dollar sharply higher would be news that Saddam has died, or that more Iraqi commanders have surrendered. At this point it would seem unlikely that mass surrenders will take place. If the Dollar were to rise above 102.00 one might assume that some major shift in conditions has taken place. EURO: Considering that the euro has managed to climb into the overhead resistance off the February consolidation it might be possible to see it climb to 108.00 in the build up to the battle for Baghdad. With German inflation numbers this morning under control there would seem to be little to discourage the buyers from pushing the Euro higher for the coming 24 hours. In other words, the Euro is expected to get flight to quality buying for at least the next 24 hours. However, a decline back below 105.53 in the June contract would signal a change in conditions. YEN: Japanese economic readings this morning hardly support the influx of flight to quality buying but in the near term getting away from US investments and from investments impacted by the war takes precedence over the pace of the Japanese economy. In fact, Japanese supermarket store sales fell for the 8th straight month and department store sales fell for the 11th straight month. Some economists are already predicting a recession for the US and Japan in an extended war. Near term resistance in the Yen is 84.04. We don't like the risk and reward of being long the Yen from current levels. SWISS: It's all about flight to quality but we don't get the sense that the long interest in the Swiss will be nearly as strong as it was Monday. However, as we lead up to the battle for Baghdad we suspect that the Swiss will see a return of aggressive buying. Near term upside targeting in the Swiss is seen at 73.20. POUND: More gains are in order with near term targeting seen up at 157.12. Right now it is unclear what is driving the Pound, as it managed to rise in the face of military losses, while the Dollar slid in the face of military losses. We suspect that the Pound will see little in the way of major war developments today but Wednesday and Thursday will be a whole different ballgame. CANADIAN: We are a little disappointed that the momentum in the Canadian hasn't put the currency closer to the contract high. We do suspect that more gains are ahead and that 67.00 has become solid support. Once the assault on Baghdad starts the Canadian should reach 68.00. YEN (JUN): The market's close below the 9-day moving average is an indication the short-term trend remains negative. The gap upmove on the day session chart is a bullish indicator for trend. A positive setup occurred with the close over the 1st swing resistance. Swing resistance is targeted at 83.26 and above there at 83.48, with the yen finding support around 82.89 and below there at 82.74. The close under the 40-day moving average indicates the longer-term trend could be turning down. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 82.74. EURO (JUN): Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 1.0564. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.0564, with overhead resistance at 1.0668. The market's short-term trend is positive on a close above the 9-day moving average. The major trend is down with the cross over back below the 40-day moving average. The gap down on the day session chart is bearish with more selling pressure possible today. --------------------------------------------- martedì 25 marzo 2003 -- THE HIGHTOWER REPORT MORNING FINANCIAL COMMENT FINANCIALS:3/25 OVERNIGHT CHANGE to 4:15 AM :BONDS +15 While economic uncertainty remains high enough to have a number of economists expressing doubt on the timing of the recovery, talk about deficit spending today might countervail the bullish tilt in the Treasury market. With a number of economists suggesting that a protracted war might cause the world economy to fall back into a recession and others suggesting that the war is already causing consumer spending to contract sharply a quick end to the war is a must. While we understand that the impact of the war is damaging the recovery bid, we also think that ruling out a quick end to the war is still premature. Certainly US numbers had already turned soft before the first attack was launched and the subsequent concern over the loss of coalition forces was supportive to bond prices but also think that long bond interest will reach a zenith on Wednesday or Thursday. In other words, the lead up to the attack on Baghdad, looks to fan the flames of anxiety and give bonds an additional lift. The US economic numbers to be released this morning will only give a look at the net effect of the lead up to the war, because for most of February many felt that war could still be avoided. In conclusion, the numbers for February will be soft but not nearly as soft as the March numbers will be when they are released several weeks from now. In the June bonds, we suspect that prices will be able to rise to 112-13, instead of stopping at the 111-19 level we suggested yesterday morning. Therefore, traders should raise sell orders in the June bonds to 11213, with a risk level of 112-29. In the June Notes, we now suspect that a rally to 114-09 will be seen before the close Wednesday. Those getting short the June Notes at 114-09 should use stops up at 114-27. Until fear and anxiety subside and the outcome of the battle for Baghdad is absorbed, the path of least resistance is up in the fixed income markets. ---------------------------------------------

lunedì 24 marzo 2003 -- THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS ENERGY:3/24 OVERNIGHT CHG to 4:15 AM :CRUDE +51 ,HEAT+264 ,UNGA+171 The energy complex should have little remaining concern for massive uncertainty arising from the Iraqi supply condition. However, because the war goes on there might be less pressure on energy prices than was seen last week. Additionally the market is now picking up on the Nigerian situation, as Shell closed its oilfields in that country. The Shell shutdown effectively takes 370,000 barrels per day off the market and that is significant in the current scheme of things. The weekly COT report showed the net spec long in crude to be 22,000 contracts but since that report was measured the crude market declined an additional $3.00. Therefore we have to assume that the net spec long is all but eliminated. The product market shows an equally deflated spec and fund long position and considering the liquidation late last week it is possible that the "products" have a net short position. Supposedly, Kuwait increased its output to 2.4 million barrels per day but that is easily countervailed by news that Iraqi production had fallen to 200,000 barrels per day, from around 2 million just two weeks ago. We suspect that Iraqi output will go to zero once the Northern pipelines have their throughput cut off. Apparently, the oil wells on fire in the South of Iraq are now in the process of being repaired (early stages only). Therefore, unless oil prices show and a strong comeback early this week we seriously doubt that we will see a return to the energy crisis levels posted in late February and early March. However, if Nigerian production becomes locked down and ends up requiring military intervention there will be a significant increase in prices as the US gets a significant amount of its oil from Nigeria. Additionally, if anti war protests manage to upset the balance of power in the Middle East, one should not be surprised to see a sharp recovery rally unfold. In the meantime, we suspect that antiwar protests around the world and the Nigerian situation will be enough to drive energy prices up. It is possible that May crude oil manages a rise back into the late December and early January consolidation pattern, which is bound by $28.00 to $30.00. NATURAL GAS: The natural gas market showed a moderately large small spec long position in the last COT report and therefore we have to think gas prices remain vulnerable to liquidation. However, as long as the Nigerian situation bolsters overall energy prices, the May gas contract should find support above $5.12. On the other hand, with weather looking to take a bite out of ongoing heating demand, the natural gas market probably won't be able to rally significantly, unless there is very strong leadership from the regular energy complex. In the end, we have to think that it's only a matter of time before natural gas prices slide down toward the January consolidation pattern. The January consolidation pattern is bound by $4.75 and $5.15 in the May contract. In the mean time, the natural gas market might be forced to consolidate between $5.12 and $5.55, until conditions calm down in the Middle East. --------------------------------------------- lunedì 24 marzo 2003 -- THE HIGHTOWER REPORT MORNING STOCK COMMENT CHANGE to 4:15 AM:S&P-1520 DOW -142 NIKKEI +240 FTSE -99 Just as everything was "all positive" last week, the outlook to start this week is "all negative". The fact that the war didn't end over the weekend is a disappointment to the market. The fact, that the coalition forces have had some unfortunate accidents is also serving to undermine sentiment. Furthermore, fears that the worst part of the battle are just ahead, is disquieting. Unfortunately, developments in Iraq weren't the only negative news brought to the market over the weekend, as it would seem that Nigerian oil production is being shut down by ethnic unrest. Nigeria is a major supplier of oil to the US and the combination of Iraqi production being shut down, at the same time that Nigeria is being hampered, means that energy prices regain some ground they lost last week. Considering the abundance of bearish political news this morning the stock market is lucky not to have any scheduled US economic information due out today! Considering that the "end game" in Iraq looks to involve an ugly situation (with coalition forces expected to be hampered by trying to reduce civilian casualties) we suspect that coalition forces are about to suffer significant losses. Furthermore, because the loss of life is about to be documented 24 hours a day and the frequency of losses is sure to rise, it is possible that stock prices come under extreme pressure for at least 36 hours. DOW: Initially support is seen in the June Dow at 8240 but we doubt that level will hold for long. In fact, we see the Dow falling to at least 8075 before the close Tuesday. Traders that want to speculate in what could become a wild market, should seriously considering using April Dow options to control risk. If you think that the war will be won and that the economy will recover quickly, wait for a correction to 8075 and then buy May Dow 8700 calls for 1200. S&P 500: Initial support in the June S&P is seen at 872 but we suspect a bigger correction to 850 before another solid low is forged. Longer-term traders should be looking to purchase some May S&P calls on a correction to 860 early this week. The war should be won, but in the coming 24 hours economic euphoria is sure to be temporarily lost. If the COT report figures are accurate and the small spec long position was significantly reduced, then the market is in a much better technical position than we expected it to be. Therefore, maybe we won't see quite as much war liquidation in the coming 24 hours before another major low is posted. --------------------------------------------- lunedì 24 marzo 2003 -- THE HIGHTOWER REPORT MORNING METALS COMMENT METALS:3/24 OVERNIGHT CHANGE to 4:15 AM:GLD+4.00 ,SLV+3.7 ,PLAT+4.90 London Gold Fix $330.15 -$2.40 LME Copper Warehouse stks 824,625 ton -2,800 tns Comex Gold stocks 2.334 ml -482 oz COMEX Silver stks 109.1 ml oz Unchanged OVERNIGHT: Slightly higher Asian prices as the war drags and concerns rise. GOLD: Apparently the market is seeing increased long interest because of the resistance being encountered by the coalition forces. The gold market might also get a lift from weakness in the stock market and concerns for the airline industry. Apparently a Wall Street Journal article this morning suggests that the airline industry could see an additional $10 billion Dollar loss. However, since it appears as if the war is going to stretch further than expected into the future, the gold market will probably get a second life. Furthermore, with some potentially horrific developments anticipated in the end game (the battle for Baghdad) we suspect that gold will generally rise early this week. However, we seriously doubt that gold will be able to rise above $350 basis the June contract, especially with initial resistance anticipated at $341.6. The weekly COT report showed the small spec and fund long to be 58,000 contracts, but since the COT report was measured the gold market fell $10 and that could have reduced the net long position to 48,000 contracts. Therefore, we have to think that the weak handed longs are out and that the gold market might begin to respect support on the charts. If June gold can't regain $335.1 today, we would think the market lacks the resolve to return to bull market status. SILVER: The silver market has bounced off the $4.34 low, but the momentum of the rally off that low hasn't been very impressive. We just don't get the sense that the metals will rally much, off the concerns that the coalition forces will encounter heavier than expected resistance around Baghdad. In fact, if the war looks to drag out a week or two, we suspect that deflation and recession will begin to provide an undertow. The weekly COT report showed the small spec and fund position in silver to be 35,000 contracts but since the market dropped an additional 10 cents since the report was measured the net spec long position might now be below 30,000 contracts. In other words, the silver market is much closer to being technically balanced than many might have realized. If the war ends quickly, without significant additional damage to the world economy, we think silver can respect the October lows. Critical pivot point in May silver remains 440 and the market will have to close above that level to alter existing bearish sentiment. PLATINUM: It is unclear whether platinum will have to continue to slide, as April chart support is still another $4 below the opening peg this morning. We continue to think that platinum is a physical demand driven commodity and is not being driven by flight to quality. Therefore, prices might slide until the war is over and equity prices are consistently on the rise. --------------------------------------------- lunedì 24 marzo 2003 -- THE HIGHTOWER REPORT MORNING FOREIGN EXCHANGE COMMENT DOLLAR: What the market put in place last week begins to come back out early this week. While the progress of the war coming is generally what was expected by coalition officials we have to think that the market had a different opinion. We think that the market was expecting the war to end over the weekend, with mass surrenders and subsequently the trade has temporarily changed its opinion toward the Dollar. With US economic stats worsening significantly and the worst stage of the war directly ahead, the Dollar could come under very heavy attack. Furthermore, we suspect that anti war demonstrations will reach a zenith in the coming two days. In fact, the US will never get credit for putting its soldiers in harms way just to reduce civilian losses in Iraq. Iraq in turn will use any method to repel coalition forces including human shields, fake surrenders and who knows what else. In short, the UK and US are now set to suffer every public relations setback conceivable. Therefore, we expect the Dollar to slide to 100.95 and possibly to 100.51 if the war isn't effectively wrapped up by the opening Wednesday. EURO: We are not sure why the Euro is seen as a flight to quality instrument, as their economy looks to take the same hit as the US. In any regard, the Euro is at least temporarily seen as a flight to quality instrument. The coming 24 hours is a moment of truth for the Euro bulls, as seeing two closes back above 106.37 could effectively discourage the liquidation pattern entrenched last week. YEN: The flight to quality status of the Yen is back in play today, as the world might want to get as far away from the political wrangling as possible. Furthermore, the world might also want to see the solitude of the Pacific Rim as opposed to North America and Europe, which are in the political cauldron. Near term upside targeting is seen at 83.47. SWISS: Initially we are not seeing the type of buying in the Swiss as one would expect to see in the face of the Dollar slide overnight. In fact, the Swiss is really disappointing considering the news and the potential ugliness for the coming two days. We expect a minor bounce to 72.70 and then a major decision will have to be made. POUND: The Pound appears to have shed its surprise selling pressure seen for most of last week. However, massive overhead resistance around 156.90 could restrain the gains today. CANADIAN: The flight to quality tilt is back on in the Canadian and we suspect that a run back to the March highs is very possible in the coming two days. The Canadian needs to stay above 66.89 to present an aggressive bull posture. --------------------------------------------- lunedì 24 marzo 2003 -- THE HIGHTOWER REPORT MORNING FINANCIAL COMMENT Without even measuring the ebb and flow of war sentiment we can look at the cover of the Wall Street Journal see rational for higher bond prices today. Last week the market was aware of the deterioration in the macro economic condition of the economy but that was discounted because sentiment suggested that the war could be over by the opening today. Now it would seem that the battle will extend at least through the coming week, with the most difficult portion of the attack still to come. Certainly, weak macro economic numbers support bond prices but against a back drop of war casualties, its understandable that consumer and investing sentiment deteriorates. In fact, the worst fears on the US airline industry look to come to fruition in the coming weeks while the retail sector might not see things get as bad as many anticipated. Therefore, we suspect that June bonds will mount a rally to 111-19, while June Notes might see a recovery to 114-09. While the tide of the war could regain the optimistic pace seen in the initial days we suspect that the next 48 hours will bring about fear, anxiety and long interest in the fixed income markets. In reality, the regularly scheduled economic numbers probably won't be the issue driving prices, as anecdotal headlines look to take precedence. In other words, Sears's layoffs and the forecasts of another $10 billion loss by US airlines look to dominate the market instead of reports like existing home sales. Don't get us wrong, the home sales numbers will probably be supportive to bonds but that type of information looks to be a background issue in the coming three sessions. Unless something surprising happens, we seriously doubt that June bonds will slide below 110-00 (Notes below 112-28). If the war begins to go really bad, energy prices explode again, or a US confidence shocks unfolds, one shouldn't be surprised to see the Fed act between meetings and that could catch the market by surprise and drive prices back to the mid March levels of 112-28 in June bonds and to 114-24 in June Notes. ---------------------------------------------

venerdì 21 marzo 2003 -- THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS ENERGY:3/21 OVERNIGHT CHG to 4:15 AM :CRUDE -42 ,HEAT-84 ,UNGA-179 The energy complex found only fleeting support around the lows Thursday, which could mean additional losses today. We also have to think that the technical oversold condition of the market is fairly overdone, especially given the magnitude of the losses seen in such a short period of time. In fact, since the March high, crude oil has already declined $9 a barrel. We would have thought that OPEC would react with some type of supportive production dialogue but overnight they didn?t even feel the need to call a special meeting and instead was trying to comfort the market by suggesting that the world had enough oil and there was no reason to meet. In other words, OPEC has yet to begin hinting at a roll back of past production cuts. An issue that wasn't given much attention Thursday was reports of significant ethnic fighting in Nigeria. Significant violence in Nigeria has already caused some oil facilities to be shut down and that could become a critical issue now that Iraqi production is out of commission. Nigeria has a very large Muslim population and apparently some fighters were asking to be flown to Iraq to help Iraq fight against the coalition. Therefore, one should not discount the potential for a protracted problem in Nigeria. The trade will also be focused on the number of Iraqi wells thought to be burning, as it became clear last night that the number of wells on fire was expanding rapidly. In other words, the Iraqi leadership has apparently ordered its forces to destroy the wells and they were following through on those orders. In conclusion, the energy complex will have see confirmation of a large number of wells on fire in order to spark much of a sustained recovery rally. Thus far it would not seem like the well fires have any bullish impact on prices. We thought that the lows forged Thursday, might hold but if it appears that the Iraqi army is preparing to throw in the towel, the trade could expect repair work on the wells to get under way quicker than many would have expected. Therefore, the next downside target in crude is the early December consolidation of $26.66. We would now be very surprised to see May crude oil manage a bounce back to $30.00 but a rally to that level would certainly be a sell. Those with significant put profits should at least old another session just to see if the coalition can't close the book quickly. NATURAL GAS: Some might suggest that the coiling pattern in the natural gas market is positive because natural gas is holding together in the face of significant declines in the regular energy complex. However, because the weekly inventory report showed a bigger draw than expected the natural gas attempted to rally along with the crude oil when it became clear that Iraq was torching its oil wells. Temps Thursday ended up coming in much warmer than expected and that should really pinch demand readings for the current week. We continue to think that May natural gas prices could easily fall to $4.73 but we suspect that the market might find initial support at $5.09 before it falls to the lower targeting of $4.73 is seen. US weather continues to track warmer on the normal seasonal pattern and that is just another minor negative in a market attempting to hold at expensive levels. --------------------------------------------- venerdì 21 marzo 2003 -- THE HIGHTOWER REPORT MORNING STOCK COMMENT CHANGE to 4:15 AM:S&P+520 DOW +48 NIKKEI CLOSED FTSE +79 With the early rumor mill focusing on the theory that the Iraqi army is not being directed by its leadership, the trade appears to be factoring a quick end to the war. In other words, the market is acting on the theory that Saddam was injured or killed in the initial attack. Apparently, US intelligence is not picking up much in the way of directive communications from Baghdad and perhaps an even more telling sign, is that Iraqi troop movements show almost no organized motivation. In other words, the head of the snake may have been cut off and the war might come to an end over the weekend. In other words, the bull camp might be motivated today by a fear that they will miss out on a significant euphoria event, if they are not long for the weekend. Certainly, the increased terrorist threat is a drag on investor and consumer sentiment but a quick end to the war is something that won't be ignored. The question becomes, will the euphoria be significant enough to insure a sea change in economic sentiment? In the near term, one simply can stand against the bullish tide. With crude oil prices possible set to end the week a full $10 a barrel below the March highs, retail energy prices could begin to put more disposable income back into the hands of the consumer in the coming weeks. To really go hard to the upside, we need hints that Saddam has perished, or a true sense that the war is coming rapidly to an end. DOW: Considering that the Dow easily plowed through the bull/bear line of 8250, it would seem that the market is on a mission to retest the January highs above 8800. Pre-weekend buying might reach a fever pitch, if the market sees evidence that the "Shock and Awe" portion of the Iraqi attack won't be needed. S&P 500: As we suggested yesterday, the June S&P looks to make the 875 level a support zone instead of a resistance zone. Furthermore, we now expect the June S&P to rise toward the January high of 933.50. Temporary resistance might be encountered at 900 and near term support should be respected down around the 868 level. We might also peg interim support at an old gap area of 875 to 872. One warning, if the trade were to adjust this afternoons COT reading for the action since the report was calculated, the net spec long position in the S&P might be above well 100,000 contracts and that is an extensively overbought condition! --------------------------------------------- venerdì 21 marzo 2003 -- THE HIGHTOWER REPORT MORNING METALS COMMENT METALS:3/21 OVERNIGHT CHANGE to 4:15 AM :GLD-0.20 ,SLV+1.0 ,PLAT+6.60,CP +25 London Gold Fix $332.55 -$2.95 LME Copper Warehouse stks 827,425 ton -600 tns Comex Gold stocks 2.335 ml Unchanged COMEX Silver stks 109.1 ml oz +425,641 oz OVERNIGHT:Gold managed to rise in Pacific Rim action but only on short covering. GOLD: With June gold almost ready to breakout to the downside again it would seem that the war is just not going to reverse negative sentiment. It would also seem like the platinum and silver are getting more long interest off the war than is gold. Failing to hold the overnight low of 332.7 would be pretty damaging especially considering it is the end of the week and potentially the end of the war. Furthermore with a significant small spec and fund long hanging on by a thread, we would not be surprised to see a capital, margin or stop loss selling liquidation unfold. So far the war has come off with minimal financial market anxiety and that highlights the lack of flight to quality interest in gold. Even with reports that up to 30 oil wells and an Iraqi refinery are ablaze, the gold market hasn?t been able to feed off anxiety. In fact, OPEC doesn?t even feel the need for a special meeting, which means that gold as a flight to quality instrument is really hurting. As we suggested yesterday, June gold might have to fall deeper into the $330 to $310 range just to balance the market technically and forge a solid fundamental bottom. In order to turn the market bullish, it would take an impressive recovery back above $337.6. SILVER: While May silver might have rejected the trade below $4.40, the pattern of lower lows looks to prevail. However, we see no reason for May silver to fall all the way down to the October 10th low of $4.32, unless the world economy somehow flips into back a deflationary spiral. In the mean time, silver might have to forge an extended consolidation pattern just to discourage the bear camp. In order to turn sentiment back up, the May silver would probably have to climb back above $4.47. PLATINUM: The platinum market appears to be getting some week ending profit taking but we would suspect that platinum would be the first metals market to begin to stabilize, off the idea of better economic conditions following the war. In fact, if the trade thinks the war might come to a conclusion over the weekend that could mean that platinum anticipates a bottom. Fresh longs in April platinum might have to risk positions to least $647. Trend line support in April platinum comes in at $651. #METALS: GOLD & SILVER PLAYERS MIGHT HAVE TO CONSIDER A WEEKEND WAR CONCLUSION COPPER: The May copper would seem to have consolidation support at 76.30 today. However, Chinese copper prices were weak and Shanghai copper stocks were down only 2,946 tons to 80,886 tons. In other words, the Asian copper market didn?t give the US market much incentive to rally today. In order for copper to rise toward this week?s highs, there will have to be evidence that the war is coming to a conclusion in the near term. With expectations for today?s US economic report calling for weak readings, copper will need to get positive leadership from the equities in order to venture toward the top of the recent consolidation. We peg support at 76.20 and critical resistance up at 78.00. The bias in copper is up but the trade wants more specifics on when war will end. PRECIOUS METALS TECHNICAL OUTLOOK #P-METALS 3/21/03: SILVER (JUL): The market tilt is slightly negative with the close under the pivot. Initial support for silver is at 439.9 and below there at 437.2 with resistance likely at 443.8 and 445.9. A negative signal for trend short-term was given on a close under the 9-bar moving average. Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The next downside objective is 437.2. The market is approaching over sold levels on an RSI reading under 30. GOLD (JUN): Support for gold today comes in near 329.80, while resistance is pegged at 340.20. Momentum studies are still bearish, but are now at oversold levels and will tend to support reversal action if it occurs. The next downside target is now at 329.80. The market setup is somewhat negative with the close under the 1st swing support. The close below the 9-day moving average is a negative short-term indicator for trend. Some caution in pressing the downside is warranted with the RSI under 30. --------------------------------------------- venerdì 21 marzo 2003 -- THE HIGHTOWER REPORT MORNING FOREIGN EXCHANGE COMMENT FOREX:3/21 OVERNIGHT CHANGE to 4:15 AM:$ +20 ,YEN-18 ,SF-20 ,CA-7 EU-21 DOLLAR: The progress of the war is providing the Dollar with buying interest but so far the justification of the war hasn?t been a major issue. The fact that Iraq fired even longer range scud missiles into Kuwait overnight shows that they in fact were hiding illegal weapons but for the big Dollar boost the possession of chemical or biological weapons must be proved. Fortunately for Dollar bulls, the war has taken the focus away from US economic reports, which have been extremely soft. However, the trade seems to think that all economic reports are old news if the war ends and consumer sentiment improves dramatically. In our opinion for the Dollar to rise above the last two months consolidation, we might need to see a strong chance that the war will end over the weekend. To rise to an even higher trading range and end to the war and proof of illegal weapons might be necessary. In other words, for the Dollar to transition into an uptrend pattern the US has to fully satisfy the pundits with respect to the Iraqi weapons threat! EURO: Keep in mind, just how much flight to quality pricing was factored into the Euro over the last three months. A number of markets like crude oil, bonds and gold are returning to December and January consolidation levels and that time and price zone was the kick off for final wave of flight to quality buying. In other words, to extract a moderate portion of flight to quality value, the June euro might have to slide all the way down to 103.03. YEN: It is painfully clear that the Yen is extracting its flight to quality windfall of the last two months. One should also note that the BOJ wants the Yen to fall in order to protect export markets. Near term support in the Yen is seen at 82.47. SWISS: The next downside targeting in the Swiss is seen at 71.27, which is the January low. Unless the war takes an unexpected turn, the Swiss looks to continue to slide in the coming sessions. POUND: So far, the Pound hasn?t seen the vindication that the Dollar has. We would suspect that the Pound will respect recent consolidation lows of 155.10 and could manage a rise back into the late February consolidation in the event that the war is expected to come to an end over the weekend. Therefore we expect a bounce in the Pound to 156.36. CANADIAN: So far the Canadian has managed to hold chart support and consolidate, which is a good sign that the Canadian rally wasn?t only about flight to quality. In our opinion, seeing the Canadian close above 66.97 confirms that the bull trend will remain intact. CURRENCY TECHNICAL OUTLOOK #CURRENCIES 3/21/03: YEN (JUN): A negative signal for trend short-term was given on a close under the 9-bar moving average. The market tilt is slightly negative with the close under the pivot. Swing resistance is targeted at 83.58 and above there at 83.86, with the yen finding support around 83.14 and below there at 82.98. The market back below the 40-day moving average suggests the longer-term trend could be turning down. Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The next downside objective is 82.98. The market is approaching over sold levels on an RSI reading under 30. EURO (JUN): Momentum studies are still bearish, but are now at oversold levels and will tend to support reversal action if it occurs. The next downside target is now at 1.0503. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Swing support for the Euro comes in at 1.0503, with overhead resistance at 1.0677. The close below the 9-day moving average is a negative short-term indicator for trend. The close below the 40-day moving average is an indication the longer-term trend is down. More selling pressure is likely given yesterday's gap lower price action on the day session chart. --------------------------------------------- venerdì 21 marzo 2003 -- THE HIGHTOWER REPORT MORNING FINANCIAL COMMENT FINANCIALS:3/21 OVERNIGHT CHANGE to 4:15 AM :BONDS +2 While the Treasury market has periodically showed some buying interest off the idea that the war might go slower than expected, this morning that sentiment has been reversed. In other words, the bonds have to be concerned that the war might come to a quick end. Seeing the war end would certainly remove a significant amount of geopolitical headwinds and increase the odds of economic recovery. Considering the damaging chart action this week, one might not expect the Treasuries to halt their slide until the late January consolidation pattern is probed. One should note that a number of markets, (crude oil & gold) appear to be headed back to levels seen in December and January. Therefore, the early January price levels in the Treasuries might be a target because the gains in many financial markets from those levels seemed to come primarily off the flight to quality theme. In other words, the actual evidence of a slowing economy had only a moderate bullish impact on fixed income prices since January. Therefore, the build up to war and the delay in resolving the crisis contributed significantly to the bull case. If the flight to quality theme fueled the buyers and not weak economics then the bonds can continue to slide even in the face of weak economics. Therefore, the Treasuries are simply extracting flight to quality premium. However, the markets might also be correct in factoring a slightly more favorable forward looking economic outlook if the war issue is put to rest and that could mean even more selling. It is also possible that the fixed income markets get another bearish shot this morning from the CPI report, as inflation is showing signs of gathering momentum. We might add that inflation readings are showing these hot readings in the face of very soft economic reports. Therefore, one has to wonder what happens to inflation readings, if recovery is given a significant boost by a quick end to the war. In conclusion, we have think that June bonds have a near term target of 110-03 (Notes 112-16) but the market could easily remove the majority of flight to quality pricing, with a decline to 108-00 and to 110-25 in the June Notes. In order to get below the 110-00 consolidation level in bonds and the 112-07 level in Notes, there will have to be a notable improvement in the forward look on the economy. If the CPI were to come in above +0.7%, that could really feed inflation talk. However, inflation will only become a key issue if the war story begins to fade into the background. ---------------------------------------------

mercoledì 19 marzo 2003 -- THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS ENERGY:3/19 OVERNIGHT CHG to 4:15 AM :CRUDE -4 ,HEAT+35 ,UNGA+66 The bear camp didn't seem to be daunted Tuesday by the prospect that the Iraqi wells could be destroyed in the coming attack, or by the potential that US supplies might show signs of expanding in the inventory reports today. The Iraqi oil for aid oil shipment flow should begin to taper off now, as the US shuts down and closes shipping access. Apparently, the market is bearish enough to look through the uncertainty of the initial attack and isn't entirely concerned about the previously feared "year-long" loss of Iraqi production. A private brokerage house report suggests that Iraq had indeed wired their wells to explode in the case of an attack with that same report suggesting that Iraq had removed the safety values from the wells in question. The "year-long" loss of Iraq production came from private forecasts that probably assumed the same outcome as was seen after the initial Gulf war experience. In the current case we suspect that many of the Southern wells might be in the hands of the allies (on fire or not on fire) within the next week! The US has already established contracts with companies to repair the wells and the necessary equipment is apparently being moved into position. We would not be surprised to see US crude stocks rise, while US product stocks declined further, as the effect of the February 1st OPEC production hike is finally seen in the supply chain. It might also be possible to see the effects of the Venezuelan production recovery even though the National Oil Company from Venezuela suggested that it might take until the end of March before its gasoline stocks show up in the US. In the end result, the bull camp might find it difficult to countervail a notably negative reading from US inventories but with US officials suggesting that no SPR supply will be unless some a supply disruption is seen, could mean that SPR oil won't automatically flow in the event of an attack! In other words, the release of the SPR isn't guaranteed and that takes some downward pressure off the market. We have not heard the position of the IEA but we would assume that they will be the last to release their reserves and only if there is skyrocketing price action. We would have to advise any entity holding excess supplies, to aggressively dump those supplies, as energy prices out into the future might be much cheaper than where oil is currently trading. We are a little concerned that seeing Turkey change its mind, (to allow the US to enter Iraq through their country or to use their airspace), might stall the kick off to the war into next week as the US might want to reposition forces to compensate for any new found advantage. We also see the potential to delay the start of the war due to extremely poor weather in the region. Many cash markets are beginning to see reduced activity, as many players are covered up for near term needs and are of those players are concerned that they might have paid too much for that coverage. Considering that the current tightness in crude and energy stocks might have been exaggerated over the last year, by the buildup of buffer stocks, we can fully understand OPEC fears of significantly lower energy prices in the months ahead. Therefore, until nearby crude oil prices slide back below $28, we will assume that prices are still carrying a war premium. However, until the war is launched and the condition of the Iraqi wells is known, it is possible that the energy market manages to hold some of that war premium. Sell any coming rallies by buying puts API & DOE Crude Oil Stks Est +1 to +3 ml ml bls Actual chge due out at 8:30 cst API & DOE Distillate Stks Est -2 ml to -1 ml bls Actual chge due out at 8:30 cst API & DOE Gasoline Stks Est -2 ml to -3 ml bls Actual change due out at 8:30 cst API & DOE Refinery Operating Rate Est +.6% Prev API 89.5% Prev DOE 90.8% NATURAL GAS: Slightly colder weather in the US and a possible pause in the aggressive selling action in the regular energy complex, could mean a weak bounce in the natural gas market. In fact, as long as May natural gas manages to consolidate above $5.19, the bears might be uncomfortable attacking this market. Furthermore, as the 48-hour window passes today, it could become even more difficult for the sellers to attack natural gas. In the event that the US begins to attack tonight, it might be possible to see the May contract rally up to $5.85 and possibly even crawl back into the late February consolidation pattern bound by $5.85 and $6.25. Unfortunately for the bull camp, the upcoming inventory report will probably not stir long interest, as the recent warm weather should really have cut down demand. Aggressive traders should buy puts on the coming rally. --------------------------------------------- mercoledì 19 marzo 2003 -- THE HIGHTOWER REPORT MORNING STOCK COMMENT It seemed like the progression toward war might stall yesterday when it appeared that the Turkish government might allow US troops to access Iraq through Turkey. Seeing the Northern attack corridor open to ground troops could have delayed the start of the war as the US would have changed the set battle plan at the last minute. Some traders were also concerned that political developments in the UK could remove the UK at the last minute and that would have made the war seem a lot more daunting and costly to the US. With less than 12 hours left in the ultimatum, it would seem as if the Allies and Iraq are both making final military moves that insure a start to the war. The US has apparently moved forces into the demilitarized zone between Kuwait and Iraq. Furthermore, Iraq is moving surface-to-surface missiles toward US positions. Therefore, one can expect fighting soon! The fact that France suggested yesterday that they would enter the war in the event that Chemical or Biological weapons were used by Iraq gives the US a renewed sense of "coalition" and we suspect that the use of banned weapons will be seen early if Iraq has such weapons. Considering the price action early this morning the stock market is still in a posture to rise off the prospect of war. Considering the extremely weak US housing starts reading from the US this week, the US economy simply can't stand much longer under the cloud of uncertainty. Therefore, the market cheers the war and will forge even more gains if the battle goes somewhat according to plan. DOW: The upward tilt in prices continues to exist, with the June Dow approaching a critical pivot point of 8250. In fact, one might suggest that the 8250 level is a long term bull/bear line as the market only fell below that level (back in January) when it became clear that Iraq hadn't satisfied UN requirements for the 1441 filing. Considering the massive since last week, the Dow doesn't have much in the way of close-in support on the charts. In fact, technical support in the June Dow isn't seen until 8083. S&P 500: There is very little focus on profits, sales and fundamentals in the current market mix, as the market is rushing to factor a quick and decisive end to the war. However, we would assume that the June S&P will quickly correct to 851, if the attack becomes mired by weather or fails to start because of political developments. A near term critical pivot point is seen in the June S&P in at 875. The 875 level happens to be the level that failed in January, when Iraq was found to be in material breech of the UN resolution. The path of least resistance is up, but risk and reward requirements make chasing the market less attractive. We do suspect that prices will setback and then recover on the realization that Iraq is using chemical weapons as that would in many ways justify the unpopular US decision to attack Iraq! --------------------------------------------- mercoledì 19 marzo 2003 -- THE HIGHTOWER REPORT MORNING METALS COMMENT METALS:3/19 OVERNIGHT CHANGE to 4:15 AM:GLD+0.80 ,SLV+2.7 ,PLAT-0.70 London Gold Fix $339.00 -$5.90 LME Copper Warehouse stks 829,675 ton -1,375 tns Comex Gold stocks 2.335 ml -3,511 oz COMEX Silver stks 108.7 ml oz Unchanged OVERNIGHT: Minor long interest in Asia as the proximity of war means little. GOLD: While gold attempted a comeback rally yesterday and is showing positive direction overnight, there is by no means a frenzy to buy gold. Maybe the trade is a little put off by the fact that the stock market and energy complex are signaling a quick end to the war, or maybe buyers are waiting for the hostilities to start. We have to think that some buyers Tuesday were hoping that the Fed would cut interest rates, which in turn could lead to inflation if the war was quick and decisive. After all, a significant amount of stimulus was applied to the world economy and the only way to shift from a deflationary theme to an inflationary theme, is to get the world economy into an expansion mode. Considering how CPI and PPI readings have expanded in the face of slack employment and activity readings we truly think there is a real chance of inflation. However, in order to ignite the bull market in gold off inflation, we have to change market focus and clear the war completely and without significant damage to consumer sentiment. A raging sand storm in southern Iraq might delay the start of a ground war and that could keep some would be gold buyers on the sidelines for another day. The pattern of higher closes suggests that June gold might drift up to resistance $343.1, with support seen at $335.1. Forced to be in position, we would be long but realizing that a break to $330 could be seen before gold shifts back into a physical demand driven commodity market. In other words, instead of a negative correlation to the stock market, we think that gold will have to develop a positive correlation with the stock market. SILVER: Considering the low of $4.445 in the May contract this week, we suspect that silver has mostly extracted its war premium. Like gold, the silver will have to transition from a flight to quality investment, to a physical demand driven commodity. In the near term, one can hardly get excited about the physical demand posture of silver, especially since many traders think that even a quick war will slow the economy somewhat. In order to be long silver, through the transition period, one might have to risk the position to $4.34. Near term resistance is seen at $4.50 and that comes off the early February spike low. PLATINUM: A strong attempt to rally overnight was rejected and some technical damage was logged on the charts. Like gold, platinum is not getting the anticipated lift from the proximity of the war and disappointed longs are bailing out. First downside target in the April is $665. COPPER: The copper market is sitting just above the mid point of the weeks trading range and that is impressive considering the pace of economic readings this week and the potential for hostilities soon. Chinese copper prices were down overnight and it appeared that Chinese traders were easily prompted to bank profits from buys made last week. In other words, the trade seems to have temporarily lost a bull catalyst. The May copper could easily slide to 75.40 without damaging the charts. Near term resistance is seen at 77.10 basis the May contract. We have to think that copper will continue to correlate with equities and that could mean a quick end to the war is needed to return to the Feb highs. --------------------------------------------- mercoledì 19 marzo 2003 -- THE HIGHTOWER REPORT MORNING FOREIGN EXCHANGE COMMENT DOLLAR: Now that the war is close at hand, the longs in the Dollar are becoming less convinced of their positions. There is also a story circulating that the US might have bugged EU offices and that could certainly stall the rally in the Dollar. Make no mistake about it the market is fully expecting the war to start soon and for the outcome of the war to be known before the end of the week. The fact that Turkey will only vote on the use of its airspace, is also a minor negative to the Dollar. In other words, some traders were hoping that Turkey would allow the US to deploy through their country at the last minute. Recent US economic numbers were very weak and the US Fed decided to hold steady on rates and that is also a slight undermine of the US Dollar. However, there is no accounting for the continued long-term technical short covering influences n the Dollar. We would not be surprised to see the Dollar correct below 101.00 basis the June contract, especially if Iraq uses chemical weapons or weather delays the start of the war. EURO: We expect the Euro to pause the slide seen over the last few weeks, as the market will wait to see how the war unfolds. European opposition might quickly end if Iraq is found to be using banned weapons against attacking forces. Critical support in the June Euro comes in at 105.00 but a failure to 102.60 could be possible if it becomes clear that a quick victory is at hand. Near term resistance is seen at 106.16. YEN: A critical pivot point is seen at 84.00 and it would appear that the start to the war might push the Yen below that support. Overnight the Japanese stock market was concerned about how much the government would be able to do to support equities prices. In fact, the government suggested that they could not fully support the stock market artificially. Therefore, we see the Yen as vulnerable. SWISS: One can hardly expect the Swiss to ignore the potential for flight to quality buying. While the Swiss violated critical support at 72.00 it did manage to recover and may try to stay positive for the next 24 hours. Critical resistance is seen at 72.75. POUND: The political battle in the UK is causing a wholesale liquidation and we suspect that a decline to 152.50 is underway. The Blair government is seeing key resignations and that is a direct undermine for the Pound. CANADIAN: In the initial hours it would seem like the Canadian is going to slide toward support of 66.86 but we doubt that the Canadian will slide below that level. The Canadian economy continues to post the best numbers in the G7 but one can't forecast the ebb and flow of flight to quality trading sentiment for at least the coming 48 hours. + #CURRENCIES: NO CLEAR CUT DIRECTION SEEN BUT THE DOLLAR HAS A BULLISH TILT * CURRENCY TECHNICAL OUTLOOK #CURRENCIES 3/19/03: YEN (JUN): A negative signal for trend short-term was given on a close under the 9-bar moving average. The gap lower on the day session chart is bearish and puts the market on the defensive. The market tilt is slightly negative with the close under the pivot. Swing resistance is targeted at 84.52 and above there at 84.62, with the yen finding support around 84.27 and below there at 84.12. The market back below the 40-day moving average suggests the longer-term trend could be turning down. Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The next downside objective is 84.12. EURO (JUN): Momentum studies are still bearish, but are now at oversold levels and will tend to support reversal action if it occurs. The next downside target is now at 1.0537. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Swing support for the Euro comes in at 1.0537, with overhead resistance at 1.0641. The downside crossover of the 9 & 18 bar moving average is a negative signal. The close below the 40-day moving average is an indication the longer-term trend is down. Some caution in pressing the downside is warranted with the RSI under 30. More selling pressure is likely given yesterday's gap lower price action on the day session chart. --------------------------------------------- mercoledì 19 marzo 2003 -- THE HIGHTOWER REPORT MORNING FINANCIAL COMMENT FINANCIALS:3/19 OVERNIGHT CHANGE to 4:15 AM :BONDS -6 The bonds continued to fail in the overnight action and that comes because the trade continues to look through the war and to a long-term economic recovery. We also have to think that technical considerations have a great deal to do with the weakness in bonds, as there was significant volume and open interest thrown at the long side of bonds in the 111-26 to 112-10 zone in late February and those longs were forced from position this week. The fact that Iraq is moving surface-tosurface missiles into an attack position, means that the war is probably unavoidable. Apparently, German and French diplomats will address the UN today, in what many think will be a protest of the allied attack. The fact that the Blair government could be collapsing (several cabinet members resigned) could increase the selling pressure on US Treasuries, as seeing the UK pulled from the equation, at the last minute, would mean that the US will carry the brunt of the war costs. Considering that bonds almost totally ignored a rather significant decline in US housing starts clearly shows that Treasuries are not concerned with scheduled numbers. The fact that the Fed decided to leave rates steady is of little significance, as the Fed suggested they wanted to see how the economy reacted to the war before they altered their stance. The trade suggested that an inter-meeting cut would be possible, if the Fed detected a severe confidence loss in the face of the war. In the mean time, the bonds seem content to play for a long term top but we have to think that the actual start to the war will discourage aggressively selling, especially with the bonds already 4 full points below the March high. In other words, the initial fog of war might be a temporary bullish factor but if the attack shows a controlled progression without surprises, bonds and Notes will quickly resume their slide toward an ultimate downside target of 110-00 in bonds and 112-00 in the Notes. ---------------------------------------------

martedì 18 marzo 2003 ENERGY MARKET COMMENT & STATS * HIGHTOWER NEWS ENERGY:3/18 OVERNIGHT CHG to 4:15 AM:CRUDE -252 ,HEAT-602 ,UNGA-661 While the energy complex started the week out significantly weak it did manage to level out some of the losses. Since it would appear that the UN is pulling out inspectors and humanitarian workers and that means that oil for food shipments will be stopped. At last count Iraqi exports were 1.7 million barrels per day and most of that was destined for the US, which means that some pinch in supply could be noticed in the coming weeks. Supposedly the US-SPR was poised to "flow", which means that some reserve supply will find its way to the market quickly in the event that an attack is initiated. Keep in mind, that OPEC has suggested they would increase production in the face of a war, while the IEA has also indicated that they would release their reserves in the event of an attack. Therefore, there would seem to be plenty of reserve flow potential but the question becomes just how psychologically "flipped out" the trade will be in the early stages of a attack. At this stage with crude making new lows it would not seem like the trade is "flipped out" at all and that could mean that the actual war means nothing but a temporary flare in prices. While some might suggest that the destruction of Iraqi wells is a crucial issue we beg to differ. If the Iraqi defense is to pull most of its forces back to Baghdad then the southern oil wells will be captured quickly and can be extinguished and primed for repair. Therefore, the big bull market in energies is over with the exception of one last fleeting gasp that will be seen (or not seen) before the end of the week! Even the US weather continues to moderate but that will probably not be a significant impact in the grand scheme of the coming sessions. The Midwest is expected to see warm temps in the 6 to 10 day forecast and that simply takes some of the upside momentum out of play. The President suggested that Saddam had 2 days to leave the country, or be taken by force and that would set up a weekend air bombardment and maybe a ground assault by Friday. In the end, we think that prices will only mount a minor flare on the onset of the war. However, psychologically the market could try an interday rally in the event that the wells are torched. We continue to advise being long a June crude and long 3 June crude 27 puts. In the event of a $2-$3 crude rally, exit the futures and assume the premium risk of the long puts. NATURAL GAS: Traders rolling from the April to the May contract have a critical decision to make, as the market would appear to be slightly undermined and moderately overbought coming into the end of the heating season. A normal retracement off the February high, to March low, should allow for a recovery to 5.89, but a failure below 5.26 might signal a critical chart failure. The warmer than normal temperature forecast is somewhat discounted because the fear of war but without the fear of war, natural gas prices might be threatening a major downside breakout. Risk control is paramount and right now we strongly advocate a long June natural gas futures and a long 3 June natural gas 4.80 put spread. In the event of a pre-war rally, look to take a 400-point profit on the futures, leaving the long puts on long-term. --------------------------------------------- martedì 18 marzo 2003 MORNING SOYBEAN COMPLEX COMMENT & STATS * HIGHTOWER NEWS NEAR-TERM OUTLOOK: If there is a significant move due to Iraq war situation, the move looks to be down as speculators might decide to move to the sidelines due to the uncertainties ahead. Keep in mind, speculators hold a hefty net long positioning both soybeans and meal. Taiwan passed on a tender for 56,000 tons of soybeans from the US or South America due to high prices. There are rumors this morning that China officials have still not approved the proper documents to bring in Brazil new crop production. There is talk that this is yet another strategy to limit the imports of soybeans this year with rumors of 12 million tons. With near 16 million tons already booked, this estimate seems too low. While directly or indirectly limiting the soybean imports, China continues to book oil with talk of another 30,000 tons done last week. With recent softness in poultry prices and exports, Thailand meal demand appears weak at the same time that China, US, Brazil and Argentina meal is available on the world market. Look for the movement of oil gaining on meal like yesterday to continue over the near-term. Palm oil was 11 lower in overnight trade. RECAP: Soybean export inspections were 20 million bushels against expectations of 25 to 30 million bushels so it goes without saying that the trade was disappointed. Even the soybean crush was judged to be negative by the CBOT even though the tally was slightly above the range of expectations. Maybe the trade centered on the idea that the total was down 13 million bushels from last year. The expectations for the crush were 123.5 to 124 million bushels with the actual reading coming at 125.089 million bushels. With almost perfect harvest weather in South America and increased rain due in the US growing belt Tuesday and Wednesday weather is very bearish. Finally add in the desire to sell grains off the coming threat of war and you have fairly conclusively negative condition. CASH NEWS AND TENDERS: Taiwan passed on a tender for 56,000 tons of soybeans from the US or South America due to high prices. Basis levels were steady to higher. WEATHER: There is excellent weather ahead for harvest in Argentina into the weekend with scattered rains in Brazil which will not slow harvest much. FUNDAMENTAL FOCUS: The major fundamental factors over the short-term look bearish and with much demand uncertainty and rains in the Midwest in the next few days, sellers look active. PRICE OUTLOOK: May soybean Oil support is back at 20.60 with 21.45 as upside objective. May meal selling resistance is now at 172.90 with 168.90 as next downside objective. May soybeans still look poised for a downside correction with selling resistance near 569 1/2 and downside support levels at 562 1/2 and 552. BEAN COMPLEX TECHNICAL OUTLOOK #SOYBEANS (MAY) 03/18/03: The close below the 2nd swing support number puts the market on the defensive. The next area of resistance is around 572 and 576 1/2, while 1st support hits today at 564 1/2 and below there at 561 1/2. The market's close above the 9-day moving average suggests the short-term trend remains positive. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 576 1/2. MEAL (MAY): The daily stochastic's gave a bearish indicator with a crossover down. The next downside objective is now at 169.2. First resistance comes in at 173.8, with support at 170.2. The market's short-term trend is negative as the close remains below the 9-day moving average. The market is in a bearish position with the close below the 2nd swing support number. The major trend is down with the cross over back below the 40-day moving average. BEAN OIL (MAY): The market's close above the 9-day moving average suggests the short-term trend remains positive. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 21.01. It is a slightly negative indicator that the close was lower than the pivot swing number. The daily closing price reversal up is positive. Daily swing resistance is found at 20.92 and above there at 21.01. Support should be encountered at 20.71 and 20.59. --------------------------------------------- martedì 18 marzo 2003 MORNING GRAIN COMMENT & STATS * HIGHTOWER NEWS NEAR-TERM OUTLOOK: Aggressive fund and speculative selling is driving the market lower as traders seem fearful of the potential for increased acreage ahead. While the supply/demand outlook for the coming year remains relatively tight, traders seem to expect record yields, poor demand and a slow down in the world economy. Taiwan bought 56,000 tons US corn for April delivery overnight which may help slow the aggressive selling from funds. Funds were noted sellers of near 14,000 contracts which brings the net short position back up to near record high with the market near the lows. The heavy rains expected for the dry western cornbelt are expected to help support improved moisture. With soybeans not far from contract highs and corn at 10-month lows, perhaps the move to more corn acres may not be as robust as feared. ASH NEWS AND TENDERS: Taiwan bought 56,000 tons of US corn at their tender for US or Argentina corn. Cash basis levels were steady. WEATHER: The short-term weather models show 1-2 inches of rain common for the Midwest in the next few days and then normal to below normal precipitation for the 6-10 day and 8-14 day forecast models. FUNDAMENTAL FOCUS: Negative attitudes continue to spin news in a bearish direction which is driving the speculative short to a record level into the spring. PRICE OUTLOOK: The next downside technical objective for May corn is at 227 1/2 and for December corn at 232 3/4. Aggressive short-term traders can buy December against support. CORN TECHNICAL OUTLOOK #CORN (MAY) 03/18/03: Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 227 . The market is in a bearish position with the close below the 2nd swing support number. Market resistance comes in at 233 1/2 today, with support at 227 . The downside crossover (9 below 18) of the moving averages suggests a developing short-term downtrend. With a reading under 30, the 9-day RSI is approaching oversold levels. ---------------------------------------------

lunedì 17 marzo 2003 THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS ENERGY:3/17 OVERNIGHT CHG to 4:15 AM :CRUDE +.40,HEAT +19,UNGA +50, NG +66 It would appear that the Atlantic Alliance (UK, US Portugal and Spain) have decided that diplomacy will only be on the table through midnight tonight. While the French and Germans are bristling with anger over the ultimatum stance, one could also expect the Atlantic Alliance to be equally put off by the apparent stance by many UN diplomats, not to even consider compromise efforts or anything that in turn pressures Saddam. The fact that France would not even consider a structured check list, means they don't want Peace. Germany for its part was rumored to have internal communications that suggested it would be best to let the US go to war alone and then have the US come back and beg the UN for post war rebuilding aide. In other words, this has become a power struggle and has almost noting to do with compliance and weapons of mass destruction. Late last week, the energy complex showed signs of caving into the idea that supplies were poised to rebuild. However, after listening to the weekend summit at the Azores, it would seem that the idea of rebuilding supplies will not be allowed to come to fruition. With the recent COT report showing crude oil to be net spec long 58,000 contracts and the market breaking aggressively after the report was measured, we have to think that the net spec long was pared down to 45,000 contracts or less. Therefore, the bull camp might have more buying fuel on the sidelines than many would have expected. While North American weather is warming slightly, little of the upward momentum will be reduced. However, if the track is decidedly toward war, the correction last week might have to be instantly put back into prices. It hasbecome clear that Venezuelan production is now close to pre-strike levels but with Iraq possibly coming out of the equation and 700,000 barrels per day to be lost from Kuwait (they suggested they would idle some production during the onslaught of war to protect those facilities) the world energy situation is expected to tighten back up again. One will be able to tell quickly today if hard line anti war postures at the UN are softening in the early dialogue and one will also be able to tell quickly if Iraq intends to make some effort to comply. However, given the hard line stance by the antiwar crowd at the UN, and past compliance efforts by Iraq a shift away from war is not a high probability. NATURAL GAS: The COT report showed the net spec long position to be 31,000 contracts, but we have to think that the liquidation late last week, diffused the long significantly. The liquidation after the COT report comes on top of the 15,000 contract liquidation that took place in the preceding week. Therefore, natural gas has a good technical setup to rally. While temps have warmed they have not soared to significantly above normal levels and therefore war buying looks to have little offsetting weather selling. In other words, the potential for war start easily countervails normal weather forecasts in natural gas market for the early part of this week. Near term resistance in the May natural gas. --------------------------------------------- lunedì 17 marzo 2003 THE HIGHTOWER REPORT MORNING STOCK COMMENT The fact that the stock market rallied aggressively last week could mean that the market is more vulnerable to liquidation this week. We sensed that the rally last week was a signal that the market wanted the conflict to be decided, but now that hostilities are about to be launched, a number of weak handed longs are expected to exit. We would suspect that the chance of avoiding a conflict is small, with the Allies and the UN antiwar block mired in a power struggle that has little to do with Iraq. With "DIPLOMATS" suggesting last week they would not "compromise" we can understand the stance of the Atlantic Alliance (UK, US, Spain Portugal). To underscore the lack of time before a war is launched the US has formally asked the IAEA to get its inspectors out of Iraq. Therefore, the stage is set and considering the unyielding stance by all parties, the next big question is when instead of if. In the background, we could see a couple rate cut decisions this week but those will have almost no impact considering that the war dialogue will consume all consciousness. We do suspect that Iraq will make the most aggressive compliance move to date, as Saddam has always been mindful of when he has the most to gain on the public relations front. However, unless the compliance effort reveals the smoking gun the Bush Administration probably won't be turned away from war. DOW: Considering the rise last week from 7417, to the high of 7894, the June Dow is extremely vulnerable to a setback. In fact, we would expect to see a slide to at least 7648 and possibly even lower if somehow the diplomatic process makes it even harder for an attack to unfold. Throwing off the war means that we remain under the cloud of uncertainty and the economy staggers. In the best interest of the bull camp, something final needs to be decided this week, in order to hope for a major low and to avoid a return to global recession. However, keep in mind, a trade back above 7885 today in the June Dow, reverses the downtrend in effect since last November. S&P 500: The net spec long position in the COT report showed the small traders to be long 65,000 contracts and that leaves the S&P vulnerable to heavy liquidation. In fact considering the rally since the COT report was measured, the net spec long position might have reached 74,000 contracts into the close Friday. Therefore, we expect to see a correction to at least 808 before a major bottom is expected to be in place. In order to reverse the downtrend in effect since last November, the June S&P has to climb back above 844! Expect a washout but be looking for a key long term low. --------------------------------------------- lunedì 17 marzo 2003 THE HIGHTOWER REPORT MORNING METALS COMMENT METALS:3/17 OVERNIGHT CHANGE to 4:15 AM:GLD+4.40,SLV+4.70, PL +11.3 CP -.05 London Gold Fix $340.50 +$5.00 LME Copper Warehouse stks 834,250 ton -1,050 tns Comex Gold stocks 2.31 ml +21,211 oz COMEX Silver stks 108.7 ml oz -628,312 oz OVERNIGHT:The drumbeat of war rekindled the bull spirit in the Asian gold trade. GOLD: Just as the gold had several issues hindering the bull camp last week, it would appear that the bull camp this week would find multiple supports. The 24-hour ultimatum delivered by the Allies to Iraq would seem to have little chance of altering opinion at the UN. If France was really concerned about Iraqi lives they would at the last minute agree to a slight extension in the hopes that Iraq would buckle or some other peaceful solution might be found. In the end, this has become a power struggle with the Iraqi people a sideline complication. With the US asking the IAEA inspectors to leave Iraq it is clear that the Allies are prepared to stick with their ultimatum. The US has pushed too hard but France and Germany gave Iraq no reason to succumb to international law. Depending on when the President asks to address the nation (Monday night or Tuesday night) we suspect that gold has at least a couple sessions of higher action. We suspect that June gold is headed back to the $350 to $360 trading range. In the event that equity markets collapse or some severe economic shock is encountered, then June gold might be capable of returning to the $370 to $380 level. In the mean time we would only count on 1 or 2 days of $5-$6 gains in each session. The COT report showed the net spec long position to be almost 80,000 contracts, which means that gold didn't see as much liquidation as one would have expected into last Tuesday. In other words, gold could run out of buying fuel but only after an aggressive wave of buying unfolds. SILVER: Certainly silver will catch some of the pull from gold but we don't get the sense that silver will impress with massive gains. Significant overhead resistance is seen up around $4.60 to $4.73 basis the May contract. We suspect that May silver will trade $4.72 in the coming 48 hours but we doubt that the market will manage a return to the $4.80 to $4.95 level unless shots are fired. The net spec long in silver was 47,000 contracts, which is a bit longer than the trade might have been expecting. PLATINUM: The net spec long in platinum was 5,400 contracts long, as of last Tuesday, which is only a moderate long position. However, it would appear that platinum has solid support around $680, with resistance coming in up around the level $700 basis the April contract. COPPER: Early action in copper suggests that the concern over war is only a slightly negative impact. Surprisingly Asian copper prices were up overnight despite the war threat and that should give the bull camp some hope. However, we suspect that in the end, the bear camp will prevail. While we doubt that copper fall below chart support of 74.60, it would not be surprising to see the February lows retested down at 74.40. Marco economic reports look to have little impact on copper this week with the war pressuring prices and the US Fed and the ECB possibly poised to cut interest rates this week. Therefore, in the event of a shooting war, the May copper could temporarily fall below the 74.00 level. The recent COT report showed a moderately large small spec and fund position of 25,000 contracts and that means that stop loss selling is possible this week. GOLD (JUN): Support for gold today comes in near 332.15, while resistance is pegged at 342.95. Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 332.15. It is a mildly bullish indicator that the market closed over the pivot swing number. The market's short-term trend is negative as the close remains below the 9-day moving average. --------------------------------------------- lunedì 17 marzo 2003 THE HIGHTOWER REPORT MORNING FOREIGN EXCHANGE COMMENT DOLLAR: This time around the flight to quality thrust looks to be present in all the currencies against the Dollar (with the exception of the Pound). In other words, all those countries going to war are being sold. The fact that the Euro is making such a big run means that the Canadian/Yen strength against the Dollar is toned down but the overall track is that the Dollar has significant ground to give. Considering the rally in the Dollar last week, we could easily see a quick return to the gap areas of 99.26-99.00 and the other lower gap at 99.31-98.83 in the June Dollar. With the US spearheading the decision to disarm Iraq and the world expected to have a fit in the face of an attack, the selling of the Dollar could become quite severe. In fact, a concerted effort to damage the US, by the UN could take place if the diplomats decide to impose sanctions on the US for attacking. Of course given the track record of the UN the US would have roughly 12 years before a penalty was enforced. We suspect the following pattern will be seen, two major downward washouts in the Dollar to just above 98.00 and then if and when an attack is launched, we suspect a major bottom to be put in place. EURO: For the time being, the weakness in the Euro zone economy is discounted and the Euro is granted top flight to quality status. While some are concerned that the soaring value of the Euro, will hurt trade, that won't be a consideration this week. We expect the June Euro to rise toward resistance at 108.42 and then fail. YEN: The Yen is getting flight to quality flow, as the Pacific Rim is once again seen as an insulated economic area. However, we suspect that the Yen will be unable to rise above 85.82 in the coming rally wave. SWISS: If there ever were a week in which flight to quality was at a premium, it would seem to be this week. However, the Swiss might not be able to take out resistance at 74.59 unless it does so in the coming 48 hours. We would be long 1 Swiss and long a multiple amount of June Swiss puts and hope something wild happens. POUND: The Pound is being lumped into the same category as the Dollar and that won't be a good thing for at least three or four sessions. We suspect that the June Pound will slide to the February low of 156.02 and maybe lower before making a major low. CANADIAN: The Canadian would look to have a chance to make fresh contract highs early this week. As long as the backlash toward the US doesn't include UN economic sanctions the Canadian should be able to rise aggressively. --------------------------------------------- lunedì 17 marzo 2003 THE HIGHTOWER REPORT MORNING FINANCIAL COMMENT It would also seem like the Fed and the ECB might be poised to cut interest rates this week and that should simply foster the bullish tilt already in place in the bond market. We have a steady diet of economic information this week but most of that information will be secondary to the war/no war debate. In fact, most traders will assume that war is on until it can be proven that no war will be seen. We suspect that the bond market will retest the highs posted last week around 115-27 in the June contract unless the Dollar falls so hard and fast that dollar denominated investments come under excessive pressure. In other words, as long as there isn't an oppressively dark cloud over the US (sparked by threats of UN sanctions), bonds should rise in the coming three or four sessions. We do think that US economic numbers will support the bull case, but for the most part, the buying will be done off the war track and not because of the economic numbers. We suspect that the Fed might be poised to cut 25 basis points, but a move in excess of that amount would surely unnerve investors and possibly even cause a flight of capital away from US bonds and stocks. Therefore, the Fed has to be sure to walk the line between helping and hurting the overall equation. If by chance, the Fed were to hold steady, that would certainly send off a signal that the economy isn't as bad as many might think. In the coming sessions, the presence of anxiety and possibly panic could rule, expect trading ranges to be wide and for an upward bias to exist. However, there are many traders waiting to pick a long term top in bonds and having the kick off to war coming soon, means that some players are getting anxious to sell into rallies. Wait at least until Tuesday to sell bonds for long-term top plays. ---------------------------------------------

venerdì 14 marzo 2003 -- MORNING FOREIGN EXCHANGE COMMENT HIGHTOWERNEWS FOREX:3/14 OVERNIGHT CHANGE to 4:15 AM:$ +14 ,YEN +3,SF-19 ,EU-20, CA -6 DOLLAR: The Dollar continues to trade higher because there is a chance that war could be avoided, that war might be quick and successful and because long-term short players are taking profits from months of selling. While not every perspective can be satisfied, it would appear that overwhelming negativeness toward the Dollar is nowhere to be found. In our opinion, the only way that the Dollar falls back into the disdain of the world is to see the Iraqi filing satisfy the world and not be sufficient enough for the President. If the White House sees no way to withdraw from the attack mode without losing face, then the Dollar could come under renewed selling. However, it would appear that a critical bottom has been forged. If Iraq is mostly disarmed that could be the headline the Bush Administration touts. Until the June Dollar climbs above 101.24, nothing other than a recovery in a bear market has taken place. We suspect that the Dollar rise will be slowed because of the Iraqi filing, as the trade sorts out the documents. Early US numbers probably pull the Dollar back off its highs but it probably recovers from that slide. EURO: With the Germans highlighting their weak economy in their State of the Union address, some of the attractiveness of the Euro is peeled away. We also continue to see more of the war premium pulled out of the Euro, which might have had 10 points interjected since the December time frame. Aggressive traders that think the Euro up trend will resume should wait for a decline to 107.03 to get long. YEN: While the yen is showing weakness early, the economic news from Japan overnight was pretty supportive given the low economic bar being set by most countries. Japanese factory order shipments increased by 3.4% and bankruptcies were down by 7.4%. In other words, left to the numbers alone, buyers would favor the Yen. SWISS: Until proven otherwise it would seem that the trade is expecting the Iraqi situation to be solved and possibly solved peacefully. Therefore, until the Iraqi filing is shown to be a farce, the Swiss looks to slide to 73.09. POUND: The latest developments have apparently undermined the Pound as the sell off overnight projects a slide to at least 158.00. However, a slide to the 157 consolidation is possible, if the UK is forced to fall back and accept more UN diplomacy. CANADIAN: Until there is reason to return to the flight to quality mode the Canadian could be undermined. However, it would seem that support around 66.86 might be capable of holding up. If the Iraqi filing is acceptable to the UN, the Canadian could slide to 66.47 and then form a solid low. CURRENCY TECHNICAL OUTLOOK #CURRENCIES 3/14/03: YEN (JUN): A negative signal for trend short-term was given on a close under the 9-bar moving average. The gap lower on the day session chart is bearish and puts the market on the defensive. Could see some early pressure today given the market's negative setup with the close below the 2nd swing support. Swing resistance is targeted at 84.90 and above there at 85.18, with the yen finding support around 84.40 and below there at 84.18. The market back below the 40-day moving average suggests the longer-term trend could be turning down. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 84.18. EURO (JUN): Stochastics trending lower at midrange will tend to reinforce a move lower especially if support levels are taken out. The next downside target is now at 1.0684. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Swing support for the Euro comes in at 1.0684, with overhead resistance at 1.0900. The close below the 9-day moving average is a negative short-term indicator for trend. More selling pressure is likely given yesterday's gap lower price action on the day session chart. --------------------------------------------- venerdì 14 marzo 2003 THE HIGHTOWER REPORT MORNING STOCK COMMENT CHANGE to 4:15 AM:S&P+360 DOW +37 NIKKEI +134 FTSE +73 The stakes are high as the stock market is rushing to factor a solution to the Iraqi conundrum. Through war or full compliance, the stock market is suspecting that the geopolitical cloud will be removed soon. Considering the deteriorating US economic condition, the end to the Iraqi situation is now becoming a necessity. A prime example of the critical condition of the US economy will be documented in the face of the market today with a series of scheduled reports. In fact, many analysts are expecting Michigan consumer confidence readings to fall off the table and that could temper some of the optimism generated by the John Wayne rally yesterday. It is our opinion that the stock market rallied off the prospect that the UK and US were finished with diplomatic efforts and were going to go into Iraq and get it over with. Make no mistake about it, the best road to economic recovery would be for Iraq to disarm itself, but from a market perspective stock prices might not get as big of a bang out of Iraq begrudgingly disarming over a 3 month period. In other words, the markets probably won't trust Iraq, even if the filings today are sufficient enough to literally cool the jets of the Allies. However, considering the follow through action in the overnight trade, we suspect that the market will attempt to spin today's events into the bull camp. In other words, if the anthrax and VX reports from Iraq are seen as a credible effort to cooperate, France, Germany and Russia will be coming out of their socks to stop the second resolution. In fact, because the VX and anthrax issues were 2 of the 6 issues in the latest compromise offering, the doves at the UN could have a field day. We are not entirely sure that stocks "need" an attack to rally, as they could rally if Iraq comes far enough to weaken the resolve of the UK. Therefore, the bias in the market today is generally up, even if early US economic numbers are soft. It could take until late in the session for UN officials to decipher the Iraqi filing and that means volatility could be seen late in the session. DOW: As we suggested yesterday, seeing a rise above 7742 would prompt a more intense short covering rally. However, we suspect that the Dow could be temporarily hindered by the sweep of US economic numbers. The Dow will also be focused on the Iraqi filing, as the Ford production cut really casts a shadow on the blue chip sector. We do think that the June Dow will forge a rally to 8024 today, especially if the disclosure is a credible document. Keep in mind if it were not for the euphoria of getting beyond the Iraq situation, deterioration in the US economy would be serving to pound stock prices. S&P 500: Those that took our suggestion two weeks ago to buy a June S&P 990 call and risk the entire premium on the trade, should look for a 850 June S&P trade today, to take profits on that call. It would seem that bullish momentum will attempt to control prices today, but if the market isn't maintaining favorable price action by mid session, we would turn skeptical. In order words, we suspect that the Iraqi filing will be the critical pivot point. Therefore, if stock prices clear the filing issue and stay positive, then an 850 target in the June S&P will be an easy target. On the other hand, if the Iraq effort is a veiled farce, then the stocks could have a very bad afternoon. --------------------------------------------- venerdì 14 marzo 2003 THE HIGHTOWER REPORT MORNING METALS COMMENT METALS:3/14 OVERNIGHT CHANGE to 4:15 AM:GLD-0.70 ,SLV+1.5 ,PLAT+2.80 OVERNIGHT: Minor Asian losses mask the idea that the war rally in gold is ending GOLD: We suspect that the net spec and fund long is now 60,000 contracts and that means a large portion of the weak handed longs have been flushed out of position. The gold market will only be saved from another $10 break, if it becomes clear that the Iraqi papers on anthrax and VX are a farce and that an attack is still very possible in the near term. While it is possible that the PPI registers a hot enough number to provide some support to gold, we doubt that gold will begin to rise off an inflation tilt, unless it becomes clear that the economy has a chance of regaining strong momentum. However, in order to get to strong economic growth, the issue of the war would have to be resolved. In order to get beyond the war, gold might have to see yet another washout. While the June gold is showing some signs of respecting the low of $332.6, there could be another $16 of the war premium that hasn't been extracted. Even in the event of a war, we doubt that June gold will be able to rise sharply above $360 on this cycle. Considering the stimulus that has been applied to the world economy and the potential that pent up consumer demand might spark the economy, we could see an inflationary tilt if war is avoiding quickly and decisively. However, in order to buy for an inflationary play in gold, fresh longs might have to buy close to $330. SILVER: As we suggested yesterday, May silver should have very solid support around $4.50, as that level in our opinion is a deflated price. Like gold, the silver might have to weather a final selling wave, in the event that Iraq adequately complies, or that an attack unfolds and ends the situation quickly. We have to think that silver will begin to lead gold, if some of the geopolitical headwinds can be removed. As we have said a number of times over the last four months, in order to mount a sustained and healthy rise in silver prices, traders need to see evidence that physical demand is set to rise far into the future. PLATINUM: The platinum market held together pretty well and that is because platinum has such tight supply fundamentals. In fact, platinum should have the easiest road off all the metals of transitioning from a war driven market to a classic tight supply strong demand focus. If there is a final capitulation washout off the war it is possible that Apr platinum could slide to $660. Trend line support in the Apr platinum is violated with a trade below 672. COPPER: Shanghai copper stocks were down 23 tons an insignificant amount and certainly not a sign that recent declines in prices attracted interest for copper in China. Ford motor has announced this morning that they will cut production 17% and that is certainly a negative for copper prices. A very heavy slate of economic reports is due out today and most of those reports suggest that copper will be under pressure again today, unless the stock market manages to replicate the action seen Thursday. We suspect that May copper will waffle between 74.50 and 76.00, with a breakout above that range coming only in the event that Iraqi filings with the UN show the most significant cooperation yet. --------------------------------------------- venerdì 14 marzo 2003 THE HIGHTOWER REPORT ENERGY MARKET COMMENT & STATS ENERGY:3/14 OVERNIGHT CHG to 4:15 AM :CRUDE +10 ,HEAT+54 ,UNGA+12 The energy complex might have faded yesterday off the idea that the war might be on and it might have faded off the idea that the war might be delayed by at least another week. In other words, some longs were concerned that the US might be ready to attack in the coming week. It's also possible that the energy complex faded off the idea that Iraq was beginning to show signs of complying. It should be no surprise that Saddam is getting closer to seeing his life pass before his eyes as the UK and US were extremely upset with the UN and were as close to launching a war as they have ever been. With the French suggesting they would not even consider a compromise there was some flak that eventually softened the French stance. It would also appear as if the Secretary General of the UN finally showed some leadership by calling for a summit on the Iraqi compromise. We are not sure what the UN Security Council was supposed to be doing late into the night Wednesday, but that would already seem to be a summit of sorts. In other words, now that the world sees that both the UK and US are serious about Iraqi compliance, every one is stepping up with real diplomatic efforts. In response to the increased threat of attack, Iraq has apparently decided to formally respond to the anthrax and VX charges. Once again Saddam is doing what ever is necessary to extend the delay. Why wasn't anthrax and VX documentation part of the required January filing? We also have to think that warmer weather and signs that Venezuela production has reached 2.9 million barrels per day sparked some of the liquidation. In fact, the Venezuelan production is getting pretty close to normal and OPEC raising production by 1.5 million barrels per day since February 1st there is significant supply on the market. Therefore, the world is adequately supplied but won't see evidence of that rebuilding until spring is in full swing and Iraq has remained in the equation into spring. We suspect that many longs were worried about a delay in the war and decided to exit while other think that war will be avoided altogether. Breaking prices aggressively on the idea that a war might be quick is risky, considering that Iraq wells might be destroyed but breaking prices because war might be avoided is not that surprising. For most of this week we called for a May crude decline to $34.50 and now we suspect that May crude might even test the $33.00 level. Critical support in May unleaded is seen at 103.10 and then again down at 101.00. NATURAL GAS: It is our opinion that the weekly inventory draw was disappointing to the bull camp and with the combination of warmer weather and sloppier regular energy complex price action, the path of least resistance is down. In our opinion, the natural gas is entrenched in a correction unless the threat of war rises up quickly and saves the bulls. While some might think that $5.40 is solid support, but we suspect that a slide to $5.23 is possible in the coming sessions. The weather next week might be wet but temps in the US are climbing. --------------------------------------------- Modificato da - Giorgia on 3/14/2003 18:44:46

mercoledì 05 marzo 2003 -- MORNING FOREIGN EXCHANGE COMMENT * HIGHTOWER NEWS FOREX:3/5 OVERNIGHT CHANGE to 4:15 AM:$ -77 ,YEN+38 ,SF+59 ,EU+94, CA +32 DOLLAR: The US Treasury Secretary reconfirmed overnight that the US Administration continues to favor a strong Dollar policy and that seemed to increase the pressure on the Dollar. The fact that the US Administration offers no recourse to the selling pressure seen in the Dollar, means that the Dollar resumes its slide in earnest. We have to think that a major portion of the upcoming declines in the Dollar is going to come off the continued desire to attack Iraq. In other words, the majority of the world is going to weigh in against the Dollar. We suspect that political developments will actually bring about a blocking effort where France and Germany attempt to "prevent" a unilateral attack. In fact, the biggest threat the Dollar shorts have is that the US is prevented from a war by UN maneuvering. In the event that the US can't attack, that could easily alleviate some of the selling pressure on the Dollar. However, in the absence of significant political developments, the Dollar will continue downward. The gap down overnight only temporarily puts the Dollar in an oversold status. On a bounce to 98.60, be a seller of the March Dollar. EURO: With Euro zone price readings coming in at expectations and a German PMI reading coming in weak, there isn't enough economic information to discourage the overnight gains in the Euro. In fact, the Euro is once again going to get considerable flight to quality interest. In other words, unless the March Euro falls back below 108.94, expect the trend to extend to the upside. YEN: The trade is unsure of which direction the Yen is headed in the current scheme. The push and pull between the Dollar and the Euro looks to dominate and that leaves the Yen in a secondary standing. We suspect that the Yen will attempt to rise but with the Dollar so weak, one has to suspect that the BOJ will be inclined to support the Dollar in order to restrain the Yen. Therefore, be careful paying up for the Yen above 85.20. Economic information from Japan overnight was mixed with some confidence concerns generated by a MOF survey on capital spending. SWISS: Since we don't detect a major flight to quality concern off the war track, the Swiss fails to get a full lift off the current situation. However, the path of least resistance is up and the Swiss should at least see 75.80 in the current wave higher. POUND: The overnight move in the Pound hints at a more significant short covering bounce ahead. The fact that the UK February Services PMI came in the weakest in almost two years undermines some of the potential buying power in the Pound. However, it would seem that the Pound is poised to rally toward 160.00. CANADIAN: The Canadian looks to continue its pattern of strong favor. The next upside target is seen at 68.50 with the expectation that gains will now begin to expand. We can only attribute the gains to political isolation and a strong export relationship to the Pacific Rim. The Canadian is also getting pure flight to quality buying interest. CURRENCY TECHNICAL OUTLOOK #CURRENCIES 3/5/03: YEN (JUN): A negative signal for trend short-term was given on a close under the 9-bar moving average. The market tilt is slightly negative with the close under the pivot. Swing resistance is targeted at 85.28 and above there at 85.49, with the yen finding support around 84.93 and below there at 84.79. A bearish signal was triggered on a crossover down in the daily stochastics. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 84.79. EURO (JUN): Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 1.0902. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Swing support for the Euro comes in at 1.0808, with overhead resistance at 1.0902. The close above the 9-day moving average is a positive short-term indicator for trend. Follow-through selling is indicated by the key reversal down. The market rallied to a new contract high. More selling pressure is likely given yesterday's gap lower price action on the day session chart. --------------------------------------------- mercoledì 05 marzo 2003 -- MORNING METALS COMMENT * HIGHTOWER NEWS METALS:3/5 OVERNIGHT CHANGE to 4:15 AM:GLD+2.50 ,SLV+0.8 ,PLAT+13.50 London Gold Fix $354.50 +$2.10 LME Copper Warehouse stks 821,975 ton -850 tns Comex Gold stocks 2.245 ml -16,664 oz COMEX Silver stks 110.3 ml oz +1.164 ml OVERNIGHT: Asian buyers surfaced partly because of the Philippine bombing. GOLD: We suspect that the $345 to $361 consolidation pattern will restrain gold prices, especially since the track of war is difficult to define. However, overnight the US Dollar slid aggressively and that could rekindle flight to quality buying of gold. With gold only slightly above the level at which the last COT report was measured, we doubt that the net spec long is that limiting. More than likely the net spec long is only 68,000 contracts. Therefore, it would be our opinion, that gold is only slightly overbought and certainly not without additional buying fuel. We get the sense that the market is once again fostering concern over the slowing economy and that could mean that gold gains will be tempered by deflationary concerns. April gold should have a critical pivot point at $351.3, with critical resistance seen coming in around $356.9. In order to prompt a breakout above resistance of $357, the gold will have to see more definitive prospects of war, than would appear to be present currently. SILVER: The silver market would appear to be a little more vulnerable than the gold market considering the technical setup and the rising concern over the pace of the economy. In other words, deflation could undermine silver easily if the gold market isn't providing consistent leadership. A close above $4.71 could signal another upside breakout, while a decline back below $4.65 could signal a failure off of a deflationary focus. In the end, we think the bulls prevail but that May silver could easily chop in a range bound by $4.60 and $4.71. PLATINUM: The market almost gapped higher overnight and appears to be headed toward a fresh contract high. It would see that 2003 export patterns from Russia will not be markedly changed from 2002 and that the combination of steady jewelry demand and rising investment demand for platinum will keep prices on an upward track. COPPER: Its clear that the copper market is once again sensing weakness in the economy, with the tightness in Asian supplies being temporarily discounted. With the US stock market possibly ready to decline to the February lows and the world expecting an extended delay in the resolution of the Iraqi conflict, it would seem that copper is being exposed as an overbought commodity. Initial support in May copper comes in at 77.30 and then again at 76.80. Chinese copper futures were lower, following weakness in the London copper market. Apparently Press reports suggested that both the Shanghai and London markets violated critical technical areas on the charts, which could set up a New York failure this week. On a big stock market washout, May copper could fall to the 76.00 level. PRECIOUS METALS TECHNICAL OUTLOOK #P-METALS 3/5/03: SILVER (MAY): The market has a slightly positive tilt with the close over the swing pivot. Initial support for silver is at 464.7 and below there at 462.6 with resistance likely at 468.1 and 469.7. A positive signal for trend short-term was given on a close over the 9-bar moving average. Stochastics are at mid-range, but trending higher which should reinforce a move higher if resistance levels are taken out. The next upside objective is 468.1. GOLD (APR): Support for gold today comes in near 350.60, while resistance is pegged at 356.20. Momentum studies are rising from mid-range which could accelerate a move higher if resistance levels are penetrated. The near-term upside target is at 356.20. There could be more upside follow through since the market closed above the 2nd swing resistance. The close above the 9-day moving average is a positive short-term indicator for trend. Follow through buying looks likely if the market can hold yesterday's gap on the day session chart. --------------------------------------------- mercoledì 05 marzo 2003 -- ENERGY MARKET COMMENT & STATS * HIGHTOWER NEWS DAILY ENERGY COMMENT * HIGHTOWER RESEARCH ENERGY:3/5 OVERNIGHT CHG to 4:15 AM :CRUDE +55 ,HEAT+200 ,UNGA+98 April crude oil recovered after a three day break as the US and its allies appear to be getting one step closer to war. The US is continuing to build up its armed forces and said that even without a base in Turkey its war efforts will not be hindered. The US has also made it clear that a war with Iraq will take place to ensure a regime change with or without full backing by UN members. The US wants a vote on the latest resolution for war next week. As the war with Iraq becomes imminent, we think it is very risky to be outright short crude oil. The market has very real concerns that a war with Iraq could impact supplies from Kuwait or Saudi Arabia if Saddam uses weapons aimed at those country's oil fields. Escalating tension with North Korea and a bombing at a Philippines airport thought to be tied to al Qaeda keeps geopolitical anxiety high. Even if the API/DOE stock data shows a build in crude stocks it may not have much negative impact given that the US looks to be in its final preparation phase for war. We would expect April crude to remain firm and head back toward $40, but we also expect a top to form quickly once the war starts and the US takes control. With OPEC and other countries pledging to raise supply levels to offset any disruption from Iraq (currently producing about 1.9 million barrels/day), crude prices could fall very quickly as the war premium is taken out and more world supply is factored in. Heating oil bounced back as the immediate forecast is still calling for frigid temps while another big draw is expected in this week's inventory report. There is still a good chance April heating oil will make another run at the highs. However, the end of the winter season is approaching which suggests the unleaded market should begin to take leadership in this sector. Relatively low gas stocks and a low refinery rate suggest gas supplies this Spring/Summer could remain very tight. We don't see too much downside in April unleaded with support at 109.48. API Crude Oil Stks Est +1 to +2 ml bls Actual chge due out at 8:00 cst today API Distillate Stks Est -5.5 ml to -500k bls Actual chge due at 8:00 cst today API Gasoline Stks Est +1 to -1.25 ml bls Actual chage due out at 8:00 cst today NATURAL GAS: While technicals suggest April natural gas could weaken further towards support between the $6.45 and $6.35 per million btu levels, the extreme tightness in supplies would suggest the bull trend in this market will be maintained. Even though the late in the week forecast is calling for less frigid temps, the weekly inventory draw through the end of the heating season will likely be high enough to take gas stocks to 9 year lows. As we said in yesterday's report, EIA stocks only need to fall 63 bcf per week to meet the lowest stock level of 697 bcf, seen in early April 1996! With stock levels this low, utilities will have a tough time refilling inventories, while trying to supply cooling needs this summer. While April natural gas may be pulled lower today by technical selling, don't be surprised to see prices jump higher if Thursday's stocks report shows a draw over 200 bcf. ---------------------------------------------