-- Posted Friday, 13 July 2007 | Digg This Article

EXPECTED TRADING RANGE
GOLD AUGUST  -- $660.20 -- $676.00	SILVER  SEPT   -- $1288.50 - $1339.00
COPPER AND CRUDE OIL -- EXPECTED TRADING RANGE
COPPER SEPT   -- $344.10.00 - $366.50	NYMEX CRUDE OIL  JULY    - $71.25 - $75.20
GENERAL MARKET CONDITIONS
Central banks have also become obsessive with strong equity markets. Politicians ensure that their comments are not negative for the stock markets. The reason is that most of the central banks are now using stock markets rise growth to propel higher consumption and strong GDP growth. It’s another indirect method of providing cheap money. China is not taking adequate measures to cool its economy as they fear that increasing interest rates or quick revaluation of the yuan could result in Chinese stock markets tumbling which could result in large scale public backlash. As it is regulation and reporting norms in China for Chinese banks are not strong. It’s like the same position as Indian banks were in early 1990’s which resulted in huge non performing assets (NPA’s) when regulations were tightened. There is a direct correlation between equity indices and real estate prices. The chain is simple, quick money from stock markets are used on greater consumption and real estate investment. Higher consumption results in news capacities being created, which results in greater demand for capital goods and greater employment generation in services/tertiary sector. This chain continues with the net result that asset bubbles starts getting created. There are concerns (including myself), that these bubble will get busted sooner than later. It will get busted. But when will happen, difficult, to comment, between a few months to one or two years. Technology is partly responsible for these asset bubbles as it just takes a few seconds to switch from one market to another, whether in the same country to another. Nobody and no markets are invincible. Gold, silver, copper, nickel, bond prices have all corrected. The net result in gold, silver and other hard assets will be the biggest beneficiary when these paper assets shred. Short term investment in paper assets in good, but a long term investment from a three to four year horizon hard assets get an edge over paper. Incidentally, most traders are short term oriented.   Long live the carry trade as they refuse to die resulting in US equity markets rising nearly two percent. Euro falling to yet another record against the yen while the US dollar Index at multi year lows. US equity markets rose on speculation that activist investor William Ackman has accumulated a stake of more than five percent in Target Corp., the second-biggest U.S. discount retailer and other M&A news. The risk appetite of investors is rising with passage of each. July to September, historically has been a lean period for global stock markets, however in 2007 history did not period itself. As long as M&A news continues to pour in, equity will remain firm.   Crude oil and copper fell from the high while zinc for one day outperformed every metal. I am still concerned about the Collateralized debt obligations (CDO) scam. This will increase volatility in foreign exchange markets and slow down the carry trade. Carry traders flourish in a period of certainty. Higher volatility in currency markets could result in risk aversion which could benefit the US dollar in the short term.
COPPER -- SEPTEMBER
Failure of copper to break $367 will result in fall to $351.40 and $346.30. Only a consolidated rise over $367 will result in $373.10 and $377.25
NYMEX CRUDE OIL -- JULY FUTURE
Crude oil needs to break and hold $73.48 for $75.69 and $77.55. On the lower side $72.27 is the initial support with $70.35 and $69.70 as the key supports.
Happy Profitable Trading & Have a Great Weekend.
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-- Posted Friday, 13 July 2007 | Digg This Article

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