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-- Posted Friday, 21 February 2003 | Digg This Article
METALS:2/21 OVERNIGHT CHANGE to 4:15 AM:GLD+1.60 ,SLV-0.7 ,PLAT+1.00 London Gold Fix $354.50 +$2.50 LME Copper Warehouse stks 824,900 ton -7775 tns Comex Gold stocks 2.263 ml -6,077 oz COMEX Silver stks 108.0 ml oz +394,537 oz OVERNIGHT ACTION: Minor gains possibly from physical and jewelry buyers in Singapore. GOLD: The bias remains up but the April contract failed to get above the Thursday highs in the overnight action. We have seen a moderate decline open interest since the February high (from 245,682 contracts down to 194,980) and that should have balanced the overbought technical condition enough to leave the market capable of a recovery rally in the weeks ahead. However, as we mentioned yesterday, we think that the market will exhaust itself quickly, mostly because the bull case is almost 90% focused on the war issue. Certainly, the hot PPI reading potentially provides another possible bull track for gold, especially since the core PPI was up +0.9% but for now war is everything. In our opinion, the true inflation threat comes after the issue with Iraq is solved, because existing under the cloud of uncertainty countervails the inflation threat. In a big picture view, we see gold returning to the vicinity of $390 and forging a top (as the bulls rush headlong into gold into the war timing of the next three weeks). We then we expect a post war washout back down to the area of the recent lows ($343) followed by a resumption of a slower but gradual trek higher off tight supplies and rising physical demand. Near term action probably sees gold grinding higher, with the first leg up culminating in a consolidation around the $370 level in the June gold. SILVER: As we suggested yesterday, the silver has also seen its technical positioned balanced and that should make the recent lows pretty solid. However, one should not be surprised to see the May silver drop back below $4.60, as the upcoming gold rally doesn't seem to be have the same amount of hype, as the December and January rally. We detected a slight weakening in the CRB Index this week and that is certainly a function of a fear of deflation and slowing US numbers. Deflation and slow economics are limiting for silver on the upside. However, strong gains in the PPI reading, soaring sugar prices and the potential for volatility in the grain markets, keep silver poised to react to the upside, but the fear of war is the single most damaging issue for the bulls in silver. We think the logical positioning for silver is to be long a May silver and long a May 450 put for 9 cents. As a correction back below 460 could be used to take profits on the put and in a sense lower the long entry point on the futures to something at or below $4.60. The path of least resistance is up, but the action is likely to be uninspiring. METALS TECHNICAL OUTLOOK 2/21/03 #P-METALS 2/21/03: SILVER (MAY): The market has a slightly positive tilt with the close over the swing pivot. Initial support for silver is at 463.2 and below there at 458.1 with resistance likely at 466.9 and 471.2. A positive signal for trend short-term was given on a close over the 9-bar moving average. Rising from over sold levels, daily momentum studies would support higher prices especially on a close above resistance. The next upside objective is 466.9. GOLD (APR): Support for gold today comes in near 347.55, while resistance is pegged at 357.95. 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 347.55. Market positioning is positive with the close over the 1st swing resistance. The close below the 9-day moving average is a negative short-term indicator for trend.
-- Posted Friday, 21 February 2003 | Digg This Article
***This report includes information from sources believed to be reliable and accurate as of the date of this publication, but no independent verification has been made and we do not guarantee its accuracy or completeness. Opinions expressed are subject to change without notice. This report should not be construed as a request to engage in any transaction involving the purchase or sale of a futures contract and/or commodity option thereon. The risk of loss in trading futures contracts or commodity options can be substantial, and investors should carefully consider the inherent risks of such an investment in light of their financial condition. Any reproduction or retransmission of this report without the express written consent of Hartfield Management, Inc. is strictly prohibited.
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