|
-- Posted Friday, 3 February 2006 | Digg This Article
METALS: OVERNIGHT CHANGES THROUGH 4:00 AM: GOLD -1.10, SILVER +0.30
London Gold Fix $571.85 Unch LME COPPER STOCKS 95,750 metric -100 tns COMEX Gold stks 7.318 ml oz +50,526 oz COMEX SILVER stks 125.3 ml oz +600,924 oz OVERNIGHT ACTION: Overbought talk in the wake of new highs has gold a little soft. GOLD: We suspect that rising inflation expectations were part of the fuel behind the gold rally on Thursday, as the softer than expected US productivity number is thought to signal an increase in pricing pressures within the US economy. However, the decline in productivity might also reduce the Fed's patience in the face of any renewed inflation signals. As usual, the gold market saw persistent support from fund buying and with the stock market also tossing around the rumors of a terrorist warning from the Homeland Security Department, it is likely that gold saw some flight to quality buying. However, recent strength in the Dollar is making some would-be buyers a little nervous and that could rob the market of some upward momentum. We do note a certain amount of bearishness in the trade dialogue, with a number of traders suggesting that the gold market has become overbought again, from a short term perspective. To a degree a certain amount of persistent bearishness could be healthy for the gold market but that also suggests an ongoing daily volatility threat. Traders should continue to be long but should not be afraid to sell the March $600 calls against the long futures, as we doubt that the April contract will make it significantly above the $600 strike price, before the expiration. Trend line support in April gold now moves up to $571.6 and a key failure isn't seen unless the April contract falls back below $569. SILVER: Since the silver market failed to make a new high with gold on the recent run up, it is possible that the market is losing its leadership role and at the same time silver does appear to have lost some momentum. We continue to think that position longs should sell March 1025 or 1050 calls against their position and might also consider using some of that premium to purchase March 975 puts. The options will allow more upside benefits, but will mostly offset moderate to severe corrections. We suspect that silver will see its spec and fund long leap forward in the COT report, but after the decline last week, we doubt that the silver will threaten the old record spec long. We do think that weakness in oil and weakness in the equity market are slightly negative for silver and copper. The trend remains up but one can't rule out periodic corrective action of a 7 to 15 cent magnitude. METALS TECHNICAL OUTLOOK 2/3/2006 COMEX SILVER (MAR) 02/03/2006: Momentum studies are trending higher but have entered overbought levels. The cross over and close above the 18-day moving average is an indication the longer-term trend has turned positive. It is a mildly bullish indicator that the market closed over the pivot swing number. The next upside target is 1003.5. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around 997.0 and 1003.5, while 1st support hits today at 978.5 and below there at 966.5. COMEX GOLD (APR) 02/03/2006: A new contract high was made on the rally. Momentum studies are trending higher but have entered overbought levels. The cross over and close above the 18-day moving average indicates the longer-term trend has turned up. The close over the pivot swing is a somewhat positive setup. The next upside target is 582.8. The market is becoming somewhat overbought now that the RSI is over 70. The next area of resistance is around 579.9 and 582.8, while 1st support hits today at 573.7 and below there at 570.4.
To those of you who have emailed or commented on the daily commentary regarding price manipulation: our daily comments are strictly to provide our customers and subscribers with news, which may influence the markets marginally on a day-to-day basis. This is not the forum to address price manipulation.
There are multitudes of ways in which one can participate in a bullish or bearish perspective in the metals complex. Mining shares as well as purchasing bullion are just a few. Another investment of choice is through futures and/ or options on futures contracts. If you have traded, then you will be able to appreciate the brokerage service that Nell Sloane and Group can offer. If you have not, and wish to learn more about it, please feel free to contact her staff so that they can forward you some educational literature for your review. Please contact Nell Sloane or a member of her team at 800 238 2610.
-- Posted Friday, 3 February 2006 | 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.
Previous Articles by Nell Sloane
|
