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-- Posted Thursday, 16 February 2006 | Digg This Article
METALS: OVERNIGHT CHANGES THROUGH 4:00 AM: GOLD -0.20, SILVER -7.00
London Gold Fix $544.30 -$3.65 LME COPPER STKS 106,575 ml tns +200 tons
COMEX GOLD stks 7.488 ml oz Unchanged COMEX SILVER stks 125.6 ml oz Unchanged OVERNIGHT ACTION: European gold weaker, while early US action posted a higher bid. GOLD: While we are not ready to concede a major top, we do think that the market is in for a rough ride in the near term. With the market tossing around the idea of producer hedging, there is certainly a countervailing force to the physical buying trend. In fact, just as the ETF and Index funds generated implied demand for gold, producer selling in a sense creates implied supply. However, forward selling can improve the supply and demand equation on paper but it won't help much in the event that physical and investment demand continue to rise. In the mean time, this market is in trouble and traders had better be considering a host of corrective targets on the downside. On the other hand, we suspect that the market will be the most vulnerable in the near term and that seeing some time pass will allow this market to absorb the threat of hedge selling. In fact, simply because a report suggested that "de-hedging" was slowing in the 4th quarter, doesn't mean that all gold producers will clamor into the market with hedges. However, with the Dollar also making an upside breakout this morning, the gold chart partially undermined and the threat of hedging present, we have to think that more spec longs are poised to liquidate longs. Therefore, traders that are long futures, should exit and replace those positions with either long term simple call option plays or one might consider an overly weighted calendar spread of selling April gold 555 calls for 1020 and buying the June gold 570 calls for 1500. Near term support is seen at $541.8, at $537.8 and finally at $529. SILVER: Certainly silver behaved much more impressively than gold over the last four days and that is understandable because of the perception by specs and perhaps silver mining companies, that silver isn't nearly as historically expensive as gold. We also suspect that silver was slightly less overbought than gold but with the copper market also diving sharply, the silver is partly undermined from the industrial metals demand aspect. We might add that the change of fundamentals in the copper market was quite significant yesterday, as that market saw evidence of increased producer hedging. Therefore, while the silver market might be able to avoid the direct pressure of hedging, it does seem like outside market influences have turned more negative. In conclusion, March silver might be capable of holding above close-in support of $9.08 but with the last COT report showing this market to be moderately spec long, we can't rule out a slide to $8.85. METALS TECHNICAL OUTLOOK 2/16/2006 COMEX SILVER (MAR) 02/16/2006: The downside crossover (9 below 18) of the moving averages suggests a developing short-term downtrend. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The close under the 18-day moving average indicates the longer-term trend could be turning down. The downside closing price reversal on the daily chart is somewhat negative. The market tilt is slightly negative with the close under the pivot. The next downside objective is 889.2. The next area of resistance is around 938.3 and 956.1, while 1st support hits today at 904.8 and below there at 889.2. COMEX GOLD (APR) 02/16/2006: 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 close below the 18-day moving average is an indication the longer-term trend has turned down. The market's close below the 1st swing support number suggests a moderately negative setup for today. The next downside objective is now at 532.8. The next area of resistance is around 548.1 and 554.3, while 1st support hits today at 537.3 and below there at 532.8.
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 Thursday, 16 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.
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