|
-- Posted Monday, 27 March 2006 | Digg This Article
METALS: OVERNIGHT CHANGES THROUGH 4:00 AM: GOLD +4.00, SILVER +18.00
London Gold Fix $564.00 +$14.25 LME COPPER STKS 123,950 ml tns -850 tns
COMEX GOLD stks 7.526 ml oz -487 oz COMEX SILVER stks 124.9 ml oz -119,875 oz OVERNIGHT ACTION: International gold prices rise to catch up with Friday US action. GOLD: Last Friday the gold market finally responded to the ongoing strength in silver and platinum but with the Dollar Index also forging a massive reversal last Friday morning it is difficult to determine what the main focus of the gold market really was. Certainly a series of new contract highs in silver, platinum and copper facilitated the run up in gold but some traders suggested that a revival in energy prices and ideas that the US Fed might go on hold, as a result of some housing market weakness probably added in some buying to the fray. It is also possible that a move back above the 50 day moving average inspired a moderate amount of stop loss buying, particularly because a portion of the market was leaning on the market from the short side. In looking at the charts, the April gold must still regain a resistance line off the February and March highs up at $566.9, just to shift longer term sentiment back to the upside. The March 21st Commitment of Traders with Options report showed the Gold combined spec and fund long to be 138,000 contracts but that was only up 4,000 contracts on the week. We would expect the market to have residual broad based buying capacity until the combined spec long position reaches 215,000 contracts. On the other hand, with a significant amount of Press hype spilling over from the Silver ETF story, it would not be surprising to see the old record spec and fund long of 227,566 contracts in gold surpassed in the coming weeks. While gold has added to the gains seen last Friday, we are concerned that the Fed will signal an ongoing need to raise interest rates and that could temporarily squelch inflationary expectations and give support to the Dollar, which could be negative to gold prices. Hopefully, the investment buzz will overcome the limiting force of the Fed and in the process allow the April contract to rise toward some critical points that sit just above this morning's highs. SILVER: The ETF story continues to foster bullishness and with positive action in outside metals markets, positive progression in the world economy and generally strong energy prices, we suspect that a bullish mentality will remain in place. While the March 21st Commitment of Traders with Options report showed the Silver Non-Commercial position to be net long 51,314 contracts and the Non-reportable position to be net long 22,258 contracts, we doubt that the market is bought out. The old record non-commercial and non-reportable combined long position was 97,635 and with the latest combined reading topping out at 73,000 contracts and the May contract finishing last week 16 cents above the level where the COT report was measured, we are probably approaching the old record. However, as suggested in the gold comment, rapidly expanding investment interest could easily result in a "new" record high spec long position in the coming weeks but as long as open interest also rises that might not necessarily point to a top. With the strong opening this morning the headline buzz will probably continue to pull in investment and that could leave the next upside target in May silver at $11.00. In fact, a major brokerage firm has upgraded the metals markets and the Press is carrying pictures of silver rolling off a conveyer belt, so we suspect that silver is set to remain in vogue. METALS TECHNICAL OUTLOOK 3/27/2006 COMEX SILVER (MAY) 03/27/2006: A new contract high was made on the rally. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The market's short-term trend is positive on the close above the 9-day moving average. It is a mildly bullish indicator that the market closed over the pivot swing number. The next upside objective is 1082.0. The 9-day RSI over 70 indicates the market is approaching overbought levels. The next area of resistance is around 1078.0 and 1082.0, while 1st support hits today at 1069.1 and below there at 1064.1. COMEX GOLD (APR) 03/27/2006: The cross over and close above the 60-day moving average indicates the longer-term trend has turned up. The daily stochastics gave a bullish indicator with a crossover up. Momentum studies are rising from mid-range, which could accelerate a move higher if resistance levels are penetrated. The cross over and close above the 18-day moving average is an indication the intermediate-term trend has turned positive. The gap up on the day session chart gave a bullish indicator and more follow through could be seen this session. There could be more upside follow through since the market closed above the 2nd swing resistance. The near-term upside target is at 568.3. The next area of resistance is around 565.4 and 568.3, while 1st support hits today at 555.6 and below there at 548.6. I wish to begin reiterating our "trend" opinion, so that traders don't forget that the "Daily" comments are in fact just "daily comments". In other words, we take the stance that the daily comment is a venue to bring in the freshest overnight developments and to suggest what fundamental impact the new developments might have on prices for that day, even if the comments are bearish within the confines of an entrenched bull market pattern. We might also suggest that trader's who are unclear on our long term opinion, should always refer to the existing trade suggestions for clarification of where we think the market is headed to over the long term. In the end, we were bashed for predicting a minor continuation of the sloppy action that had prevailed for most of the week. Certainly we were caught by a major reversal that took place 3 or 4 hours after the comments were written, but from the sounds of some of the comments one would think we called for the end of the bull market. One should also realize that the prospect of change from the pre-opening time frame is significant and Friday morning, several critical economic reports caught all of the financial markets by surprise and in a sense altered the outlook for the Fed. We try to clearly define the trend in future comments but it seems that some bull players would rather not hear anything of the markets vulnerabilities! Without the economic readings and the shift in the Dollar Friday morning, our prediction of a minor correction Friday could easily have been fulfilled.
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 Monday, 27 March 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
|
