Base Metals

Major Headline:

Aluminum dropped to a two-month low in London on speculation producers will increase output as an economic slowdown stalls demand from home builders. Copper fell to a nine-month low.

Aluminum output will exceed demand through 2008 after a supply deficit of 410,000 metric tons last year, Societe Generale SA said in a Dec. 14 report. The price of the metal used in construction, cars and beverage cans has dropped 14 percent this year and is headed for its first annual decline in five years.

Copper tumbled to a nine-month low on speculation that a slumping U.S. economy will erode demand for the metal used in homes, cars and appliances.

Manufacturing in New York this month expanded at the weakest pace since May, a report showed today. Former Federal Reserve Chairman Alan Greenspan said on Dec. 16 that U.S. growth is ``getting close to stall speed.'' Copper dropped 5.4 percent last week on concern consumption will fall in the U.S., the world's second-largest user of the metal.

European stocks fell on concern the combination of faster inflation and losses related to the collapse of U.S. subprime mortgages will sap economic growth.

BHP Billiton Ltd., the world's largest mining company, and Rio Tinto Group dropped as copper tumbled to a nine-month low. UBS AG and Deutsche Bank AG led bank shares lower. Assicurazioni Generali SpA paced declines among insurers after UBS downgraded the stock.

The Dow Jones Stoxx 600 Index fell 1.4 percent to 362.02 as of 4:06 p.m. in London. Widening losses tied to the U.S. mortgage market have dragged the measure down 9.6 percent from a 6 1/2-year high reached June 1. All 18-industry groups except food & beverage retreated today.

copper Technical Outlook:

Momentum studies are bearish but are now at oversold levels and will tend to support reversal action if it occurs. The daily stochastics have crossed over down which is a bearish indication. The stochastics indicators are decreasing from over bought level, which is bearish and should support lower prices. The market's short-term trend is negative as the close remains below the 18-day moving average. The upside closing price reversal on the daily chart is somewhat positive.

Recommendations:

MCX Copper Feb: Sell at 256-257 for the target of 250.20, 247 and 242 with stop loss at 261.50

zinc Technical Outlook:

Momentum studies are bearish but are now at oversold levels and will tend to support reversal action if it occurs. The daily stochastics have crossed over up which is a bullish indication. The stochastics indicators are increasing from over sold level, which is bullish and should support higher prices. The market's short-term trend is negative as the close remains below the 18-day moving average. The upside closing price reversal on the daily chart is somewhat positive.

Recommendations:

MCX Zinc Dec: Sell at 91.90-92.30 for the target of 90.10 and 89.10 with stop loss at 93.20

nickel Technical Outlook:

Momentum studies are bullish but are now at overbought levels and will tend to support reversal action if it occurs. The daily stochastics have crossed over up which is a bullish indication. The stochastics indicators are rising from oversold level, which is bullish and should support higher prices. The market's short-term trend is negative as the close remains below the 18-day moving average. The upside closing price reversal on the daily chart is somewhat positive.

Recommendations:

MCX Nickel Dec: Sell at 1025-30 for the target of 1005 and 995 with stop loss at 1039


lead Technical Outlook:

Momentum studies are bearish but are now at oversold levels and will tend to support reversal action if it occurs. The daily stochastics have crossed over down which is a bearish indication. The stochastics indicators are on hold from over sold level, which is bullish and should support higher prices. The market's short-term trend is negative as the close remains below the 18-day moving average. The upside closing price reversal on the daily chart is somewhat positive.

Recommendations:

MCX Lead Dec: Sell at 96.50-97.00 for the target of 94 and 92 with stop loss at 98.50
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