GENERAL MARKET CONDITIONS

The focus of the markets suddenly shifts from demand factors to supply factors and a subsequent correction in base metals and energies. Gold and silver fell on profit taking ahead of the Fed meeting. How come suddenly the focus shifts from demand factors as investors know that higher crude oil prices will in the medium term cause a slowdown in demand and that India, China and other emerging nations alone cannot cause a supply squeeze. It’s all about investment alternatives and base metals and energies attract investment interest only when there is no other place to invest. Base metals and energies will continue to be volatile for the rest of the March.

The Fed has been aggressively cutting interest rates over the past four months and the US dollar has declined substantially between two Fed meetings. Expectations for today’s interest rate cut vary from 0.50% to 1.00%. The Fed may cut one more time in April and thereafter pause. The US dollar will trade with a softer bias for another month or two (unless there are more Bear Sterns and Northern Rocks) and thereafter slowly and steadily start to gain. Precious metals have gained after the Fed meetings and it remains to be seen whether this time they will rise.

COPPER -- MAY FUTURE -- INTRA DAY PIVOT: $365.70

Copper has to hold $365.70 on closing basis, or else a fall to $357 and below. Resistance at $380.10 and $387.40.

NYMEX CRUDE OIL -- FUTURE -- INTRA DAY PIVOT: $103.80

$106 price target achieved. For the day crude oil is bullish over $103.80. Falls below $103.80 then $100.38 and $96.50.

MCXARUN
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