Tuesday, February 26, 2008

Long view

COPPER

LIKELY TO TEST 344-347 UPTO 350 WITH ANY BREAK & CLOSE ABOVE 339, AND CLOSE ABOVE 351 TEST 360-65 ATLEAST, ONLY CLOSE BELOW 302.5 DOWN TREND AGAIN TEST 297-293 ATLEAST(FEB)

MCXARUN
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Safe trade

GOLD

now any sustain below 11970 lead correction for 11850-825 atleast, for the day sell only below 11970 S/L 11995 and T/p 11900-875-825 atleast OR sell ard 12125-30 S/L 12140 and T/p 12090-12050 (any time close above 12200 bullish while close below 11575-475/ 11300/10950-900/10500/10050/9850/ 9575 bearish for medium term)

SILVER

we book profit on buy last, for the day buy only abv 23275 S/L 23200 and T/p 23400-500 OR sell below 22900 S/L 23000 and T/p 22825-750/650/sustain below 22650 sharp correction (any time close below 22650/21940/21700-475/ 20950/20300/19725/19375/19000/ 18625/18250/18100/17750/17050/ 16450 bearish rally while close above 23275 bullish for medium term)

CRUDE

for the day buy only abv 3960 S/L 3945 and T/p 3980-85/sustain abv 3985-4000 test 4075 atleast upto 4100 OR sell below 3880 S/L 3900 and T/p 3860-45/ sustain below 3840 test 3780-3800 atleast (now crude need to close above 3985 for bullish rally while close below 3840/3790/3635-3590/3475/3395/3350/ 3090/2810 bearish for medium term)

COPPER

for the day sell only below 323 & more below 321.5 S/L 325 and T/p 318-315 OR sell ard 332.5-333 S/L 333.5 and T/p 330.5-329/327 (upside strong rally only on close above 339.5/348 while close below 321.5/315.5/302.5/286.5/ 278/270/265/250/235 bearish for medium term)

MCXARUN
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Energy intraday

· MCX Crude Oil March traded positive following international clues and registered days high near Rs. 3960 per barrel and days low remain at Rs. 3887 per barrel.

· MCX Natural Gas March followed oil prices and traded near Rs. 372.

· Fund money has poured into commodities recently as market players look to hedge against the weakness prevalent in equity and bond markets during the current financial turmoil. While the inflow of financial players has boosted prices, it has left the complex vulnerable to corrections on profit-taking.

· Rising tensions in the Middle East have leant support to oil's move back up to around the 100 usd handle, with Turkey's move into northern Iraq and warnings by Iran against further sanctions increasing fears over the security of supplies.

· Last week, the International Atomic Energy Agency reported it was still unsatisfied with its investigation into Iran's past nuclear weapons research, despite cooperation in other areas from the Islamic state.

· Iranian President Mahmoud Ahmadinejad has threatened "decisive reciprocal measures" against any country who supports increasing sanctions against the Islamic state. The UN Security Council with Germany is preparing a third tougher round of sanctions in response to the IAEA's report, increasing fears Iran could use oil supplies as a political weapon.

· Turkey's military move into Iraq has also stoked fears over supplies, with fighting in the key energy corridor heightening concerns that Kurdish guerillas could target pipelines in the area. The Ceyhan pipeline, which exports around 300,000 barrels of Iraqi oil through Turkey, has not been affected so far, according to the Iraqi oil ministry.

· While price gains have been fuelled by geopolitical risks, many market analysts continue to point to the increase in fund activity in the crude market for oil's return to the 100 usd handle.Speculative long positions, or bets the price will rise, were up by over 15,000 contracts for WTI in the week to Feb 19, according to the US Commodities Futures Trading Commission.

· Looking ahead, investors are keeping one eye on next Wednesday's OPEC meeting in Vienna. The cartel has repeatedly said it will not up production levels, blaming oil's rise to near record levels on market speculation and geopolitical tension rather than any shortage of supply.

· OPEC may in fact consider a cut at its meeting, as demand is seasonally lower in the second quarter of the year, and the cartel is concerned a slowing US economy could see demand for crude fall.

· OPEC has come in for criticism from some quarters for contemplating output cuts when prices remain close to 100 usd. The Centre for Global Energy Studies has accused OPEC of keeping supplies low to run down global inventory cover, contributing to the run-up in prices.

MCX Crude Oil March

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 positive as the close remains above the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

MCX Crude Oil March: Buy at 3845-50 for the target of 3990 and 4025 with stop loss at 3810


MCX Natural gas March

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 positive as the close remains above the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

Natural gas March: Sell at 376-79 for the target of 365 and 358 with stop loss at 387

MCXARUN
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Base metals intraday

· Copper was lower in early afternoon trade after hitting a 21-month high this morning as the LME reported a fresh build in stockpiles.

· MCX Copper April traded weak following international clues registered days low near Rs. 325.10 per kg, market re-retreated from days high of Rs. 337.90 per kg. MCX Zinc March followed red metal and traded near Rs. 100 per kg, MCX Lead March traded near Rs. 129.35 per kg.

· LME copper erased gains after stockpiles stored at exchange- monitored warehouses expanded 5.4 percent to 149,225 tons, the largest daily increase since Aug. 28. The deliveries were made to South Korea, the nearest location to China. LME-tracked inventory has dropped 24 percent this year.

· Before it, Copper traded near a two-year record in London on speculation that supply disruptions will drive prices higher. Tin rose to the highest since at least 1989.

· Open interest of copper futures, which measures outstanding positions that haven't been closed or liquidated, this month was at the highest since at least 2005 when Bloomberg records began, signaling demand for the metal. Hedge-fund managers and other speculators increased bets that New York copper will rise, according to U.S. Commodity Futures Trading Commission data.

· However, prices are continuing to take support from a flood of fund money into the commodities complex, which is supporting the metals at healthy levels this morning, analysts said.

· Copper has been well supported by falling stockpiles in recent weeks, and analysts fear the recent rebuild in inventories could pressure prices lower amid expectations the bleak US economic picture could weigh on consumption.

· Tin inventories have been weakened over the last year by restrictions on exports from major producer Indonesia. Falling exports from Asia have been a major factor in an 11 pct decline in LME-monitored stockpiles of the metal since the beginning of the year.

· Power shortages in China, the world's largest refiner of copper and also the biggest consumer, disrupted output and inflated prices. The metal's gains ``are excessive,'' Weinberg said.

· China canceled electricity price discounts for the aluminum and ferro-alloy industries in 18 provinces to save energy, the National Development and Reform Commission said in a statement today. The measure will increase production costs at companies including Aluminum Corp of China Ltd., the country's top producer.

MCX Copper April

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 positive as the close remains above the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

MCX Copper April: Buy at 323-25 for the target of 328 and 337 with stop loss at 318

MCX Zinc March

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 positive as the close remains above the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

MCX Zinc March: Buy at 97.00-97.50 for the target of 102 and 103.50 with stop loss at 95.40


MCX Nickel March

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 positive as the close remains above the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

MCX Nickel March: Buy at 1130-34 for the target of 1158 and 1170 with stop loss at 1120


MCX Lead Feb

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 positive as the close remains above the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

MCX Lead March: Buy at 128.50 for the target of 131 and 134 with stop loss at 126.20

MCXARUN
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Bullion intraday

· Gold slipped from record peaks as market participants sold the metal on news the US treasury is likely to approve the sale of gold from the International Monetary Fund.

· The US Treasury, in a significant policy shift, has decided it will support gold sales from the International Monetary Fund's reserves if they are part of a package of cost-cutting and other reforms of the way the international financial organization operates.

· Under Secretary for International Affairs David McCormick will lay out the details in a Washington speech later today. In a pre-address briefing for reporters, he said the Bush administration -- which had until now opposed selling IMF gold reserves -- would support a sale of the scale of roughly 8 pct of the IMF reserves or 12.9 mln ounces as part of a package of reforms which also included significant cost-cutting in IMF operations.

· The dollar stayed well bid, with talk of a rescue plan for troubled bond insurer Ambac Financial Group boosting sentiment, although attention is also starting to fall on the raft of US data and events this week.

· Fed chief Ben Bernanke's testimony to the US Congress will be a key event for the dollar and will shed more light on whether markets are pricing in too many more rate cuts in the world's biggest economy.

· The National Association of Realtors said that existing home sales were down .4% in January to an annual rate of 4.89 million units. The number of existing homes for sale represent 10.3 months of inventory.

· Johannesburg-based gold mining company Gold Fields Ltd. said Monday that it will be forced to scale back or close parts of its operations to achieve the 10% power reduction imposed by South African power supplier Eskom Holdings Ltd., which will further affect gold output.

· The company reiterated that as a result of the power cut, sustainable production at Gold Fields' South African operations is likely to decline by between 15% and 20% from the June quarter of 2008 onwards.



Indian Bullion Spot Market

Precious metals end with gains in spot markets tracing the record high touched in domestic futures market, on the back of a firming crude oil and expectations of yet another interest rate cut by the Federal Reserve.

· In Mumbai markets, gold (995) finished at Rs 12,265 per 10 gm and gold (.999) at Rs 12,320/10gm. Silver (.999) closed at Rs 22,735/kg.

· Ahmedabad gold (995) closed at Rs 12,250/10gm and gold (.999) at Rs 12,300/10gm whereas Silver (.999) closed at Rs 23,000/kg.

· In Delhi bullion markets, gold (995) closed at Rs 12,250/10gm and gold(.999) closed at Rs 12,330/10gm whereas Silver (.999) ends at Rs 22,470/kg.

MCX Gold Apr

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 positive as the close remains above the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

MCX Gold April: Buy only above 12010 for target of 12210 and 12330 with stop loss at 11920

MCX Silver Mar

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 positive as the close remains above the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

MCX Silver March: Buy at 22870 to 22900 for the target of 23300 and 23500 with stop loss at 22680

MCXARUN
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Technicals – MCX (Intra day calls)

CRUDE OIL (March) BULLISH ABOVE 3937 BEARISH BELOW 3918

GOLD (April) BULLISH ABOVE 12077 BEARISH BELOW 12037

SILVER (March) BULLISH ABOVE 23155 BEARISH BELOW 23060

COPPER (February) BULLISH ABOVE 330.2 BEARISH BELOW 329.20

LEAD (February) BULLISH ABOVE 129.80BEARISH BELOW 129.00

NICKEL (February) BULLISH ABOVE 1133 BEARISH BELOW 1126

ZINC (February) BULLISH ABOVE 100 BEARISH BELOW 99.40

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Outlook

April gold closed lower on Monday as it consolidated some of last week's rally. Today's low-range close sets the stage for a
steady to lower opening on Tuesday. Stochastics and the RSI are becoming overbought but remain neutral to bullish signaling
that sideways to higher prices are possible near-term. If March extends last week's rally, monthly resistance crossing at 978.50
is the next upside target. Closes below the reaction low crossing at 899.50 would confirm that a short-term top has been posted.
First resistance is last Thursday's high crossing at 958.40 then monthly resistance crossing at 978.50. First support is the 10-
day moving average crossing at 927.00. Second support is the reaction low crossing at 899.50.

March silver closed higher on Monday and posted a new contract high close. The high-range close sets the stage for a steady to
higher opening on Tuesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to
higher prices are possible near-term. If March extends this winter's rally, monthly resistance crossing at 18.450 is the next
upside target. Closes below the 20-day moving average crossing at 17.176 are needed to confirm that a short-term top has been
posted. First resistance is last Friday's high crossing at 18.195 then monthly resistance crossing at 18.450. First support is the
10-day moving average crossing at 17.580 then the 20-day moving average crossing at 17.176.

March copper posted a key reversal down on Monday as it consolidated some of this year's rally. The low-range close sets the
stage for a steady to lower opening on Tuesday. Stochastics and the RSI are overbought and are turning bearish hinting that a
double top with October's high might be forming. If March extends this winter's rally, weekly resistance crossing at 387.00 is
the next upside target. Closes below the 10-day moving average crossing at 364.74 would confirm that a short-term top has
been posted. First resistance is today's high crossing at 384.95. Second resistance is weekly resistance crossing at 387.00. First
support is the 10-day moving average crossing at 364.76. Second support is the 20-day moving average crossing at 349.72.

April crude oil closed higher on Monday as it consolidates some of last Thursday's decline. The high-range close sets the stage
for a steady to higher opening on Tuesday. Stochastics and the RSI are overbought and are turning neutral to bearish hinting
that a double top with January's high might be forming. If April extends last week's rally above January's high, upside targets
will be hard to project now that April has traded into uncharted territory. Closes below the 10-day moving average crossing at
96.65 would confirm that a short-term top has been posted. First resistance is last Wednesday's high crossing at 100.86. First
support is the 10-day moving average crossing at 96.65. Second support is the 20-day moving average crossing at 93.36.

April Henry natural gas closed slightly higher on Monday and spiked above the previous contract high crossing at 9.222. Profit
taking tempered early gains and the low-range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the
RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term. If March
extends this month's rally, monthly resistance crossing at 9.820 is the next upside target. Closes below the 10-day moving
average crossing at 8.817 would confirm that a short-term top has been posted. First resistance is Today's high crossing at
9.391 then monthly resistance crossing at 9.820. First support is the 10-day moving average crossing at 8.816. Second support
is the 20-day moving average crossing at 8.417.

MCXARUN
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GENERAL MARKET CONDITIONS

Gold and silver fell after the U.S. Under Secretary for International Affairs David McCormick said that the Bush administration would support a sale of roughly 8% of the IMF reserves, or 12.9 million ounces. IMF gold sales could result in some of the long positions in gold getting squared off. The real effect of IMF gold sales will be when they announce the time of sale or the period within which IMF gold will be sold. However the dip in gold will not last long and will be used by long term investors to reenter. Unless gold is in a short term to medium term bear phase gold will not fall. At lower levels there will be greater physical demand. For gold to be in a bear zone four conditions need to be met:

(A) Global equity markets need a sustained rise
(B) Geopolitical risk should not escalate
(C) Global economy remains robust and last but not the least
(D) The US dollar should gain. Even if there is a correction to $850 or $770 in the next few months, it will not alter the medium term bull rally in gold.

There could be some month end profit taking in silver and copper ahead of the March future expiry which could drag prices lower if they do not hold key technical supports. Gold has corrected due to IMF gold sales news. The big question is where is crude oil headed? For the moment it is trading in $96-$101 range which will be broken soon and a new range will be formed.

SILVER -- MARCH FUTURE -- INTRA DAY PIVOT $1796.0

Failure of silver to break $1824-$1844 will result in a fall to $1752 and $1720 and $1688.

COPPER -- MARCH FUTURE -- INTRA DAY PIVOT: $382.0

Copper is bullish over $356.70. Only a daily close below $356.70 will result in $339. Upside is open with $379, $386 as resistances.

MCXARUN
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