GENERAL MARKET CONDITIONS

Yesterday I had mentioned that investors should buy US dollar calls and precious metals puts. I was right. The US dollar gains and the fall in energy prices and metal prices is nothing but a technical correction which is a part and parcel of a long term bull run rally. Investors should get used to such movements and if they get scared, then the best place for them is the bond markets. Risk appetite has to be increased for both the investors and the day trader else stop losses will keep on getting hit.

Base metals get cranked up very quickly. Returns in base metals are high but so is the risk. It is the physical trader which tries to create an artificial shortage of the metal which in turn shrinks the LME stocks and prices rise. Retail investors think that whenever LME stocks fall that metal should rise and they end up doing a loss making trade. LME stocks are just manipulated by the base metals hedge funds and physical traders so that the end user buys at higher levels. They are not concerned over five percent intra day swings in base metal prices as long as medium term demand is high. Retail investors, if they are caught on the wrong side, exit only when they are unable to pay margin calls.

Looking at intra day LME inventories is not the correct way to trade.

We wish u all a very colorful holiday and happy Easter vacations. We will back on Monday. Day traders expect higher volatility to continue in metals and energies.

LME ZINC 3 MONTHS -- INTRA DAY PIVOT:$2287

Only a break of $2476 will result in bullish zone else zinc will fall to $2200 and below in short term.

LME NICKEL 3 MONTH -- INTRA DAY PIVOT $28580

Nickel has to close over $28580 to be in a bullish zone and target $31000 and $32000 once again. A close below $28580 will result in a slide to $26280 and below.

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