GENERAL MARKET CONDITIONS

Markets will be looking forward to the G7 meeting this week for surprises (if any) and their comments on global financial markets. Else there is hardly anything to comment on the metals and energy market. The US dollar is the key driving force behind movement in metals and energies as they move in direct correlation. Volatility has been excess this week. At the beginning of the week I had expected this week to be calm one but it has been the reverse. Every day we are hearing comments from one central banker or another. As long as these continue volatility will continue to remain on the higher side.

The movement in crude oil prices seems to be dictated by the options markets. Since last September retail investors were seen buying put options in crude oil on expectations of a fall in crude oil prices after Easter. These became useless. The sellers of options started to cover their positions when it seemed prices will hit the strike price. Even medium term movement in copper and silver is all about the options market. Higher volatility has resulted in low risk traders and retail investing more in options markets due to the limited nature of risk. The fund manager tries his best to ensure that most of the retail investors do get anything in options. In my view its better to trade in spreads than in options. Spreads will give higher returns than options with slightly higher risk. Comex silver and copper May futures are expiring this month. Volatility in copper and silver spreads will rise which will give opportunity for day traders as well. One should look at inter commodity spreads as an investment option also. I prefer inter commodity spreads than single commodity spreads.

SILVER -- MAY FUTURE

Failure of silver to break $1918 in the rest of April will result in a fall to $1630 and $1554.

NYMEX CRUDE OIL -- FUTURE -- INTRA DAY PIVOT: $112.20

Crude oil reached our target of $112.20 and fell subsequently. Crude oil is bullish over $107.10

MCXARUN
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