GENERAL MARKET CONDITIONS

Copper shocked everybody as comex July futures rose to a record high of $427 just after the comex open and then crashed after mine workers at codelco mines agreed to end the 20 day strike. London Metal Exchange (LME) was closed yesterday else copper would have easily crossed the $9000 mark. The US is the hub of global paper trade while London is the hub of physical trade. Prices are never sustainable unless it is backed by adequate physical demand. We have seen this with gold, silver and some other base metals. Crude oil prices are firm despite greater investment demand as it is also backed by physical demand. Copper will find buyers on dips as long as LME (3 months) holds $8000.

Momentum traders were caught in the whirl pool of copper’s rise. One of my clients was short in comex copper around $396, the sudden rise scared the wits of him and he reversed his trade at $421 only to exit at $408. This person made a double loss while trading. Whenever prices reach a new historical level one needs to check the sustainability of the rise. One should wait and if prices stabilize then go long else go short. Stop losses are useless. One needs to keep in mind the stop loss prices before the trade is done but exit at market prices. Stop losses are bound to get triggered if one put it on the trading screen.

COPPER -- JULY FUTURE

Yesterday's rise to $427 was fake. For the day as long as copper holds $382 and $369 downside will be limited and copper can target $404 and $412.

NYMEX CRUDE OIL -- FUTURE

A break of $120.60 will result in $121.60 and $125.20. On the lower side only a consolidated fall below $116.20 will result in $113.20.

INDIAN RUPEE (USD/INR)

The Rupee has been consolidating in 40.44-40.77 wider range and should break out from this range soon. In the short run unless the rupee breaks 40.88-41.00 zone, the rupee will continue to find sellers on the rise. I have been asked whether the rupee has bottomed out at 39.25. The Rupee has room for more gains in the medium term, but the pace of gains will be slower than 2007. Crude oil prices and the performance of global equities will be the key for the rupee in the medium term. If crude oil continues to rise and global stock markets shag in the medium term, the rupee may reverse the direction from bullish to bearish. Average volatility will be around twenty paise in the next few weeks. Key intra day supports are 40.28 and 40.42 while resistance is at 40.73 and 40.88.

MCXARUN
9994500540