The analysis presented is the view of a pure market technician. There is no attempt to present any fundamental data or information as that is not the expertise of the analyst.

The mid week table includes the Wednesday’s prices, used as if they were the end of week prices for the purpose of calculating the technical information.

Wow! Down nine bucks. Gold seems to do that almost every month and a half to two months, so, what’s new?

FUTURES COMMENTARY

METALS

Gold: Every month and a half to two months gold seems to take a dive just to keep its loyal subjects awake. On the chart it has broken below that “flag” pattern, which was expected. What next you ask? Well there is support at the $461 level but once through there it could go all the way back to the start of the recent move, i.e. back to the $420 level. This would be based upon a short term P&F projection after a $461 breach. Better details on the week-end.

Silver: A significant drop on Wednesday but still within a wide aggressive up trending channel. P&F chart still some distance from a reversal, so, the move may be more scary than it seems.

Palladium: Up against the March highs but action halted probably in sympathy with gold. No real hint of a reversal yet but watch that $206 support.

Platinum: Volume action weak, momentum neutral price seems to be topping out. Significant support at $910.

Copper: Latest month long rally on weaker than normal volume action and can’t last long. Either volume picks up or more likely price turns down. Latest bounce not into new highs. A drop below $174 may be start of new reaction.

ENERGY

West Texas Light Sweet Crude: Step by step it continues into lower levels. Next step once it breached the $60 mark. Momentum ready to go negative.

Natural Gas: Probably the strongest of the energies but still starting to show signs of weakness. Hasn’t been able to make any headway since breaking the third accelerating FAN trend line, the “blow-off” line.

Heating Oil: Ready for a serious downside move once through that $1.90 support level.

Unleaded Gas: A serious support break and now could be heading back towards the $140 level. A minor support at $160.

CURRENCY

Australian Dollar: May be trying to stabilize recent downside move but volume low and not a help. Could see a rally but would be expected to be short lived.

British Pound: Stabilizing above the $1.74 level. Could be a bullish double bottom but needs more confirmation. A break above $1.78 would be good.

Canadian Dollar: Within an up trending channel since May. Almost at the lower support line. Could see some limited sideways motion and then up trend continuation.

European Euro: Continues to hold above $1.19 support. A rally from here would make for a nice double bottom reversal but no indication of that yet.

Japanese Yen: Now at the May 2004 support. Will it hold? I don’t think so. The downward trek just seems to solid at this point in time. Needs better convincing.

Mexican Peso: Basically into a lateral trend for past month. May be gathering strength for another try at a rally.

Swiss Franc: Back to $0.77 support and a possible double bottom. Seems like many currencies are doing it. Momentum showing a positive divergence which is a positive sign for a rally ahead.

U.S. Dollar Index: Nice P&F upside break but still has one more hurdle. Must trade at the 91 level to confirm. Volume and momentum still suggest weakness so it will be interesting as to which wins out.

INDICES

It should be noted that the comments in this section are based upon the actions of the Indices futures market and not upon the actions of the respective Indices themselves.

Dow Jones Industrial Average: Nice rally on Wednesday but still nothing to get excited about on the charts.

Nikkei 225 Index: New reaction lows and may continue for some time yet. Next support at 12900 then not till 11900.

NASDAQ 100 Index: One day sharp bounce means nothing unless there is a good follow through. That looks unlikely at the present.

Russell 2000 Index: Nothing yet to create excitement. Looks like still lower levels ahead.

S&P 500 Composite Index: Some volatile moves but the basic trend still seems to be unchanged, to the down side.

FINANCIALS

Eurodollar: Stabilizing around the 95.6 level. Let’s see where it goes next.

Federal Funds 30-Day: Stabilizing at 96 plus or minus .01. Next move once beyond these boundaries.

Treasury Notes 2-Year: Looks like it’s bottoming and wants to reverse but give it more time.

Treasury Notes 5-Year: Same comment as for 2-Year.

Treasury Notes 10-Year: May be bottoming for a short time but the trend is still towards lower levels.

Treasury Bonds 30-Year: Nothing in the charts to suggest a bottom. Still trending towards the March low of 109.

See you on Monday.

Merv Burak, CMT
Hudson Aero/Systems Inc.
Market Technical Information Group

www.themarkettraders.com

[email protected]

During the day Merv practices his engineering profession as a Consulting Aerospace Engineer. Once the sun goes down and night descends upon the earth Merv dons his other hat as a Chartered Market Technician (CMT) and tries to decipher what’s going on in the securities markets. As an underground surveyor in the gold mines of Canada’s Northwest Territories in his youth, Merv has a soft spot for the gold industry and has developed several Gold Indices reflecting different aspects of the industry. As a basically lazy individual Merv’s driving focus is to KEEP IT SIMPLE.

To find out more about Merv’s various Gold Indices and component stocks, please visit Merv’s Precious Metals Central. There you will find samples of the Indices plus other publications of interest to precious metals investors.


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