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.

Too many of the commodities are showing signs of weakness behind recent up moves. Major commodity topping period?

FUTURES COMMENTARY

METALS

Gold: Recent activity looks very much like a topping activity. Once through $461 on the down side the activity would be confirmed with a short term projection down to the $443 level. Otherwise a move through $480 is required to continue the bull.

Silver: Still up against that $7.60 ceiling. Has good momentum but volume a concern. A move through $7.35 would break an up trend line and suggest further downside. Above that we have a lateral trend or a continued bull.

Palladium: Needs a new rally from these levels or it may be back to the 180 level.

Platinum: Good upside volume action but momentum starting to deteriorate. 4910 support must hold.

Copper: New highs just keep on coming. However weak volume action does not suggest longevity and a halt to the trend might occur right at these levels.

ENERGY

West Texas Light Sweet Crude: Head and shoulder neckline and solid support level at the $62.50 level. A break below this level would initially project to the $54 level, but might most likely stop at $56 support. Momentum is weak and volume no help. $69.50 needed to get going on the up side again.

Natural Gas: All the action is still to the up side but watch $13.75 for a short term top. This action has all the ingredients of a “blow-off” stage and $13.75 would suggest the end.

Heating Oil: Still trapped between my FAN Principle trend lines 2 and 3, as it has basically been for 3 months now. Looks like it’s moving down towards the third trend line at about the $1.93 level. Breaking below this line would confirm a long standing bear signal based upon my FAN Principle.

Unleaded Gas: Short term up trend line break. Solid support at the $175 level. Let’s see what happens next.

CURRENCY

Australian Dollar: Wide lateral trend continues with no end in sight.

British Pound: Minor rest period while on its way towards $1.73 support.

Canadian Dollar: Minor reaction after a 4 month up trend. Weak volume action of recent highs suggested a short term top. Could stop at up trend line just below here but also could move all the way back to the $0.82 level.

European Euro: Has had a bad year. Tried to stabilize and rally but it did not work and it’s back to previous lows. If it holds above the $1.19 level that would then be a serious bullish double bottom.

Japanese Yen: The Yen also had a bad year, and it’s continuing with a latest support break and into new lows. However, there may be a bullish positive divergence developing in the momentum indicator which, if true, might finally cause a reversal of trend.

Mexican Peso: A very strong short term rally with the short term moving average turning up but still not convincing that the trend has basically turned up.

Swiss Franc: Failed rally and almost back to previous lows and support at the $.768 level. Volume action has stabilized suggesting a potential bullish double bottom here.

U.S. Dollar Index: Month long rally continues but on weak momentum and volume action. Longevity suspect. Latest action suggests it is having difficulty in moving higher. Despite P&F projections to new recent highs, it could be topping 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: Broke recent support and could be heading back towards the 10100 level..

Nikkei 225 Index: Has just broken most recent up trend line (a blow-off line ??) and that may signal the end of the fabulous bull run since the May lows.

NASDAQ 100 Index: Still has support at the 1560 level but support is not expected to hold. Recent action weak and a move back to the April lows in the 1410/1420 area would not be a surprise.

Russell 2000 Index: Sharp downside action has support at 643. Breaking that, it could go all the way back to April’s 580 level.

S&P 500 Composite Index: Sitting just above support but recent action suggests a lot more downside still ahead. 1115 would not be a surprise.

FINANCIALS

Eurodollar: The bear slide continues but with some signs that a rest period is about to start.

Federal Funds 30-Day: The bear slide continues but with some signs that a rest period is about to start.

Treasury Notes 2-Year: Broke support and seems to want to go lower but a hesitation is in order.

Treasury Notes 5-Year: Finding support just about here. Let’s see if it holds..

Treasury Notes 10-Year: Broke support but seems to want to halt the slide. Let’s see if a rest or reversal may set in around here.

Treasury Bonds 30-Year: Volume action not as weak as price. Price has broken support but may be slowly halting slide.

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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