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.

Energy, energy, it seems that’s all that is on people’s minds is energy. High oil prices as well as gas and heating oil. Those pennies you stored in the mattress, get them out, you will need them this winter.

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.

FUTURES COMMENTARY

METALS

Gold: The sharp bounce on Thur and Fri seems to have hit a ceiling. With the Stochastic Oscillator entering its overbought zone the action is starting to look like a topping action.

Silver: Nice rebound after a serious support break but like gold, the action is starting to look more like a topping action.

Palladium: Lateral action may be considered a base building for the next move, but that move may be towards lower levels. Low volume action is suggesting minimal speculator interest on the up side.

Platinum: Upside action seems strained and labored. Maybe a rest or reaction is needed to build up additional strength.

Copper: Month long lateral action continues with support at the 160 level (Dec contract). Action has the feel of a topping action but wait for it.

ENERGY

West Texas Light Sweet Crude: In a short term bear trend with support at the $62.75 level. This is just at an intermediate term up trend line. Price momentum still in the positive territory but heading lower real fast. Volume action starting to show speculator disinterest in the higher prices for now. Look for more lateral or downside action in the days/weeks ahead.

Natural Gas: Topping out and may close that gap between $10.15 and $10.65. Otherwise, the action still seems to have strength and higher levels may be expected after a short rest or reaction period.

Heating Oil: Reaction setting in with first support at the 1.80 level. Momentum and volume action suggests that the final end is not yet in sight.

Unleaded Gas: How quick they fall. UG is almost back to where it was prior to Katrina. Boy what a ride. Support at around the 180 level but looking at the momentum and volume action do not be surprised if new highs are made in the weeks/months ahead.

CURRENCY

Australian Dollar: The Au dollar has made its first higher low in many months. This may be the start of a strengthening and reversal process.

British Pound: Very strong move with high volume has taken the Pound to new 3 ½ month highs. A reversal and new bull move may be in progress. However, a rest is in order.

Canadian Dollar: Coming up against previous Nov highs but not with vigor. Although price has been in a nice bullish up trend since May it has not been with the enthusiasm of volume or momentum. Not the kind of action long term trends are made off.

European Euro: Broke into new recovery highs but could not hold. Although volume and momentum have been positive price still seems to be holding back.

Japanese Yen: That .920 barrier just seems to be too strong to penetrate. Momentum not yet positive while volume IS showing a little strength. Wait for the penetration.

Mexican Peso: The rally appears over and it may be back to the down side. Volume action okay and momentum still positive so all may not be lost.

Swiss Franc: Short term ups and downs but with increasingly higher highs and lows. Bottoming and reversing action continues.

U.S. Dollar Index: New reaction lows with negative momentum. Volume indicator into new lows also. More down side can be expected from the Dollar Index.

INDICES

Dow Jones Industrial Average: In a rally mode but within a strong resistance zone. Must go through 10740 resistance level to look good.

Nikkei 225 Index: Rally just keeps on heading higher. May take a short rest but the trend is still towards higher levels.

NASDAQ 100 Index: Bounce off up trend line but not with any degree of vigor. Before getting too enthusiastic lets see if it can breach that previous 1635 high.

Russell 2000 Index: Positive momentum and volume action suggests that the bounce may take the Index through its previous high level.

S&P 500 Composite Index: Great volume action on the up side but momentum is holding the Index back from a serious move. Needs to break through 1250, and soon.

FINANCIALS

Eurodollar: Looked like great bottoming and reversing action but needs to break through the 96.4 barrier to get going.

Federal Funds 30-Day: Very volatile down side action. Not sure if it is for real or a data problem.

Treasury Notes 2-Year: Recovery action hit a snag and is taking a rest. More upside ahead but getting into strong resistance zone and may not move quickly.

Treasury Notes 5-Year: Great month long rally but now a rest is in order. Within a strong resistance zone and will not get out till about the 110 level.

Treasury Notes 10-Year: Rally hit resistance and price reacting lower. Reaction not serious at this stage but must hold above 111.0

Treasury Bonds 30-Year: Similar action to the 10-Year but with support at the 115.4 level.

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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