Daily Market Analysis

” FED WEEK ” STARTS !

Last week volatility , volumes and prices have taken a sharp U -turn much to the relief of commodity investors. The prices look to gain this week unless and until we have some surprise announcements from the Fed and as reiterated earlier if they try to fix and reduce their balance sheets it could have a surprise impact on the markets on the down side. Meanwhile only a rate hike of 0.25 % is in my opinion already factored in the prices , a little down ward pressure on Gold which could become a buying opportunity. However if the Fed decides to keep the rates unchanged than we could see a strong rally in the commodity space, given the current technical break out. Re bar and iron ore are up again Today. Japan announced their New Machine Sales which was a disappointing -3.1 % and .PPI was also below expectations.Gold has remained range bound and I suspect this week’s event has made the investor’s a tad nervous in taking a directional call. Crude oil are up today but only marginally as Qatar reiterates it’s stand of oil production cuts and maintains that their economy is resilient enough to face this ban. Also it has stated that they will not allow other countries to dictate foreign polices of the country. During the weekend there has been reports from China that some provincial Government has fudged economic numbers to show growth.China’s May Vehicle sales is down 0.1 % YOY. Meanwhile China’s May Fiscal Revenues are up + 3.7 % .

Copper has again taken the driver’s seat in the metal space with strong buyer’s aggression seen in the metal. Prices went as high as 5832 before faltering today, though it could be some profit booking at the high’s .A close above Friday’s high will be positive for the counter in the short run. On the down side prices need to defend 5750 to make newer high’s in the coming trading sessions. Inventory has seen a rise today after many days of withdrawals. Spreads look to be finding passive buyers for now. Technically a good close.

Support 1 – 5768.5 ( 25 May’17 high and bids seen here on Friday )
Resistance 1 – 5810 ( basis 10 Feb’17 low )
Support 2 – 5739.5 ( basis 18 April’17 high )
Resistance 2 – 5838.5 ( basis 23 Feb’17 low and strong resistance in this vicinity )

Zinc has given a strong technical break out with buyer’s aggression seen throughout the day. Technically a very good close. Spreads have seen buying after many days. Inventory has reached multi year lows. Open interest has increased 5 % in two days indicative of fresh longs in the counter ? Prices above 2575 will bode well for the counter in the medium term and on the down side a close below 2500 will again attract liquidation in the counter.

Support 1 – 2517 ( basis 18 April’17 low )
Resistance 1 – 2558 ( basis 11 April ’17 low )
Support 2 – 2500 ( remain psychologically important )
Resistance 2 – 2581.5 ( basis 17 May’17 high )

Lead had a weak close but it was baffling to see the counter being sold into the close after being buyers throughout the day. At one point in time it did break the 2130 resistance zone but failed to sustain above it. Spreads are again well offered. Inventory has seen a rise. Just like it’s sister metal it ‘s open interest positions has risen indicative of Longs entering the markets ? The two metals look strong and for me it will be buy at dips for both the counters with a strict technical stop loss.

Support 1 – 2090 ( initial support area and Today’s low )
Resistance 1 – 2130 ( a bit repetitive but remains strong short term resistance )
Support 2 – 2070 ( basis 28 Oct’16 high ) Resistance 2 – 2150 ( long term resistance and a close above this will bode well for the metal )

Aluminium has been a laggard with prices making a low before bouncing back into the lates along with other metals. Prices have technically held the 1900 levels but today again in the morning session it has gone below the 1900 mark. Price action negative and any fall back below 1885 will open up the counter on the down side.Inventory has seen constant declines. Spreads remain well bid.

Support 1 – 1885 ( remain strong support zone )
Resistance 1 – 1909 ( basis 31 May’17 low and divergence seen at this level )
Support 2 – 1871.5 ( basis 12 May’17 low )
Resistance 2 – 1917.5 ( basis 17 June’17 high )

Nickel has been bid for but as usual the price action has been weak despite crossing 9000 decisively in morning trades and was promptly sold. For a good break out it needs to show positive order book position which is missing so far. Inventory has been declining but it seems it is immune to any good news. The most negative part has been it’s failure to defend major technical levels and even if it manages to go above that, fresh round of selling emerges in the counter. Spreads are offered. On a positive note for a change closing looked good but needs to be backed by a price rise for it to sustain higher levels. With fingers crossed I will remain a buyer in the counter with a strict stop loss of 8900. Any break out from here could create value for the investors in the medium term.

Support 1 – 8930 ( Today’s low )
Resistance 1 – 9040 ( basis 16 May’17 low )
Support 2 – 8790 ( basis 16 June’16 low )
Resistance 2 – 9085 ( basis 24 May’17 low )

Tin has seen some good volumes at lower levels with seller’s aggression evident in the counter. However in today’s morning trades selling seems to have abated with some mild buying seen in the counter. Latest official Chinese Customs data reveal that April imports of Tin ore from Myanmar totaled 20580 tonnes , up 14 % from march figures but down 51 % year on year. Technically it is in oversold territory and small bounce back can take place. Spreads are well bid but weak closing.

Support 1 – 18800 ( remain a strong level in the medium term )
Resistance 1 – 19215 ( basis 13 March’17 low )
Support 2 – 18660 ( Friday’s low )
Resistance 2 – 19450 ( basis 10 March’17 high )

On the macro economic parameter it is light today. But this week there is slew of data from China and US. The most important factor would definitely be Fed announcements on Wednesday after the LME close. It has the potential to change the market direction and we should read the press release carefully before arriving to a conclusion !