Daily Market Analysis

Markets Firmly In The Grip Of The Bears

The negativity surrounding the metals have finally broken key resistances of base metals and it seems that they may be heading downhill at a much faster pace today. The way markets have behaved lately with the trend changing on the blink of a eye lid we will not be betting our whole money but the general perception seems to be sell at rallies rather than buy on dips. Yesterday again manufacturing data came in below expectations ‘ fueling demand concerns going forward and a slow down seen in major economies as the data points out. Also with Qatar getting murkier ,any de stabilization of the middle east could have long term ramifications in the Global economy. If you combine this with UK elections and terror attacks , than we have a grim picture where risk reduction should take center stage. These environment breeds new winners like Gold which we can see in terms of prices. Prices have so far failed to cross $ 1300 but I expect them to topple today or Tomorrow. The failure to do that could attract selling in the metal in the long run.Crude has made a smart recovery on the back of API Data again showing larger than forecast withdrawal of stocks. Today we have EIA data which would further guide us on the demand picture going forward though I suspect it’s price movements will be dependent on headlines coming out of the recent developments in Qatar. Equity markets are on the softer side with EX FBI Chief Comey’s testimony tomorrow.Dollar Index have hit seven months low. Re bar has remained range bound and seems to be stabilizing at this levels.

Zinc has become a pain with negative price action and seller’s aggression seen in the counter. Technically it was a very weak close . Prices have now closed below 2500 two days in a row and if it closes below this pivotal figure today than this will be a sign that bears are here to stay. The picture certainly does not favor that and for the bulls the silver lining could be Crude oil prices and continuous weakening of dollar. Inventory has been positive with draw down’s seen. Spreads have again seen seller’s emerge.

Support 1 – 2425.5 ( basis 09 Nov’16 low )
Resistance 1 – 2475 ( basis 05 June’17 low )
Support 2 – 2399.5 ( basis 30 Sep’16 high )
Resistance 2 – 2500 ( will remain strong medium term resistance )

Lead held well throughout the day but as reiterated earlier it’s continuous failure to rise and breaking of the current range led to selling. The peculiar thing that we noticed was despite breaking 2070 , there was buying seen in the counter and no strong stop losses triggered in the metal. Spreads have been very well offered and they have been net sellers during the settlements. Inventory has seen declines. Reports coming from the physical markets have indicated some tightness and it will be interesting to see it’s price movements going forward. 2100 now holds the key in the short term.

Support 1 – 2065.5 ( Yesterday’s low )
Resistance 1 – 2090 ( basis 05 Jan’17 high )
Support 2 – 2043.5 ( basis 18 May’17 low )
Resistance 2 – 2100 ( strong and technically important resistance )

Aluminium has been a tale of two halves with strong passive buying seen in the counter and rejection of sub 1900 levels for now. It found support in the afternoon and the late buying seen during the evening session has continued in the morning. Spreads have been very well bid with Backwardation persisting. Technically a strong close with 1900 being protected on a closing basis. Inventory has seen declines.A close above 1920 will bode well for the counter in the short term.

Support 1 – 1892 ( basis 18 April’17 low )
Resistance 1 – 1909 ( basis 31 May’17 low and strong resistance )
Support 2 – 1885-1887 ( this zone provides good support )
Resistance 2 – 1922.5 ( basis 05 May’17 high )

Nickel has shown some positive intent and at one point in time traded above the 9000 levels but failed to sustain it despite some buying seen in the counter. Inventory has seen continuous declines in the LME controlled ware houses. Spreads are better bid as compared to the preceding day. Open interest has been declining indicative of short covering ? A close above 9000 will bode well for the counter in the medium term .

Support 1 – 8790 ( basis 16 June’16 low )
Resistance 1 – 9005 ( yesterday’s high )
Support 2 – 8705 ( basis 07 June ’16 high )
Resistance 2 – 9070 ( basis 10 May’17 low )

Copper has shown that demand has been strong so far in the 5550-5575 zone with buyer’s rejecting lower levels so far . Price action positive with buyer’s aggression seen in the counter. Copper has been a tale of two halves with selling being the theme in the European hours and buyers calling the shots in the evening session. Inventory has been supportive of the price rise. It needs to close above 5650 for buying to emerge in the counter.

Support 1 – 5600 ( remain well supported in the short run )
Resistance 1 – 5650 ( very congested zone and short term resistance )
Support 2 – 5575 ( will act as stiff support for the metal )
Resistance 2 – 5700 ( will act as resistance in the medium term )

Tin has been the laggard with very weak price action and seller’s aggression seen in the counter. Technically a weak close as rumors doing the round is that raw is amply available in off markets and the inventory shown in LME controlled warehouses is not the actual picture of demand and supply. A close below 19500 will not bode well for the counter in the short run.

Support 1 – 19500 ( basis 06 June’17 low )
Resistance 1- 19750 ( today’s high )
Support 2 – 19340 ( basis 27 March’17 low )
Resistance 2 – 19820 ( basis 09 May’17 high )

On the macro economic parameter China’s Foreign Reserves saw a small uptick from last levels.Spanish Industrial Production came in below expectations.Later in the day we have Crude oil Inventories which is expected to show reduced off take last week .Volatility has certainly risen with important events coming up ,we expect it to continue this way only. Investors are advised to be cautious as volatility can erode their intrinsic value.