posittional sell lead@ 164.50 sl 166 target 161/158/155
Friday 23 February 2018
Thursday 22 February 2018
Lead Trading Zones: February 21–March 2nd, 2018
Since my last look at lead, it looks like the metal is about to complete a correction phase due to the steep recovery in the dollar index, which points to an upward trend in the upcoming weeks. I expect a propositional trading zone from February 21 to March, 2018.
Aluminum Trading Zones: February 21–March 2, 2018
Since my last analysis of aluminum I find the metal is still struggling inside the Bullish Consolidation zone, which points to steep downward moves during the upcoming weeks. Based on that outlook, I expect a propositional trading zone from February 21 to March 2.
Elliott Wave Analysis: Gold Can Do A Double Correction
Short Term Elliott Wave view suggests that the yellow metal is still correcting cycle from 12.13.2017 low ($1236.30) as a double three Elliott Wave structure. Down from 1.25.2018 high ($1366.06), the decline is unfolding as a double three where Minor wave W ended at $1306.96 and Minor wave X bounce ended at $1361.81.
Minor wave Y is in progress and the subdivision is also unfolding as a double there where Minute wave ((w)) ended at $1324.75 and Minute wave ((x)) ended at $1336.21. Near term, while bounces stay below $1336.21, but more importantly below $1361.81, the yellow metal has scope to extend lower towards $1288.27 - $1302.28 to end Minor wave Y. Afterwards, expect gold to resume the rally higher or at least bounce in larger 3 waves to correct cycle from 1.25.2018 high. We don't like selling the proposed pullback
For this view to be gain more validity, gold needs to break below Minor wave W at $1306.96. Until then, there is no guarantee gold will extend lower and the right side remains higher as the yellow metal still has 5 swing bullish sequence from 12.15.2016 low. We do not like selling the proposed pullback and expect buyers to appear at $1228.27 - $1302.28 (if reached) for a 3 waves bounce at least.
Gold 1 Hour Elliott Wave Chart
Wednesday 21 February 2018
Tuesday 20 February 2018
Gold Leads Silver
It is widely believed that silver leads gold during bull markets for these metals. I wonder how this belief first arose and persists to this day given that it is contrary to the historical record.
It is partially true that silver outperforms gold during precious-metals bull markets. In particular, it’s true that silver tends to achieve a greater percentage gain than gold from bull-market start to bull-market end. It’s also the case that silver tends to do better during the final year of a cyclical bull market and during the late stages of the intermediate-term rallies that happen within cyclical bull markets. However, the early stages of gold-silver bull markets are characterised by relative strength in gold.
Gold’s leadership in the early stages of bull markets is evidenced by the following long-term chart of the gold/silver ratio. The boxes labeled A, B and C on this chart indicate the first two years of the cyclical precious-metals bull markets of 1971-1974, 1976-1980 and 2001-2011, respectively. Clearly, gold handily outperformed silver during the first two years of each of the last three cyclical precious-metals bull markets that occurred within secular bull markets.
Gold & Silver
Now, in the same way that all poodles are dogs but not all dogs are poodles, the fact that gold tends to strengthen relative to silver in the early years of a precious-metals bull market doesn’t mean that substantial strength in gold relative to silver is indicative of a precious-metals bull market in its early years. For example, there was relentless strength in gold relative to silver from mid-1983 until early-1991 that took the gold/silver ratio as high as 100, but there was no precious-metals bull market during this period.
Between mid-1983 and early-1991 there was, however, a multi-year period when gold, silver, most other metals and mining stocks offered very profitable trading opportunities on the long side. I’m referring to 1985-1987. We are probably in a similar period today, with the next buying opportunity likely to arrive before the end of this quarter.
LNG Comes To Boston, A Harbinger Of The Future?
The most curious natural gas story of the year so far comes out of Boston and seems to have echoes of a deepening Russia-related scandal in Washington. A liquefied natural gas (LNG) tanker bearing natural gas produced in part in Russia delivered its cargo to the Boston area for insertion into the natural gas pipeline system there. Apparently, the Russian company that supplied some of the gas may fall under U.S. sanctions against the financing and importation of Russian goods.
One of the many ironies of the delivery is that the United States is simultaneously importing LNG in one place even as it exports LNG from another. (I'll explain later why this may become a more frequent occurrence in the years ahead.)
The hue and cry from the natural gas partisans blamed Boston's predicament on the lack of pipelines to carry growing gas production from the nearby Marcellus and Utica shale deposits to needy Bostonians whose gas supplies had been depleted by a deep winter freeze.
Within the context of this narrow appraisal, the partisans are mostly correct. Attempts to bring more pipeline gas to New England have come to grief, especially in New York state where residents have strongly opposed new natural gas pipelines and storage facilities.
In addition, the state banned hydraulic fracturing—the main method for extracting gas from the Marcellus and Utica deposits—in 2014, claiming the process threatened water supplies. That ban, of course, prevented any shale gas development in southern New York under which the deposits lie. And, it brought into disrepute all things related to hydraulic fracturing or "fracking" including natural gas pipelines and storage facilities.
What lurks behind the outrage of the partisans is the assumption—widely touted in the media and by the U.S. Energy Information Administration (EIA)—that the country is about to become a large exporter of LNG for the long term as its natural gas production grows ever skyward. Energy abundance, they like to say, has arrived in America.
There's just one problem—or should I say four? Of the six major U.S. shale gas plays that are the basis for the optimism about supply, four are already in steep decline. (Gas produced from other types of deposits has been either flat or in decline for many years.) As of the end of 2017 the rate of natural gas production in the Barnett play in Texas, the Fayetteville play in Arkansas, and the Haynesville play spanning the area where Arkansas, Louisiana and Texas meet are all coincidentally down by about the same 44 percent from their peaks years ago. The Woodford play is down about 25 percent from its 2016 peak.
That leaves only the Marcellus and Utica plays mentioned previously to carry the United States into an era of continuously climbing overall natural gas production. That's an unlikely prospect and one rated as such by David Hughes, author of "Shale Reality Check." For his analysis, Hughes meticulously checked the actual well production histories of shale gas wells—rather than merely scanning misleading energy headlines as most other analysts seem to do.
Even the Marcellus is showing its age as the rate of production from new wells sags, a sign that the most productive prospects have already been drilled. In addition, a preliminary production peak in the Marcellus in early 2017 waits to be confirmed.
If the optimistic scenarios for U.S. natural gas production fail to materialize as seems likely, we will almost certainly see more LNG-related irony as imports and exports occur simultaneously at the country's LNG terminals. This is because long-term delivery contracts entered into by LNG export terminals will prevent any rerouting of gas bound for export to domestic use, possibly even under emergency conditions. If the shale gas boom fizzles, we will discover that government approvals for U.S. export terminals were wildly ill-advised as more LNG delivery ships dock near Boston and other places to make up in part for outgoing U.S. LNG cargoes .
Silver Market Poised For Bullish Trend
Silver is completely “off the radar” for most investors right now which is just the way we like it when we are buying, however, as we will see, there are good reasons to believe that this will not be the case for much longer.
On its latest 8-year chart, we can see why silver has zero appeal for momentum traders now – it ain’t goin’ nowhere, or so it would seem, if you project past performance into the future, but as we have repeatedly observed in recent months, it is marking out a giant Head-and-Shoulders bottom, which is quite heavily disguised compared to the concurrent flat topped H&S bottom forming in gold, because it is downsloping. A key bullish point to observe on this chart is the steady volume buildup over the past 2 years, which is a sign that it is building up to a major bull market. This hasn’t had much effect on volume indicators so far, but such is not the case with gold, where a more marked volume buildup has driven volume indicators strongly higher so that they recently made new highs, which bodes well not just for gold, but obviously for silver too.
Silver Daily Chart
Moving on to observe recent action in more detail on the 6-month chart, we see that silver dropped back further than predicted in the last update, which is hardly surprising considering what happened to the broad stock market. No technical damage was incurred, however, and it has already clawed back a part of the loss. What now? – like gold, silver may drop back again short-term on another modest dollar rally, which appeared to have started on Friday, and any such drop will be viewed as presenting another opportunity to accumulate more silver and silver related investments, especially given silver’s latest COTs which are “flat-out bullish” as we will now proceed to see.
Silver 6 Month
The latest COTs show that the Large Specs have “thrown in the towel” on silver and gone home – great! – that’s what we like to see. This extremely low level of Large Spec long positions is very bullish indeed for silver and also implies that gold could soon rally too, despite its COTs not being so positive, although as mentioned above both metals are likely to have to weather a modest dollar rally first.
In summary, whilst a minor short-term dip on a modest dollar rally looks likely, silver’s chart are very bullish overall as it appears to be readying to break out of it giant Head-and-Shoulders bottom. Any near-term weakness will therefore be viewed as presenting an excellent and possibly final chance to accumulate silver and especially silver stocks at very low prices ahead of major sector-wide bull market commencing.
India Posts Robust Oil Data
The oil continues to bullishly run on the market as India’s January results were peaking at a new record high. Crude imports were skyrocketing in the previous month, a large number of refinery runs and the growing refinery capacity also pushes the strong demand and what a handful of analysts dub as the “strong recovery”.
The striking oil news from the country is buoying the oil prices in the market and a lot of investors and market analysts are looking at the possibility of the record high reports in India can sustain and support the ongoing bullish prices in the future.
Indian Oil Figures
Looking at the country’s January oil imports, they managed to tally a whopping 13.6% increase against the January 2017 figures and tallying a massive 12.5% increase versus the figures from the latter month, December 2017’s.
According to reports, the country’s state-owned refineries garnered a whopping two-thirds of the incredible 5 million barrels per day that the country has pushed in the previous quarter. Reports also revealed that the country has been looking to rally the run rates for January until March of this year to meet the targets the government declared.
Furthermore, the high imports and run rates have also been stemming from the highly anticipated spring maintenance in the country’s local refineries. This managed to increase the great results alongside the strong demand and refining margins. Analysts also stated that the country has been running a massive barrels per day production, peaking at 5.27 million bpd.
Bullish Price on Higher Imports
The previous robust import data from India last January is already taking the over the market as analysts and economists are debating on what this can actually mean for the oil prices in the future. Analysts are debating on whether the robust import can keep the oil prices bullish the in the future and eventually impact the benchmark future prices as well.
According to the Indian government, the local annual fuel demand was up by a massive 10.3% from the prior month. Meanwhile, the consumption of diesel and gasoline were also up from the previous month by double-digit figures.
Analysts noted that it is going to be possible given that the country continues to boost their manufacturing in the next few years. According to reports, India is looking to attain just that with a massive 2030 target; they revealed their plans on increasing the refining capacity by a whopping 77% by that year to an 8.8 million barrels per day production.
Higher taxes likley to weigh UAE Gold jewelry imports
DUBAI (Scrap Register): Higher taxes appear to be a growing issue for gold-jewelry wholesalers in the United Arab Emirates, although other issues are also at play, said Metals Focus.
The consultancy cited two tax changes in recent years -- a 5% import duty on jewelry at the start of 2017 and a 5% value-added tax this year. This has accompanied a slump in gold jewelry imports into the UAE, with last year’s inflows roughly half those in 2014, analysts reported.
Gold jewelry consumption in the UAE has been fallen from just over 64 tonnes in 2013 to under 43 tonnes last year. Drivers include political tensions and armed conflicts in the region, weak energy prices, lower government revenues, rising living costs and deteriorating consumer sentiment.
However, analysts said they also believe that the UAE has, to some extent, declined in importance as a hub for wholesaling. For instance, jewelry imports into Iran and Iraq are thought to have grown last year, while Italian data show that through October, Italian gold-jewelry shipments to Turkey rose 35% year-on-year and to Lebanon by 75%.
Further, there has less buying by Indians visiting the UAE due to reduced price differentials between purchases at home and in the UAE. “Industry sources…inform us that jewelry imports into the UAE this year so far are severely depressed,” Metals Focus noted.
To an extent, this is partly due to some importers pulling forward imports into December last year to beat the 1st January deadline [for higher taxes]. Some are hopeful that the worst damage has now passed and that a tentative recovery could soon start, in part as wholesalers and their customers adjust to the new regime.
However, it seems highly likely that imports will remain sluggish for the entire first quarter and perhaps for the whole of 2018 due to further market share loss to other wholesaling hubs, greater purchasing at home by Indian consumers and poor sales within the UAE itself.
The consultancy cited two tax changes in recent years -- a 5% import duty on jewelry at the start of 2017 and a 5% value-added tax this year. This has accompanied a slump in gold jewelry imports into the UAE, with last year’s inflows roughly half those in 2014, analysts reported.
Gold jewelry consumption in the UAE has been fallen from just over 64 tonnes in 2013 to under 43 tonnes last year. Drivers include political tensions and armed conflicts in the region, weak energy prices, lower government revenues, rising living costs and deteriorating consumer sentiment.
However, analysts said they also believe that the UAE has, to some extent, declined in importance as a hub for wholesaling. For instance, jewelry imports into Iran and Iraq are thought to have grown last year, while Italian data show that through October, Italian gold-jewelry shipments to Turkey rose 35% year-on-year and to Lebanon by 75%.
Further, there has less buying by Indians visiting the UAE due to reduced price differentials between purchases at home and in the UAE. “Industry sources…inform us that jewelry imports into the UAE this year so far are severely depressed,” Metals Focus noted.
To an extent, this is partly due to some importers pulling forward imports into December last year to beat the 1st January deadline [for higher taxes]. Some are hopeful that the worst damage has now passed and that a tentative recovery could soon start, in part as wholesalers and their customers adjust to the new regime.
However, it seems highly likely that imports will remain sluggish for the entire first quarter and perhaps for the whole of 2018 due to further market share loss to other wholesaling hubs, greater purchasing at home by Indian consumers and poor sales within the UAE itself.
Monday 19 February 2018
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