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May
24th
Altona Energy (ANR): April Bear Trap Targets 3p
By zakmirPresumably after any significant down move in a stock or market, the idea of that it could then just bounce back rather quickly always appears to be wishful thinking. Nevertheless, in the case of Altona Energy it can be seen how there was a decline towards the 1.25p level at the start of this year, a floor formed, and then there was a bear trap over the course of April towards 1p. What can be seen now is that this initial February support has now been re-established over May and we are looking for at least a retest of May resistance towards 2p to start June.
In fact, what we would like to see is the completion of what could be a U-shaped reversal taking the shares towards the initial highs of 2013 just under 3p. At this stage only an end of day close below the 1.25p support from early February would really begin to cancel the recovery scenario, especially given how much bullish RSI divergence there is from last month.
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May
24th
Gold Trying to Build Base as Retail Demand Counters More ETF Selling
By Adrian Ash
The Gold price fell $10 per ounce after reaching
almost $1400 for the 5th time this week in London trade Friday
morning.
Silver held tight around $22.50 per ounce,
managing only one-third of gold's 2.0% gain for the week.
After yesterday's 7% plunge Japan's stock market bounced, but
other Asian equities fell, as did European stocks.
US and UK markets are closed Monday for national holidays.
"There is a floor emerging around $1360," says a New York
dealer's note, adding that bearish speculators wanting to profit
from a fall in the gold price "may be inclined to wait" for a
rally to this week's high of $1414 before adding to their record
holdings of short futures contracts.
Unless the gold price gets above Wednesday's high, reckons
technical analysis from Swiss bank and London bullion
market-maker UBS, "the risk is for rejection and to resume the
broader bear trend."
But "while the trend is still bearish," counters Russell Browne
at Scotia Mocatta, "the metal is trying to develop a base."
Given the 20% drop from 2011's highs, the gold price "could take
multiple weeks to consolidate and determine a direction," Scotia
says, pegging resistance at last week's high of $1450 per ounce.
"That the gold price hasn't completely collapsed," says a note
from Macquarie bank quoted by Reuters, "is testament to strong
retail demand for jewellery, coins and bars" in the face of
continued selling of exchange-traded gold trust funds by
institutional investors.
Thursday saw another 1.5 tonnes of gold exit the world's largest
gold ETF. The SPDR Gold Trust has now shrunk by
25% from its all-time peak of six months ago.
The UK's largest pawnbroker H&T today warned
investors that every 10% drop in British Pound gold prices will
knock £2 million ($3m) off its pre-tax profits.
Major government bonds meanwhile ticked higher as stock markets
slipped, nudging interest rates lower on UK, US and German bonds.
To reduce "significantly the risk of a sharp rise in [Japan's]
long-term rates," says Nomura analyst Richard Koo, the Bank of
Japan should clearly state it won't let inflation rise above 2%
per year.
Japan's central bank vowed at the start of April to double its
balancesheet to nearly $3 trillion by end-2015. The Japanese
stock market has gained 29%, but government bonds have fallen
sharply, doubling the interest rate on new 10-year borrowing from
below 0.4% to more than 0.9% today.
"Pundits in the media, and especially on television, have devoted
a great deal of attention to the subject of inflation," says Koo.
"The more people hear about it the more they are inclined to
believe it, even if it is not true."
"[But] recent history teaches us that inflation has fallen too
low," writes John Hopkins professor and IMF scholar Laurence
Ball.
Commenting specifically on the United States, "Raising inflation
targets to 4% would have little cost," says Ball, "and it would
make it easier for central banks to end future recessions."
"Gold's sensitivity to inflation is better than most other asset
classes," says Kleinwort Benson's chief investment officer,
Mouhammed Choukeir.
The private bank and wealth manager is now selling gold from
client portfolios, however. Because with gold price "momentum now
clearly negative and key technical support broken at $1500, it
looks to be an increasingly expensive form of insurance."
Kleinwort is increasing its allocation to the US Dollar – "a safe
haven currency" – because the recent surge in world stock markets
have been accompanied by "signs of investor complacency."
Adrian Ash
(c) BullionVault 2012
Please Note: This article is to inform your thinking,
not lead it. Only you can decide the best place for your money, and
any decision you make will put your money at risk. Information or
data included here may have already been overtaken by events – and
must be verified elsewhere – should you choose to act on it
May
24th
Buy Amur Minerals (AMC): Support Above Initial 2013 Resistance
By zakmirThe target on a 1-2 month timeframe is as high as the September 2011 price channel top runing towards 15p.
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May
24th
Buy Caza Oil & Gas (CAZA): Sharp Price Channel Floor Rebound
By zakmirThe likely target at this stage is seen as being the former February resistance zone at 14p plus, although of course on a 3-6 month view while the September uptrend lnie holds we should anticipate a return to the dizzy heights seen at the turn of the year.
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May
23rd
Market Wrap - 23rd May
By Michael Hewson CMC Markets
When European markets opened this morning you could be forgiven
for hearing a loud hissing sound as the air drained out of the
strong rally we’ve seen unfold since the beginning of this month.
This morning’s sharp drop on the Nikkei was certainly one
catalyst, but it certainly wasn’t the only one as we saw the
Japanese index plunge sharply in a fall that saw every
constituent in the index close lower, the first time that this
has happened since 2005.
Whatever the catalysts behind today’s equity market sell-off they
need to be put into the context of how far markets have risen
this year. Since November last year the Nikkei has almost doubled
in value so a 7% decline while significant, still leaves us much
higher than when we started the year.
Furthermore at the beginning of May the FTSE was trading at 6,450
so we’re still well above those levels. It also shouldn’t be
forgotten that if anyone had predicted that the FTSE would be
trading just below the 2007 highs by May when we started out in
January, then I think most people would have taken that.
At any rate the change of tone today probably has more to do with
the fact that the current debate around the prospect of tapering
is likely to intensify in the coming weeks, and as a result every
bit of US data is likely to be dissected in an attempt to
establish when the Fed decides to call time on the open credit
card at the bar.
The disappointing Chinese manufacturing data, to a seven month
low, gave markets the extra nudge over the edge that was needed
and persuaded investors with money in the game to cash in and
pull some of that money off the table as markets now look set to
embark on what looks like an entirely healthy correction and
readjustment, given that the underlying economic data continues
to disappoint on several levels.
Amongst the biggest fallers today we’ve seen the technology
sector and basic resource stocks take a bit of a hammering with
ARM Holdings (ARM) sliding back sharply after
being downgraded by Paribas to “neutral”
Amongst the mining sector the biggest fallers are Anglo
American (AAL), Antofagasta (ANTO) and Rio Tinto
(RIO) as commodity prices got slammed, and copper down
sharply.
One of the few gainers has been in the utilities sector with
United Utilities (UU.) as the company delivered
profits of £305m, a rise of 8.7%.
US markets took their cues from the Asia and European sessions
opening sharply lower despite a slight improvement in US weekly
jobless claims, coming in at 340k, and improvement on the
previous 363k.
In signs that the US housing market is
continuing to improve new home sales also
improved for April, rising 2.3% much more than expected.
On the flip side we saw US manufacturing PMI slip back to 51.9 in
May with new export orders shrinking.
In terms of companies to watch PC maker Hewlett
Packard is one to watch after reporting earnings for Q2
better than market expectations coming in at $0.87c, above the
$0.81c consensus. The company also raised its outlook for the
rest of the year.
Troubled retailer JC Penney is also likely to be
in the spotlight after reporting that its 5 year credit facility
was increased to $2.25bn.
Elsewhere in the retail sector Ralph Lauren
reported Q4 profits of $1.37c a share, above expectations of
$1.30c a share, however sales revenues came in short in a
familiar story for this particular earnings season.
This morning’s fall in the Nikkei has translated
into a sharp rise in the Japanese yen and the Swiss franc as
investors once again start to fret about the strength of the
global economy. Doubts about the strength of the Chinese economy
has prompted some profit taking and also sent the Australian
dollar lower as well.
The pound has had a rather indifferent day
despite the latest Q1 GDP numbers being confirmed at 0.3%, while
the euro has also found a decent underpinning after French and
German manufacturing PMI’s saw a slight improvement in the latest
numbers. It seems investors are choosing to ignore the sharp
sell-off in Italian and Spanish bonds which have seen yields jump
sharply higher.
Copper prices have tumbled today, after hitting
a six week high yesterday, on this morning’s weaker than expected
Chinese HSBC manufacturing PMI, once again raising concern about
the weak nature of the latest rebound in the Chinese economy.
Oil prices have continued their recent declines
declining for the third day in a row on both Brent and WTI as
economic data continues to point to reduced demand against a
backdrop of high inventories.
Gold on the other hand rather perversely is
higher on the day despite speculation about potential Fed
tapering in the coming month as investors once more use the
yellow metal for a bit of haven buying.
May
23rd
Bullion Rallies Despite Losing US Fed Prop as Stock Markets Sink on Weak China Data
By Adrian Ash
Both gold and silver rose in
Asian and London trade Thursday morning, defying a sharp slide in
global stock markets to gain 3.0% rally from yesterday's sharp
sell-off.
Commodity prices fell as major government bonds rose but weaker
Eurozone debt slipped, pushing interest rates higher.
Tokyo's Nikkei index – up by 85% from November – dumped more than
7% after new data showed a surprise contraction in
China's manufacturing sector.
Private "retail" investors have "abducted" the Japanese stock
market, accounting for more than a third of recent volume,
according to brokers quoted by the Financial Times.
"[Gold's] inability to hold the highs is bearish," says the
latest technical chart analysis from Scotia Mocatta.
"[Wednesday's] intra-day rally is indicative of bargain hunting
in gold rather than a change in trend," the bullion bank adds,
pegging support at the April 2013 low of $1323.
Like Barclays Capital's analysts, Scotia now puts short-term
resistance at yesterday's sudden spike of $1412.
Gold prices rose Thursday morning to breach $1390 per ounce once
again, recovering two-thirds of Wednesday's plunge from that
1-week high – made as US Federal Reserve chairman Ben Bernanke
was testifying to the Senate on the likely direction of Dollar
interest rates and quantitative easing.
Having warned against "a premature tightening of monetary policy"
however, Bernanke was then asked if the Fed might start reducing
its $85 billion in monthly QE purchases of government debt and
mortgage bonds before Labor Day on Sept. 1st.
"I don't know," Bernanke replied.
Minutes from the US central bank's latest policy meeting also
showed one participant wanting to reduce the level of QE
"immediately".
"Not having the future support of the Fed," says Edward Meir's
note for INTL FC Stone, "will remove a major prop for gold."
"It seems the market is now squarely focusing on the September
17-18 [policy] meeting for the Fed to make its move," reckons ING
bank's analysts.
"Together with expectations of tightening quantitative easing,"
says Mitsubishi analyst Jonathan Butler – also quoted by Reuters
– "the general trend for a modest economic recovery in the
developed markets is going to fuel growth in the equity markets
and the Dollar.
"That should see gold coming under pressure."
"The momentum is strongly negative," says Edward Lashinski,
global strategist at RBC Capital Markets in Chicago.
"The market understands that gold is no longer a safe haven."
On the supply side meantime, "Being more profitable is better
than being bigger," said Jamie Sokalsky, CEO of the world's
largest gold miner, Barrick, at Bloomberg's Canada Economic
Summit in Toronto on Tuesday.
Also forecasting new record highs for the gold price thanks to
central-bank demand and the state of the global economy, Sokalsky
mooted "divesting" some smaller, higher-cost mines to focus on
more efficient projects.
In particular, the giant Pascua-Lama project in Chile – valued at
some $8.5 billion, and already eating some $5bn in costs – has
been delayed by environmental concerns, says Canada's Financial
Post.
"Barrick is considering all its options at Pascua-Lama," says the
paper, "including outright suspension."
At current gold prices around 10% of gold mines globally will be
making losses, according to Thomson Reuters GFMS data.
"We would initially expect the oldest mines closing," says a
special report from Japanese trading house Mitsui's metals
strategist David Jollie in London, "as they are in many cases
coming to the end of their operating life."
Gold mining companies are likely to avoid closing newer projects
"as long as possible," Jollie says. But if the gold price stays
low enough long enough, "closures will happen."
Adrian Ash
(c) BullionVault 2012
Please Note: This article is to inform your thinking, not
lead it. Only you can decide the best place for your money, and any
decision you make will put your money at risk. Information or data
included here may have already been overtaken by events – and must
be verified elsewhere – should you choose to act on it
May
23rd
Advanced Power Corporation (APC): Steady Price Channel Progress
By zakmirWhile I would not wish to curse the present progress of Advanced Power Corporation, it has to be admitted that the job of calling stocks and markets correctly would be made all the more easy if we were presented with price action as consistent as that which has been seen here over the recent past.
The vehicle for the ascent is a rising trend channel from the beginning of October, with added plus points being the way that the floor of the channel is backed by the rising 50 day moving average now at 29p. There is also the confidence provided by the channel floor itself being so far above the 200 day moving average now at 18p, a phenomenon that suggests great positive momentum.
On this basis one would be happy to call Advanced Power as high as the 2012 price channel top of 40p plus over the next 6-8 weeks. Only a weekly close back below the 50 day line would currently upset the buy argument.
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May
23rd
EMED Mining (EMED): Fighting A Dead Cross
By zakmirHaving been a great fan of EMED over Q4 2012 and going into 2013, it makes the latest charting set up all the more disappointing. However, it is currently rather difficult to ignore the negatives being served up on the daily timeframe. In fact, despite the rally going into February this year, the overall pattern here over the past couple of years has been of a descending price channel with the resistance line at 14p and the support line projection target down to 5p. This latter figure is currently where the shares are headed unless they can counteract the 50 day / 200 day moving average dead cross sell signal this month, and the overall downward pressure from the channel.
At this stage only back above the former 8.25p August floor really delays the 2011 price channel floor target being hit on a 1-2 month view.
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May
23rd
Pre Market Commentary - 23rd May
By Michael Hewson CMC Markets
The FTSE100 is expected to open 80 points lower at 6,760, the DAX
is expected to open 108 points lower at 8,423 and the CAC40 is
expected to open 31 points lower at 4,020
There was an expectation after Bernanke’s testimony on Capitol
Hill yesterday that the latest Fed minutes wouldn’t add too much
to overall market expectations around the prospects for further
easing against expectations of possible tapering.
After an initially dovish statement the fact that the Fed
chairman refused to rule out tapering this year in response to a
direct question left the market none the wiser, apart from the
fact it would probably come at some point, the only question
would be whether it was sooner or later.
The release of the latest Fed minutes completely changed that
dynamic with a single line, “a number of participants
express a willingness to reduce QE in June.”
This is hugely significant because this Fed meeting came before
the most recent payrolls data and the huge upward revisions to
the numbers that we saw at the beginning of May. If members of
the committee felt this way before the huge upward revisions to
the jobs numbers, then it stands to reason they probably feel
even more inclined now, bringing forward the probability of an
even livelier debate about the timing of a slowdown in the
current levels of stimulus, when the Fed next meets on June 18th
and the 19th.
In any event this was enough to stop US stocks in their tracks,
retreating from more record highs, and will ensure, along with a
much weaker than expected Chinese manufacturing
PMI that European markets open lower this morning, as
markets fret about an earlier than expected pull back of their
favourite palliative.
We should know more after the next US employment report, but you
can be certain another good report will ratchet up the
expectations of the markets about a reduction in the scale of the
current program, from the current $85bn a month, even if it
overlooks the fact that the Fed’s balance sheet will still be
growing, albeit at a slightly reduced pace.
Later today, the focus shifts back to the European economy after
yesterday’s European Summit where the subject of tax evasion was
high on the agenda. Considering the state of the European economy
you would have thought that growth and employment measures would
also have been in there somewhere, and though they were, EU
leaders seemed to be more preoccupied with the tax side of
things, while the talk of jobs and growth was almost a side issue
with lots of words, but not much action.
We have the latest updated French, German and EU Services
and Manufacturing PMI numbers for May and while we do
expect to see some improvement the French numbers are still
expected to remain remarkably weak, both below the 45 level.
At best the German numbers are expected to stagnate around the 50
level on the services side, but remain in contraction on
manufacturing at 48.7.
Italian retail sales for March are expected to
decline again by 0.1%
The UK economy and the pound will be hoping for a slug of good
news after yesterday’s awful retail sales numbers for April,
which saw a decline of 1.3%. Following on as they did with the
sharp fall in inflation seen in April they have reignited the
tired old debate about further stimulus from the Bank of England
can be expected in the near term. The IMF also added their two
pence worth to the debate by stating that they felt that the UK
had some headroom for further fiscal measures to stimulate
economic growth.
We have the latest iteration of UK Q1 GDP and
given the recent improvements in manufacturing and industrial
production numbers seen in the March numbers, there has to be a
chance we could see a revision higher from 0.3%, even though it
would seem most economists aren’t expecting that.
In the US the latest weekly Jobless
claims are expected to show a fall back to 345k after
last week’s shock rise to 360k.
EURUSD – yesterday’s rebound stalled just below
the 200 day MA just above the 1.3000 level before slipping back
towards this week’s low. The 1.2800 level should retain an
element of buying interest. Below that the twin lows at 1.2750,
which we last saw in March and April, and they remain the main
obstacle to a move lower, towards 1.2680. Only a move above
1.3020 argues for a move towards 1.3200.
GBPUSD - the pound continues to remain weak with
the key support remaining at 1.5020/30 level. A break below here
suggests that we could well see a move back to this year’s lows
at 1.4830. We need to see a move back through 1.5280 and this
week's high to stabilise and suggest a move back to the 1.5400
level.
EURGBP - yesterday’s move above 0.8520
undermines the lower euro scenario and suggests the possibility
of further gains towards the April highs at 0.8620. The 0.8520
level should now act as support where we have the 200 week MA. We
need a close above 0.8520 on the week to suggest a shift in
sentiment higher. Back below 0.8520 negates and suggests further
range trading.
USDJPY – we’ve seen further US dollar gains and
look to be heading towards the 105.50 area after we took out this
week’s highs at 103.30. The 102.80 level should now act as
support for this move to unfold. A break through 105.50 which is
61.8% retracement of the 124.15/75.30 down move is the next
obstacle towards a move towards 110.00. Given we have now broken
the 100 level any pullbacks are likely to find support at the
April highs. Only back below 99.80 retargets 98.50.
May
22nd
Market Wrap - 22nd May
By Michael Hewson CMC Markets
After trading for most of the day in or around break even
European markets went on another ramp higher as Fed Chairman
reiterated comments from senior FOMC voting members that
reinforced the prospect that we remain quite some way from the
likelihood of an imminent program of the Fed adjusting the pace
of their current stimulus program. His comments in prepared
remarks that “premature tightening risks slowing or ending the
recovery” sent the DAX to new record highs and the FTSE100 ever
closer to its all-time highs at 6,950.
These comments would appear to have knocked any talk of tapering
on the head for the time being, or at least until the next set of
good payroll numbers, where we will no doubt go through this
particular dance again.
In the Q&A to Congress the Fed Chairman didn’t really offered
anything particularly insightful over and above what we already
know. The US economic recovery remains uneven.
The best performers today have included the partially state owned
banks of Royal Bank of Scotland (RBS) and
Lloyds Banking Group (LLOY) after the new UK
financial regulation authority gave the two banks are clean
bill of health with respect to their respective capital
positions.
Also doing well Chilean copper miner Antofagasta
(ANTO) is a top riser as copper prices enjoy a positive
session hitting their highest levels in over a month.
Anglo American (AAL) is also enjoying somewhat
of a rebound after coming to an agreement with trade unions over
job cut measures at Amplatts, its South African platinum
operation.
On the downside chip maker and Apple supplier ARM
Holdings (ARM) is on the slide as investors wake up to
the fairly high valuation the company has, and the demand outlook
and headwinds in attempting to maintain that valuation.
US markets opened higher ahead of the latest testimony of Fed
Chairman Ben Bernanke to Congress on the outlook for the US
economy.
As far as earnings are concerned the picture continues to remain
mixed with general retailer Target reporting a
29% fall in profits for Q1 while revenues also fell back as well.
Expectations had been for profits of $0.95c a share, but came in
at $0.77c. The company also lowered its full year guidance for
2013.
Sliding same store sales in the US and Europe also hit
Staples numbers as profits came in below
expectations for Q1, as the company absorbed a 9.2% decline in
revenues.
DIY retailer Lowe’s also appeared to be feeling
the pinch as it reported a rise in Q1 earnings of 2.5%, and
revenues that came in inline. Market expectations had been
somewhat higher though.
On the currencies front the euro initially
outperformed largely as a result of some negative sentiment
surrounding the US dollar and the
pound.
The pound suffered after retail sales for April
slid sharply by 1.3%, well below expectations though this is
likely to have been as a result of the unseasonably cold weather
and the fact that Easter was in March this year. Food sales were
also lower for the same reasons while public sector borrowing
came in at £8bn, better than expected and an improvement on the
£12.6bn in March.
The MPC minutes didn’t contain any surprises
with the 6-3 split to hold pat on current QE remaining intact,
while the weakness in the pound suggests that the markets are
betting that we could well see this split start to move towards a
looser monetary policy.
The US dollar has enjoyed a turbulent afternoon dropping sharply
initially after Fed chairman Bernanke’s testimony to Congress as
he reiterated that the risks to an early end to stimulus were too
great and risked derailing the recovery. His response to Q&A
though saw these gains reverse as he refused to rule out the
possibility of tapering asset purchases this year if the labour
market were to improve.
The Japanese yen has continued its slide hitting
multi year lows against the euro, and the US dollar pushing above
the previous levels above the 103.20 level against the US dollar.
The Swiss franc also slid sharply after Swiss
National Bank chief Jordan reiterated the central banks openness
to raising the ceiling on the EURCHF rate while also keeping the
option of negative rates on the table. There was nothing new in
any of this but it does highlight the determination of the SNB to
keep a lid on the franc.
Gold and silver prices
initially continued their rebounds after this week’s earlier
sharp sell-off as market participants try to second guess what
will come out from Bernanke and the latest Fed minutes later
today. Gold briefly poked its head above the $1,400 level in the
wake of the post Bernanke prepared remarks, but slid back sharply
in response to the Q&A response that suggested we could see
tapering as early as this year.
Oil prices on the other hand continue to be
weighed down by concerns about economic growth and rising
inventories, after the American Petroleum Institute reported a
fourth straight week of rises. Rising China stockpiles have also
weighed on Brent prices.
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