Providio’s Daily Futures Market Commentary For May 17, 2012
17May The Euro’s modest deceleration has metals staging their own rebound.
Gold: 17May Gold stopped falling and has seemingly bounced off our noted support level at the 26Dec low (1523.9). This general area may serve as a double bottom (maybe a triple bottom?), as well, aligning with the previous low (26Sep 1535). The current extreme Oversold conditions has us looking for real support or consolidation around this level. June seems to have found support at the –2 STD below the 21-day moving average.
Below is a slippery slope to 1500 psychological support, then a cluster of lows between 1462.5 (02May) and 1478.3 (27June). The 38.2% retracement of the Oct 2008- Sep 2011 rally comes in at 1456.8.
Volume looks robust, which would add validity to the negative action. This latest plunge lower is the largest extension below the 200-day moving average since the financial crisis in October 2008.
Seasonal Snapshot: All three patterns see modest strength into the last half of May.
Copper: 17May Copper’s fall has decelerated after Monday’s plunge. It’s still falling, just a more sustainable pace now. Unless the U.S. Dollar stops rising, it’s not likely to stop falling entirely.
Technicals remain negatively predisposed. Despite its deceleration of recent falling action, the negative bias is still profound. With most global economic news coming in as disappointing, Copper is likely to remain under pressure.
The July contract continues to ride the important –2 STD (3.4625) below the 21-day moving average (3.6880). Additionally, it is below the 3.5775 level established during mid-April’s move below the 200-day moving average (currently 3.6930), as well as rising trend line support that extends back to the 03Oct low (2.9940). On more weakness, watch the double bottom from 05&09Jan around 3.3800, then the series of previous lows back to last Nov (3.3250; 3.2325; and 3.2040).
Resistance is seen at 3.6250, where a candlestick chart showed bottoming action in mid-April.
Seasonal Snapshot: All three patterns have a mild upward bias until turning decidedly weaker around 27May.