Archive for the ‘commodities’ Category

Silver heading to 25

December 28, 2011 Leave a comment

I’m using SLV as a proxy for Silver… SLV is down huge on above average volume when the overall trading volume is fairly low…

· 50% Fibonacci retracement for the run from early 2009 to the May 2011 peak is around $25

· 25 is a nice round number to anchor psychologically

· next major support is also at 25


Range bound markets in WTI?

October 7, 2011 1 comment

Oil – expect to be range bound between 75-90

Disclosure: No position in oil or oil stocks

natural gas – where to from here?

April 29, 2011 Leave a comment

Yesterday, natural gas broke the downtrend line (top blue) of the symmetrical triangle. These triangles signal continuation of prior trend for about 75% of the time and are reversal signals otherwise.

Here is a 2-year daily price chart:

Will natural gas break out of its multi-year downtrend and surge forward or will it go to new lows? Here is a 5-yr weekly chart:

And just to throw a kink, here is a seasonal chart which suggests that the time to short natural gas is right around the corner.

Disclosure: short natural gas

Will Level 7 be the death knell for Uranium stocks?

April 12, 2011 2 comments

Japan upgraded increased the severity level of the Fukushima nuclear accident to the highest possible at level 7… global equities and uranium stocks were hard hit today.

Uranium miners were recovering from the sharp fall and it looked like the worst was over but except with Level 7 the worst might be yet to come? Almost 4 weeks ago I posted charts of uranium miners Cameco & Uranium One… let’s see where we stand today. There are many exploration and development stage companies but these two are the prime Canadian uranium producers.

Today’s price action in Cameco (CCO.TO) is interesting and perhaps suggests that the worse is over…

  • The stock traded an intraday low of 26.38 and sharply recovered to close at 27.16 which is above major support lines (blue & red/green).
  • As I pointed out in my previous post, if we break here, downside targets are 26, 24 & 22.
  • On the upside, there is plenty resistance in the 30-34 area and my guess is that this stock will be range bound given the fundamental situation.

Uranium One (UUU.TO) is hanging on to support at rising trend line (short blue line).

  • Next support is near the 3.25-3.38 range and is rather strong with 3 converging trend lines, long blue line, pink line and bottom support/resistance line.
  • After that support is at just above 3.00…
  • On the upside, there is strong resistance at 4.00 which is where the recent relief rally reversed…

Copper charts – 12-April-2011

April 12, 2011 Leave a comment

There has been a lot of chatter about commodities blowing off lately (see this, this & this)… especially Copper (& Silver) which has risen dramatically since the 2009 lows. Copper is considered by many as a leading economic indicator…. without further adieu here is the technical picture for Copper

On the daily chart, copper recently broke out of the descending triangle and the short-term downtrend line… pink line. The medium term price channel (blue lines) is still intact and Copper could go higher and take out the Feb highs (fundamentals story don’t support this view)

The dotted line symmetrical triangle supports the continuation of prior (up)trend.

On the other hand, the weekly charts show a rising wedge pattern which is almost always a bearish sign… if confirmed using other indicators. In the case of Copper, MACD supports the rising trend and is not confirming the reversal… yet

Coal is here to stay for a long, long time

April 1, 2011 Leave a comment

I have liked coal for the last couple years despite of the global warming/green energy/fierce environmental protection backdrop… for the foreseeable future I see demand for coal to keep rising regardless of what happens with the renewable energy sources.

Why I feel that way?

Two stats from World Coal

Coal provides 27% of global primary energy needs and generates 41% of the world’s electricity

Approximately 13% (around 717Mt) of total hard coal production is currently used by the steel industry and almost 70% of total global steel production is dependent on coal.

If you prefer to view graphics like I do, here are some key figures from IEA’s World Energy Outlook 2010

So… if you are still not convinced, too bad J

Moving forward, I plan to analyze some coal stocks and present my analysis here.

Grande Cache Coal (GCE.TO)

I’ll start with the easy technical stuff for Grande Cache coal – a metallurgical coal miner (i.e. coal used for steel making)

  1. The stock has broken out of the recent downtrend channel (blue) and closed above the 50, 100 & 200 day moving averages on reasonably high volume
  2. Green lines are support, Red lines are resistance and there is immediate resistance around 10.5, then at 11 and 12

In the next post, I will delve in to the fundamentals of GCE

Update: Right after posting this article I stumbled upon this piece from FP via  Alphaville. Trust me I’m not looking for an opinion that confirms my thesis (confirmation bias) quite the contrary. Here are the salient points from the FP piece:

According to official data, Chinese investment in coal was about the same as its investment in oil, gas, and scientific research combined. The investment in coal at home was larger than the PRC’s outward investment in all non-bond assets — all energy, all metals, and so on — in 2010.

From 1980-1996, coal consumption growth was about 5 percent annually. From 2003-2009, under leaders Hu Jintao and Wen Jiabao, it was over 13 percent annually.

Coal previously accounted for less than 70 percent of Chinese electricity use; now it is over 80 percent.


When will the sell off in Cameco & Uranium One end?

March 17, 2011 2 comments

Cameco Corp – Symbol CCO on TSX & CCJ on NYSE

Short-term Downside targets: 26.87, 26, 24 and 22

Uranium One: Symbol UUU on TSX

Downside target: 3 & 2.5