Monday, June 23, 2014

Zinc: The Next Base Metals Superstar

Zinc: The Next Base Metals Superstar

This year has already seen the price of one base metal skyrocket higher – nickel. It hit a 27-month peak recently, north of $21,000 per metric ton (mt).
Now Zinc – a base metal that’s been priced low for many years – might be positioned for a sharp price rise.
Why? It’s simple supply/demand at work.
We have demand increasing, thanks to a combination of rapidly rising vehicle sales in emerging economies – along with a resurgence in automobile sales in the developed world.  (more)

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WTI Crude Oil on the Move $112 Next Stop

The energy sector has surged during the last two months which can be seen by looking at the XLE Energy Select Sector Fund. If crude oil continues to climb to the $112 level, XLE will likely continue to rally for another few days or possibly week as energy stocks are considered a leveraged way to play energy price movements.
Another way to look at this info is through the USO United States Oil Fund. This tracks much closer to the price of oil. The only issue is that many ETFs that “try to track” an underlying commodity is in how the funds are built. They own multiple contracts further into the future which does not exactly provide us with the short term news/event driven price movements in the current front month contract as they should.
What does this mumbo jumbo mean? Well, it means funds like USO and the highly respected UNG, and VIX ETFs… (just joking about the highly respected part), fail to track the underlying commodity or index very well when it comes to short term price movements. This means, you can nail the timing of a trade, and the commodity or index will move in your favor, yet your fund loses money, or goes nowhere…

WTI crude oil has formed a bullish ascending triangle pattern from March to May of this year. The breakout to the upside is bullish and should be traded that way until the chart says otherwise. This breakout and first pullback must hold, or I will consider it a failed breakout. So if price dips and closes 2 days below the breakout level, it will be a major negative for oil in my opinion.
The range of the ascending triangle provides us with a measured move to the upside which is $112. Typically the first pullback after a breakout can be bought. The first short term target to scalp some gains would be $109, and at that point moving your stop to breakeven is a wise decision. Trading is all about managing capital and risk, if you don’t, then the market will take advantage of your lack in discipline.
Looking further back on the chart, you can see the double bottom formation also known as a “W” formation. Once the high of the “W” formation is broken the trend should be considered neural or up.
Also note that the RSI (relative strength) has been trending higher for some time now. This means money is rotating into this commodity.

WTI Crude Oil Trading Conclusion:

In short, oil has some extra risk around it. The recent move has been partly fueled by news overseas. So at any time oil could get a lift or take a hit by news that hits the wires. I tent to trade news related events with much less capital than I normally do because of this risk.
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Chart of the Day: NYSE Trading Volume 20 Day M.A..

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Look At This Stock –Energous: WATT

WATT IPO’d in late March and after an initial run up it’s essentially been basing for the last 8 weeks. Today it is starting to move higher and if it can clear this base (and close above it) it could be a short trip back to recent highs. Keep this stock on your radar however be aware that it is a lower traded volume stock.
If it can keep the momentum going with the RSI and make it above 70 then the chances that this move is for real increases in my opinion.
Per Yahoo – “Energous Corporation, a development stage technology company, is engaged in developing wireless charging solutions. Its solutions could enable wireless charging or powering of electronic devices at distance. “
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US Weekly Economic Calendar

time (et) report period Actual CONSENSUS
8:30 am Chicago Fed national activity index May   -- 0.19
9:45 am Markit flash PMI June   -- 56.4
10 am Existing home sales May   4.75 mln 4.65 mln
9 am Case-Shiller home prices April   -- 12.4%
9 am FHFA home prices April   -- 6.5%
10 am Consumer confidence index June   83.5 83.0
10 am New home sales May   443,000 433,000
8:30 am GDP revision 1Q   -2.0% -1.0%
8:30 am Durable goods orders May   -0.4% 0.6%
8:30 am Weekly jobless claims 6/21
312,000 312,000
8:30 am Personal income May
0.4% 0.3%
8:30 am Consumer spending May   0.4% -0.1%
9:55 am Consumer sentiment index June   81.8 81.2
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