 PIVOTAL EVENTS - DECEMBER 13, 2006
Comments for Metal Producers
Bob Hoye
Institutional Advisors
Posted Dec 15, 2006
Base Metal Prices have been likely to test the May highs
on year-end positive vibes.
So far, the high on our index
(less nickel) has been 737, set in the first week of the month.
This occurred as the hotter metals were attempting to break above
recent highs.
Nickel was on its third attempt
to get through 35,000. Similarly, zinc was having a third go
at 4600. Lead was working on a test of its early November high
and, at 1808 on Monday, a record high was set.
The 7% slump in two sessions
suggests that the surge was a test and not a breakout.
However, the commodity perma-bulls
are adamant and may be able to keep these pigs on a favourable
glide path for a few weeks more.
Both producers and investors
should be lightening up.
Commodities: As outlined last week, the Goldman
Index of Agricultural Prices (GKX) was getting overbought but
with a negative divergence.
The high was 277 at the end
of the month and it has slipped to 259, where there is some support.
Taking out 248 will set an intermediate downtrend.
This would be from a multi-year
high and it is worth noting that the widely-followed CRB set
its multi-high at 366 in May. The breakdown below the 40- week
moving average was in August and the low was 293 in early October.
The rebound made it to 323,
which, at .322, is close to a Fibonacci .318 retracement. Along
with the ongoing threat of the inverted yield curve, this suggests
that the May high was a cyclical peak.
Golds: This sector continues to consolidate
the impressive gains out of early October.
Unfortunately, it was mainly
a goldbug rally and therefore vulnerable.
The real price is what counts
over the long term and our gold/commodities index was likely
to set a cyclical low around November and the low was 164 set
on October 23.
The initial bounce made it
to 188 in mid-November. This needed testing and it has been close
to 173 since last week, which seems to be building a base.
More than that, our long-term
technical work indicates that a cyclical low has been accomplished.
The following chart shows the
plunge since January as well as the cyclical low on the Coppock,
which reversed on November 3.
We are highly confident that
gold's real price is on a new bull market whereby the price could
almost double over the next few years.
- Note the cyclical low in 2000
as that bubble was blowing out.
- Something similar is being
logged.
- The Coppock is designed to
determine cyclical lows.
-Bob Hoye
Institutional Advisors
email: bobhoye@institutionaladvisors.com
website: www.institutionaladvisors.com
PIVOTAL EVENTS - DECEMBER 13,
2006
Hoye Archives
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