Commodities market : cheap-to-acquire support

Appetite shift from hot2hold to cheap2acquire

MARKET PULSE ended the Brent Crude bear-run chase from $115 at $75-77; the downward pressure was triggered from demand-supply dynamics without fear on bullish, safe-haven impact from geo-political concerns. All taken, over 33% fall from 115.71 to 76.76 since mid June 2014 is excessive and stretched. The suggestion for formation of near/short term base at 75-77 is also driven by shift of investor appetite from higher valuation equity asset to lower valuation commodity assets (in high-risk asset category) for better risk-reward play. Accordingly, near-term focus was set at 75/77-83/85. What next? The correction from 76.76 has hit 81.61 with weekly close above $80 at 80.36; near-term outlook is for extended correction into 85 while 77.50-79.50 stays firm, with most trades likely at inner-ring of 77.50/79.50-83.50/85 focus zone. All taken, it is win-win for most stake holders for Brent Crude to stay sideways in consolidation mode at 75/77-83/85; break-out bias, if at all may be for further extension into 86.50-88.00 tracking bullish cues in equity and bond markets.

The strategy for Gold was also to end the near term chase from 1250-1265 at 1120-1135 for correction into 1200-1210 ahead of 1250-1265 for completion of back-and-forth moves within 1135-1265. The move as per script from 1255.20 to 1131.85 to 1207.70 (since 21/10/14) is break-neck! What next? Weekly close at 1200-1210 (at 1201.09) is positive retaining bullish momentum for 1250-1265, higher end of set near-term strategic focus at 1120/1135-1250/1265. The focus is now at 1185-1235/1260 with bias into higher end. At this stage, prefer to stay with consolidation outlook at 1135-1260 retaining short/medium term outlook below 1120-1135 while below 1280.

Moses Harding