Zinc the metal for 2006

[wavepicker]

wavepicker
I didn't comment on your AUD/USD view: But I think it is a brave call.
If you are right then I think my commodity boom scenario will have gone up a gear.
I see a very mixed bag for commodities next year.
I think the greeenback is a basket case in need of a new weaver.

Hi Rederob, perhaps you may have misinterpreted the coment ont he USD. My call is for the USD to rise against AUD, GBP, EUR, YEN etc next year. Not the other way round

Appreciate and enjoy reading your fundemental analysis on Commodoites as well. I wish I had more time to research these as well, but don't that is why prefer the chart reading at present as this is quicker if you recognize the patterns when they are there.

I see this correction next year as correction/pause in a secular bull. If you have the nerve to hang on over the long term(most people get too emotional and don't), then this should not worry. I like to trade move my move. That is why with regard to Gold I expected a 1-2 year correction back in April. I think a trememdous opportunity will arise when that correction finally ends, but at present there is insufficient evidence that that correction has ended, as such will stick to the bearish case for now until it becomes invalidated. As for zinc, well a correction back to 3000 is on the cards thereafter will review again for the bullish case.

Cheers

 

[rederob]

Cheers wavepicker.
My logic on your post is that if the USD is higher next year, it will imply that present economic sluggishness has been mitigated.
That would likely also imply that auto and housing markets were back to normal. In turn causing a marked pickup in base metal demand, especially copper.
I agree with your view on gold.
I don't think zinc has a chance in hades of getting back to $3000 within 12 months.
Let the passage of time reveal all!

 

[wavepicker]

Cheers wavepicker.
My logic on your post is that if the USD is higher next year, it will imply that present economic sluggishness has been mitigated.
That would likely also imply that auto and housing markets were back to normal. In turn causing a marked pickup in base metal demand, especially copper.
I agree with your view on gold.
I don't think zinc has a chance in hades of getting back to $3000 within 12 months.
Let the passage of time reveal all!

Time will certainly do so rederob, quicker than ya think

as a parting note please refer to the ZFX chart, doesn't get much clearer than that.
-A 5th wave finishing off 3 degrees of trend
- A contracting triangle as 4th(When these occur in a 4th wave position, they always precede the last actionary wave in an impulse)
-An ending diagonal pattern (that ended as a truncation) to finish that last fifth wave blowoff out of the triangle 4th wave.

Yesterday was a down day, look at the volume spike. There are sellers in this market!! This chart is almost identical to that of that of Zinc from the LME site

Cheers

 

[michael_selway]

Into 2007 there are only two other metal picks - in preference, uranium, and then nickel (although nickel will find it hard to do stellar things given its 160% increase this year).
Although copper came and went (rising over 170% year on year to its May price peak) it is definitely not "collapsing", as many have feared.

Uranium, zinc, nickel for 2007 yep i agree

Red do u think Oil will stay steady, drop, or skyrocket in 2007?

Wavepicker, looking at the chart, theres is atleast another uptrend wave before any big fall, more likely 2

thx

MS

 

[wavepicker]

Wavepicker, looking at the chart, theres is atleast another uptrend wave before any big fall, more likely 2

thx

MS

Hello Michael, interesting point you make about another 2 legs up. What is this opinion and conclusion based on??

Even if that is the case, it is a higher probability scenario that prices may revisit $15 before moving higher. Refer to the proprietry tool below based on Cycles Analysis. This is a leading indicator. Basically what we have is a trend as represented by the pink nominal line, price, and upper and lower boundaries. At a first glance these may represent a modified BB. But it is nothing like a Bollinger Band as there is no lag like in a MA. Price oscillates (vibrates) like a sine wave(although not periodic) about the pink nominal trend line. As can be seen price action is contained within 97% of the upper and lower channels. When price reaches an extreme, usually at the zone of the upper and lower boundaries of the channels it thus only has a 1-3%probablilty of staying at(or beyond) that level before correcting at least back to the nominal pink line or even to the other channel extreme. Because this is a high probability scenario, when combined with EW, we can eliminate any ambiguous wavecounts and only concentrate on 1-3 scenarios. As such we can also come up with the most probable wave structures that may follow.

Cheers

 

[rederob]

MS
I think oil is a "hold" for now.
OPEC will determine direction through 2007 unless we get a Gulf hurricane doing a Katrina (usually in the 3rd quarter for such an event) or get some geopolitical rumblings from North Korea or Iran between times.
I think by 2008/2009 the "natural" growth of oil demand will outstrip capacity to supply and peak oil will begin to spike oil to greater highs than we can presently imagine.
Don't forget that there is still a massive amount of oil in the world, but it's getting harder to extract in volume and certainly get more expensive to lift every year.

wavepicker
seeing you have been kind enough to focus on the future with your chart, I will tell you that my thoughts place zinc over $5000 in March/April. I see this present consolidation ending by mid-January and the US market (via New Orleans' warehouse drawdowns) revitalising zinc's price.
It is my firm view that China is taking full advantage of present (comparatively) high backwardations to profit via deliveries to LME Singapore.
However, consumer destocking, which is a theme heading towards end of year, should come to an end in January and we should begin to see zinc drawdowns resume on an ongoing basis, although not at the heady levels we saw in 2006 - simply because the backwardation will do to zinc consumers what it has done to nickel consumers; convert them into hand-to-mouth survival mode.

 

[wavepicker]

wavepicker
seeing you have been kind enough to focus on the future with your chart, I will tell you that my thoughts place zinc over $5000 in March/April. I see this present consolidation ending by mid-January and the US market (via New Orleans' warehouse drawdowns) revitalising zinc's price.
It is my firm view that China is taking full advantage of present (comparatively) high backwardations to profit via deliveries to LME Singapore.
However, consumer destocking, which is a theme heading towards end of year, should come to an end in January and we should begin to see zinc drawdowns resume on an ongoing basis, although not at the heady levels we saw in 2006 - simply because the backwardation will do to zinc consumers what it has done to nickel consumers; convert them into hand-to-mouth survival mode.

rederob, I respectfully disagree with your $5000 zinc price by march/April. It is a low probability outcome.

Please refer to the chart below. It is that of another company frequently discussed on ASF. Buy and holders of this stock are looking for fundemental reasons why this has capitulated. My take is it would have tanked it anyway. It does not matter what business this company is involved in. Now how could we have known this stock price was gona tank it. Easy, we counted to 5!

This same pattern is currently apparent in Zinc, ZFX, and possibly developing the XAO at the moment.

I think there is a fair chance we will see 3000 in Zinc before 5000

Cheers

 

[chops_a_must]

Please refer to the chart below. It is that of another company frequently discussed on ASF. Buy and holders of this stock are looking for fundemental reasons why this has capitulated. My take is it would have tanked it anyway. It does not matter what business this company is involved in. Now how could we have known this stock price was gona tank it. Easy, we counted to 5!

This same pattern is currently apparent in Zinc, ZFX, and possibly developing the XAO at the moment.

I think there is a fair chance we will see 3000 in Zinc before 5000

Cheers

Does the end of the 5th wave automatically mean free fall?

 

[wavepicker]

Does the end of the 5th wave automatically mean free fall?

Hi Chops,

not necassarily, sometimes the market corrects slightly makes an unorthodox new high slightly above the 5th and then falls impulsively. However because zinc has completed an Ending Diagonal pattern( ie a small wedge) at the end of the 5th wave, chances are that the pattern that falls will initially be a sharp reversal of some type. There are quite a few scenarios probable.
There are no guarantees however, that is why we must place protective stops with every position.

Will be interesting to see how this works out

 

[chops_a_must]

I'm confused as to what could actually drive such a down trend in ZFX. Not that it really bothers me much, except providing more buying opportunities. Just seems every time Nickel and Zinc dives, it bounces. Although I'm not expecting Nickel or Zinc prices to go that much higher, I can't see it crashing like you have predicted. There would have to be some kind of unforeseen event or change before I could accept your negative outlook.

As others have noted in the ZFX thread, it is a notoriously hard stock to analyse. Defies rules and expectations, and bounces off important resistance points. Having said that, I wouldn't be surprised to see it in the 15's again in the short term, seems to get heavy buying there.

But with ZFX, I think you need to look at intraday charts as well. Because even on days where it does dive, it doesn't close on lows, and buyers come in as soon as it is sold off.

Not that any of this is expert opinion or anything, just what I have noticed.

 

[Fab]

rederob, I respectfully disagree with your $5000 zinc price by march/April. It is a low probability outcome.

Please refer to the chart below. It is that of another company frequently discussed on ASF. Buy and holders of this stock are looking for fundemental reasons why this has capitulated. My take is it would have tanked it anyway. It does not matter what business this company is involved in. Now how could we have known this stock price was gona tank it. Easy, we counted to 5!

This same pattern is currently apparent in Zinc, ZFX, and possibly developing the XAO at the moment.

I think there is a fair chance we will see 3000 in Zinc before 5000

Cheers

I am not a chartist but I have to say I don't quite understand the reasoning behind the fifth wave thing and why that means a free fall
So I believe on wednesday we will have a sharemarket correction but mainly because of what happened in America overnight.

 

[wavepicker]

I'm confused as to what could actually drive such a down trend in ZFX. Not that it really bothers me much, except providing more buying opportunities. Just seems every time Nickel and Zinc dives, it bounces. Although I'm not expecting Nickel or Zinc prices to go that much higher, I can't see it crashing like you have predicted. There would have to be some kind of unforeseen event or change before I could accept your negative outlook.

As others have noted in the ZFX thread, it is a notoriously hard stock to analyse. Defies rules and expectations, and bounces off important resistance points. Having said that, I wouldn't be surprised to see it in the 15's again in the short term, seems to get heavy buying there.

But with ZFX, I think you need to look at intraday charts as well. Because even on days where it does dive, it doesn't close on lows, and buyers come in as soon as it is sold off.

Not that any of this is expert opinion or anything, just what I have noticed.

Dunno if you could describe what I think will happen to Zinc/ZFX as a crash. A correction and a possible short lasting say 6 months possibly 1 year would be more accurate a description. But that also depends on what one classes as a correction or a crash!!
That would probably mean a move back down to 12 bucks. After that is anybodies guess.

All the same just my thoughts.
As for unforeseen events, well anything is possible, but all it takes is a change in mass psychology/social mood to change a trend.

Cheers

 

[wavepicker]

I am not a chartist but I have to say I don't quite understand the reasoning behind the fifth wave thing and why that means a free fall
So I believe on wednesday we will have a sharemarket correction but mainly because of what happened in America overnight

Hi Fab,

Rather than freefall, let just say a "mirror image foldback" move (which in itself is quite a move) of the last major leg up from August, because that's how long I think it will take to complete that correction.

Cheers

 

[michael_selway]

Hi Fab,

rather than freefall, let just say a "mirror image foldback" move(which in itself is quite a move) of the last major leg up from August, becuase that's how long I think it will take to complete that correction

Cheers

For some reason I just dont think that will happen, $17+ lowest, zinc and zinc shares are going up higher very soon.

thx

MS

 

[rederob]

wavepicker
As we both are tackling the same issue from a different perspective, and with different views on the outcome, we will need the market to "judge" us.
I continue to buy at times when others are selling, although am not going to be buying any more zinc equities as I think my total exposure now is around $400k.
I am somewhat ahead having got in early, but am not averse to folding when the fundamental evidence is conclusive: Even with copper the evidence is not yet conclusive, but the warning signs have been suggesting "keep clear" for some time.
The fundamental difference between zinc and copper is that copper has had significant new greenfield (eg Spence) and brownfield capacity come on stream recently. Yet despite this copper inventories are rising at a measured rather than rapid pace.
On the other hand, zinc has some brownfield capacity additions, but no greenfield expansions of any significance. Additionally, whereas copper is facing a bleak future in the US due to housing and car sales declining, steel output globally is set to continue apace and zinc's future is riding on that.
Zinc's metal inflows remain occasional dumpings from China into Singapore's LME warehouse - not a signal for the bears to raise their glasses......yet!
Cheers

 

[wavepicker]

Enough said from me on this thread for now.

I respect your both of your views on this topic and you sound like you know your stuff when it comes to fundematals of metals and miners in general.

Don't mean to be a thorn in any way, just expressing my opinion on TA based on previous experience. If I had this knowledge 6.5 years ago in the dot.com bubble I could have saved $150K in paper profits evaporating quite quickly!

Have a great xmas

Cheers

 

[michael_selway]

Enough said from me on this thread for now.

I respect your both of your views on this topic and you sound like you know your stuff when it comes to fundematals of metals and miners in general.

Don't mean to be a thorn in any way, just expressing my opinion on TA based on previous experience. If I had this knowledge 6.5 years ago in the dot.com bubble I could have saved $150K in paper profits evaporating quite quickly!

Have a great xmas

Cheers

NP & same for you

http://www.theglobeandmail.com/servlet/story/RTGAM.20061221.wcommodities1221/BNStory/Business/home

Uranium, zinc seen as top performers for 2007
ANGELA BARNES

Globe and Mail Update

Uranium, which has posted the third-best gain among Canadian commodities this year, will likely take the top spot on the performance chart in 2007, according to commodities expert Patricia Mohr, vice-president of Scotia Economics.

She expects spot uranium prices will average $80 (U.S.) a pound through 2007 but end the year at close to $90. That is up from an average $48.10 this year and a low of only $7.10 in late 2000. Ms. Mohr explained that the rise in uranium reflects a secular change in global energy markets, brought on in part by the shift by utilities from high-priced fossil fuels to nuclear power, rather than a cyclical upswing.

“Nuclear power generation emits virtually no greenhouse gases ”” another factor attracting interest in countries such as China,” she said in the latest monthly report on the Bank of Nova Scotia's commodity price index.

Zinc is Ms. Mohr's other top pick for 2007. Inventories of zinc on the London Metal Exchange have plunged by 78 per cent since late 2005, which has pushed prices of the metal to a record $2.10 a pound on Nov. 24. “Zinc is likely to move even higher in the first half of 2007 before significant mine expansion begins to trim prices in late 2007 and in 2008,” she said.

She sees the metals and minerals retaining their leadership position among commodities, but also anticipates that precious metals, especially silver, will benefit from further weakness in the U.S. dollar.

Furthermore, “potash fertilizer should yield good gains for investors,” she added. “Wheat, barley and canola should also perform quite well relative to past experience, linked to new demand for ethanol additives in gasoline and biodiesel,” she said.

Nickel was the best performer among the 32 commodities included in the commodity price index in 2006, climbing 159 per cent over the year. LME nickel prices surged to a record $16.08 a pound a week ago, buoyed by news that BHP Billiton Ltd.'s Ravensthorpe project in Australia will not come on stream until 2008 and that Inco Ltd./Companhia Vale do Rio Doce's Goro mine in New Caledonia will be delayed until late 2008. That raised concerns about supply in a time of robust global demand.

Ms. Mohr expects a “supercycle” in nickel, with prices remaining strong through 2008.

Ms. Mohr sees crude oil prices declining only modestly in 2007 from current levels. She expects the West Texas intermediate crude price will average $60 a barrel next year, which compares with an average of $66 this year and $56.56 in 2005.

The Scotia commodity price index rebounded in November, jumping 7.7 per cent from October, after declining 4.2 per cent in October and 3.3 per cent in September. That left the index, which measures price trends in Canada's major commodity exports, up 4.3 per cent from a year earlier and near its May record.

The oil and gas index increased in November as Canadian natural gas export prices recovered sharply from an oversold position relative to residual fuel oil.

Crude prices also edged higher. So far in December, they have averaged more than $62, up from the $59.40 in November and $59.14 in October.

The metal and mineral index soared to a record last month, the second record in as many months. Meanwhile, the forest products index inched higher and the agricultural products advanced in the face of surging canola prices.

 

[YOUNG_TRADER]

Some excellent high quality posting Wave and Redrob,

Will be interesting to see who's analysis was correct, I agree and am of the same view as Red, however am interested in Waves 5 wave chartist analysis,

Time will tell gents

 

[chops_a_must]

Hi Chops,

not necassarily, sometimes the market corrects slightly makes an unorthodox new high slightly above the 5th and then falls impulsively. However because zinc has completed an Ending Diagonal pattern( ie a small wedge) at the end of the 5th wave, chances are that the pattern that falls will initially be a sharp reversal of some type. There are quite a few scenarios probable.
There are no guarantees however, that is why we must place protective stops with every position.

Will be interesting to see how this works out

Where to from here? ZFX bounced from below 18 again.

 

[machi]

Some good posts here, keep them up.

Chops are must,

Perhaps give the market some more time(like a few weeks) to show what it wants to do, before passing judgement