Financial Sense "Copper & Precious Metals at Power Short Areas" by Paul Skarp 06/22/2006

COPPER & PRECIOUS METALS AT POWER SHORT AREAS
by Paul Skarp
AaronTrade.com
June 22, 2006 with clarification 6/22/2006

Long-term monthly based SR Support for COMEX Copper is currently at the 240 area.

Copper futures recently broke down and completed at descending triangle top. Additionally, the market is near its short-term SR resistance level.

NOTE: This chart was produced on Wednesday June 21 after the close. SR resistance for tonight/tomorrow session is 318.20.

Downside projections for the next leg is 230 area.

Look to sell short at 318.20 with a stop around the 325 area. If stopped out initiate next short at 329.00 area which is below heavy resistance. Downside Fibonacci projections would not change.

Due to a number of option trades that we have given to our clients I can�t give any specific recommendations. However, they are some dynamite opportunities if you know how to capitalize on Vega and IV skews.

Precious Metals Sector

Silver and gold, like copper, are also near key short-term SR resistance levels. While the opportunity isn't nearly as good as what is being presented in copper nonetheless they are some really good trades to be found. For example,

Buy 1 Sep. 10.50 Put. Closed Today at - 0.628 ($3,140.00)

Sell 2 Sep 9.50 Puts. Closed Today at - 0.223 ($1,1150.00)

The next cost on this is about $1000.00 with maximum profit potential at $5,000.

At expiration the breakeven on this trade is at 8.70. There is MAJOR support for silver around the 9.50 area as determined via monthly SR support and other technical methods.

Daily SR support for Thursday June 21 is 10.59.

CLARIFICATION - June 22, 2006 10:48pst
Due to a number of e-mails from readers who were confused about today's post I will change the format of future market commentary. Please keep in mind that there is an inherent lag in end-of-day commentary with markets that trade almost 24 hours. In copper an 1hr can make a big difference!

For example, I send today's commentary/analysis to FS around 1 AM EST give or take. However, it was not posted until somewhere around lunch time EST. Keep in mind Mary can�t work 24 hours a day!

Today�s recommendation in Copper was for the pit session. That is why a pit session ONLY chart is used. You would not have been stopped out. Although I did say that resistance was in that area for the overnight session this would not have implied to imitate this trade overnight. There can sometimes be large differences when you apply a specific indicator to a combined session vs. a pit session only chart.

The silver chart that was used was via the electronic session from the CBOT. Therefore, the recommendation was for this contact. However, this could have been applied to a combined session COMEX chart.

In the future all commentaries I give will contain exact specification weather information given should be applied to pit or combined session only and not make assumptions that you looked at what chart was used.

To be honest this was not a good assumption on my part and I sincerely apologize for any confusion this may have caused.

Sincerely,

Paul Skarp
Aaron Trading

Contact Information
Paul Skarp, Principal
AaronTrade.com
(866) 455-3633
Email | Website

Disclaimer: Even if a seasonal tendency occurs in the future, it may not result in a profitable transaction as fees and the timing of entry and liquidation may impact trading results. There is a substantial risk of loss in trading futures and options.