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Gold and silver extend, BTP too. copper moves above compressions

Gold and silver both made top extensions yesterday, at a daily scale. This probably means a dip is now coming in the uptrend that we still think will eventually go higher. Brave traders could try a short-sale here but we advise holding short positions for only a brief period – the major move will probably still be upward. Longer-term players could lighten up on long positions here, looking to re-establish after these extensions have ‘worked off’ either through a price dip or some sideways price movement.

The Euro(German)bund/BTP(Italian bond) spread has narrowed sharply in the last few days, first in anticipation of the ECB’s new bond-buying spree and secondly when the news was actually announced. This spread should now be bought, purely on the basis of ‘buy the rumour, sell the news’, but now we also have a top extension in the BTP itself - not shown on this chart. This is only at a daily scale (obviously, as weeklies can only happen at the week’s end) but should be enough to halt the rise. We last advised selling this spread in May when it was at about 42 (sorry we forgot to mention that in the recent position summary) for the front month and 45 in the December delivery and now the December spread is at 34. Take profits and reverse - we suggest scaling into a position as the market may ‘run’ a bit further.

Copper rallied above the level of recent compressions, which means that protective stops should have been elected to exit shorts for a small loss. Prices will probably keep rising for a while, so ‘trading’ long positions can be taken hereabouts and on small dips. We will advise further on this and other commodities soon.