SPX Loses 34 Points, Previous Drops Over 30 Points In 2009 and 2008

The S&P 500 (SPX) lost 34.11 points from the previous close. The previous 30+ point drop had been on April 20 2009.

These are the last major drops since early 2008. All drops greater than 30 points or greater than 3.11% are shown below.

Markets Are Tanking: 1066 is the Level to Watch

This is a great video on today's market situation. SPX (click for alerts), the S&P500 index, is currently at 1070:

Roubini on Greece's Impending Default Crisis

The markets are falling hard - again - in great part due to the impending Greece default/bailout.

Nouriel Roubini, Dr. Doom, wrote a piece on Forbes magazine in whih he says the credibility of the euro and European institutional arrangements is on the line.

"At their Jan. 18, 2009, meeting, eurozone finance ministers kept pressure on Greece to fulfill its commitment to cut its budget deficit below 3% of gross domestic product by 2012. In February the eurozone finance ministers will more fully evaluate the country's spending plans and recommend a timetable for Greece to trim its deficit, estimated at close to 13% of GDP in 2009.
Since the eurozone is a monetary union with a no-bailout clause rather than a political or fiscal union with the associated fiscal federalism, budget cuts to contain the explosion of Greek public debt are urgently needed. In 2010 a sustainable fiscal adjustment must be delivered to restore policy credibility, market confidence and ECB/EU member-state solidarity".

Roubini says that the current and latest default crisis was trigegred by three coinciding events:

1. Greece's sharp budget deficit revisions from as low as 3.7% of GDP to 12.7% in October,
2. the announcement of the beginning of the ECB's exit strategies,
3. the Dubai default

"While in March spreads were broadly driven by a common systemic risk factor, the latest spike bringing Greek yields and CDS spreads to new highs is mostly a country-specific story, brought to light by a change of government and the revelation of far larger budget deficits than previously known and a severe cyclical and structural deterioration in public finances. In tackling the deficit, Greece faces a Hobson's Choice: whether to accept social pain with financial and economic stability, or instability. Whatever it chooses, Greece will face economic pain and difficult socio-political fallout. Deep spending cuts or tax hikes, which comprise the bulk of Greece's current plan, will curb or even derail recovery, perhaps inciting social unrest. But if the debt becomes un-financeable in the primary market or if Greece elects to exit the euro and devalue and re-denominate its liabilities (a la Argentina), this could render its banking system insolvent and tip it into economic and financial isolation and decline, also with dire socio-political consequences.

While a buyers' strike has been averted for now with Greece's successful auction of five-year government debt at 6.2%, the additional yield investors requested was substantial. The possibility of a buyers' strike in the primary market in the future may further test Greece's political commitment to fiscal adjustment and economic stability, as demanded by its treaty obligations and the strictures of a currency union.

Going forward, once Greece has delivered what the EU Commission, ratings agencies and stakeholders in the markets judge to be an adequate pound of flesh, we expect the ECB to take on a more constructive stance, especially in view of the stricter collateral requirements that will be put in place by the end of 2010. The risks of not doing so would entail a judgment that Greece could, in theory, be surgically removed from the eurozone without starting a domino effect in other countries with high or escalating public debt burdens, some of which are far larger economies and hence could have an impact on the regional and global financial and economic systems. Alternatively, a sovereign upgrade to A- by two ratings agencies after the budget effort meets approval could also be part of the solution".

The endgame

Roubini expects "the extraction of a pound of flesh and a bit of a fiscal compromise that together restore debt sustainability". He states that will require a combination of further sharp fiscal adjustment, like Ireland and a signal of support from the ECB. In response, CDS spreads will peak, and improved signals from the ratings agencies will bring cash bond yield spreads back down to earth.

"Over the longer term, of course, there is no alternative to tackling the competitiveness deficit in Greece and in other member countries as well".

Having Fun With The Toyota Shameless Media Pounding

While the media keeps shamelessly pounding TM, here are our previous straddles results, as of 10AM:

This is fun!

Please do your own due diligence. This is not advice. Options are very dangerous and may cause 100% loss.

Computed with StraddlesCalc Tool

Not Too Hot, Not Too Cold: UNG Straddles To Profit Either Way

Natural gas storage inventories will be published at 10:30 today. We have had very cold weather in the East, but has it been the same in the west? Temperature has an effect on natural gas drawdowns.

This is the current chart, ahead of this week's inventories, comparing 2009 with 2010 levels:

As can be seen, levels have come down significantly, from the well-above average that they were until late last year.

Regardless of direction, temperatures, or storage levels, straddles can profit, either way up or down, as long as the stock moves the required amount. Here are the February versions for UNG, with prices as of EOD yesterday:

100% loss. Computed with StraddlesCalc Tool

Please do your own due diligence. This is not advice. Options are very dangerous and may cause

Feasting on Toyota Straddles: Profit of +29.4%

On January 28 we posted the straddles for Toyota Motors, TM. Here are the current results, for February to July months:

(please click to enlarge)

All positions are profitable. As expected, the current month options offered the largest gain, at +29.41% in one week. This is followed by March position, at +25.97%. Even the July position is profitable at +8.19%.

The campaign against Toyota is going on strong, the beating goes on. The obvious beneficiaries are Ford and GM. Please remember that last quarter Ford boasted of a profit, but most of its profit was from credit operations (a la GM in the past). Investors should be extremely concerned with this campaign against Toyota. I believe the company will be eventually vindicated. As usual, straddles are one the best ways to play, profiting if the stock goes in either direction.

You may receive technical analysis and alerts of these stocks, sent automatically to you, by entering the symbols in the Technical Trend Analysis Tool, (powered by INO).

Straddles computed with StraddlesCalc Tool

The Top 20 Stocks to Buy and To Sell Out of the Top 100 Most Popular in the U.S.

We computed the relative strength values of the top 100 most popular stocks and ETFs traded in ther U.S. Them, the RSIs were sorted by short term and long term. This provides an excellent indication of what is overbought and oversold.

Decisions to buy and to sell are always dependent on each investor's timeframe. The tables below suit both investment horizons (short term, as in days, and long term, as in months).

Short term:

Top 20 most oversold:

The most oversold stocks are EWT (Taiwan Index) and BSX (Boston Scientific)

Top 20 most overbought:

The worst offenders here are Kodak (EK) and GNW.

Long term

Top 20 most oversold:

Most oversold in the long term is the horribly-performing natural gas ETF UNG and the ultra ETF QID.

Top 20 most overbought:



The most overbought stocks here are F and STX.

You may receive technical analysis and alerts of these stocks, sent automatically to you, by entering the symbols in the Technical Trend Analysis Tool.

Here are the top 40 and their trading volumes:



With thanks to miadhach on Skype for the list of top 100 most active.

Apple's Real Business Model: The Hype is Over, Now AAPL Headed Down

The iPad hype is all over now and there is a negative engulfement line on AAPL (click for the alerts). AAPL is headed down to the $182 level, possibly $162.

These comments below from INO's President are from last week's on the iPad release, and they were right on. I agree 100% on his take of Apple's business model. I have a daughter who gave her credit card info to iTunes...

"Steve Jobs walked onstage and unveiled Apple’s latest creation - the iPad. Having watched almost every key address for Apple for many years I, like many others, were disappointed that the product didn’t live up to the hype. Nonetheless, Apple will sell a boatload of these products, but not as many as the iPhone".



Watch the Technical Analysis Video.

"Upon reflection, it occurred to me that Steve Jobs is changing the whole business model of Apple and I don’t believe anyone has caught on to this yet.

In all the reports I’ve read after the launch of the iPad, I think every writer /analyst missed this key point: Steve Jobs wants to be like King Gillette.

If you don’t know who King Gillette was, you may not old enough to shave. King Gillette started his business at the beginning of the century. His business model is what I believe Apple’s business model will be in the future.

Long ago, King Gillette decided to practically give the razor away at or below cost, but sell the razor blades separately.

So here’s what I think, I think Apple wants to give the iPhone and the iPad to as many people as possible at cost or with a small profit. Remember now, AT&T subsidized the iPhone and Apple gets a slice of the pie from every AT&T customer that has an iPhone. Now why would they do that you might ask?

The key reason, I would argue, is that Apple wants the magic of recurring revenues. This is the dream of many companies - to have millions of folks paying a small amount of money every month for using a service. What makes Apple stand out is the fact that they have an army of developers who are writing code for some very cool apps. Yes, there is an app for that. In fact, there is an app for almost every idea ever thought of.

Not only has the app store been widely successful, but Apple also has iTunes, and iBooks along with iTV coming down the road. So this is what I believe Apple’s business model is going to be: with 125 million people who have giving Apple their contact and credit card information, Apple has a huge base of customers much like the newspapers and magazines did in the ’60s and ’70s, but on a much smaller scale. Now Apple can upsell products to those customers at will. The genius part about all of this is the fact that other people are creating products to be sold through the Apple store. Apple just reinvented the King Gillette model in a thoroughly modern way. Hat’s off to you Steve.

That’s my take on Apple’s stealth business model". Watch the Technical Analysis Video.

Profiting From The Oil Cycles: Next Low in 1 to 3 Weeks

Oil is trading in cycles of between 10 and 12 weeks. These can be easily seen on a weekly candle chart:



INO has a video showing exactly this today: Watch video. It also shows when to enter and to exit.

The average of the cycles is 11.5 weeks, we are currently in week 9.

To run the tool yourself, please use this link for a risk-free trial.

St Louis Fed: U.S Has Escaped Japanese-Style Deflation; Fed Must Look at Bubbles

James Bullard, president of the Federal Reserve Bank of St Louis and a a voting member of the Federal Reserve’s says the US has escaped the danger of a Japanese-style deflation.

According to him, that was the main concern in 2009, but that risk has now passed.

I am not sure that is an optimist view or just the opposite, meaning high-inflation is on its way.

Bullard says he is happy to continue with the current guidance in terms of interest rates, but added that added that, although it was not time to tighten policy, members of the Fed's policy setting committee would weigh in their decisions factors other than inflation and unemployment.

This includes considering asset bubbles.

“I think they’re gaining weight with many people because of the bad experience we had in the aftermath of the last recession, the housing bubble and how that really has blown up and caused so many problems,”.

“I think what the operating regime will really look like going forward is an open question and one that the committee is working on,”

According to an interview to the Financial Times, Mr. Bullard also emphasised that "an end to the unusually low spread of 25 basis points between the discount rate and the interest rate paid on reserves held at the Fed should not be seen as an immediate precursor to a general tightening of monetary policy".

“I think it makes sense today to think about it in terms of a liquidity context,” he said. “The reason it’s so low is exactly because we’re trying to address a huge crisis and a very special situation.” The broader post-crisis economy was “on track” with its recovery, he said. “It’s not a real strong recovery but that’s what we had predicted anyway. But it will be above-average growth for the first half of 2010 and we’ll probably see some positive jobs growth in the first part of 2010 here.”

On political interference

“I think it’s dangerous for America and dangerous for a global economy to try to divorce this central bank from true understanding of financial markets, and I think that that’s the direction we’ll be going in if we separated out the central bank from regulation,”

“What this crisis has shown is that our understanding of financial mediation and how it can impact on macro economy was not good enough. So what you want is to force the central bank to get better understanding and more information about financial markets as they’re making monetary policy decisions.”

Investing - and Properly Diversifying - in Foreign Currencies

There are many foreign currency ETFs in the market (we track them live here) making it very easy for investors to diversify away from the US dollar.

However, many investors may not realize that most of the currencies are correlated, making them very bad paired investments. In order to properly diversify, correlations should be close to zero.

These are the updated correlations for December 2009 and January 2010 for all currency ETFs:

(please click to enlarge)

The are some of the best non-correlations:

• CNY and BNZ, DRR, ERO, EU, FXE (Euro) , FXC (Canada)
• BNZ and CYB, ICI
• DBV (the G-10 leveraged ETF) and the Euro ETFs, FXB, ULE, URR
• FXC (Canada) and GBB (UK)
• FXY and ICI, XRU
• ICI, JYF, JYN, YCS

To receive technical analysis and alerts of these ETFs sent automatically to you simply enter the symbols in the Technical Trend Analysis Tool

The ETF Graveyard: Many ETFs Shutting Down, Lots More in 2010

Investors love ETFs, there is no question about it. There are over 800 ETFs that trade in the U.S (that we track). Investors are abandoning the high-fee mutual funds en masse.

However, the recent proliferation of ETFs is staring to cause fatal victims. Wizdom Tree has announced that it is shutting down 9 ETFs, among them, DBT, DPN, and DRF:

WizdomTree has specialized in international and fundamentally-weighted funds, among them, our favorite BZF (which is not shutting down). The ETFs being closed represent 3% of WisdomTree’s $6B in assets under management.

The ETFs will stop trading effective March 24th, 2010 and are being shut down because of insufficient liquidity.

The largest ETF dieing is the WisdomTree International Communications Sector Fund (DGG) which had roughly only $27M in assets.

The funds that will be closed are as follows:

• International Technology Sector Fund (DBT)


• International Financial Sector Fund (DRF)


• International Health Care Sector Fund (DBR)


• International Consumer Staples Sector Fund (DPN)


• International Consumer Discretionary Sector Fund (DPC)


• International Industrial Sector Fund (DDI)


• International Communications Sector Fund (DGG)


• Europe Total Dividend Fund (DEB)


• Earnings Top 100 Fund (EEZ)


• U.S. Short Term Government Income Fund (USY)

There are more than 150 ETFs with assets of less than $20M, the graveyard will get quite crowded.


You may receive technical analysis and alerts of these stocks, sent automatically to you, by entering the symbols in the Technical Trend Analysis Tool, (powered by INO).

Top 20 ETFs to Buy and To Sell For February - Out of 800 ETFs

We computed the relative strength values of all ETFs that trade in the US (over 800 of them). These values give a very good indication of what is overbought and what is oversold for a desired timeframe.

Here the top 40, 20 oversold and 20 overbought, sorted by monthly rsi.

Top 20 Most Oversold (long term):





The most over sold ETFs are ITM (Market Vectors Intermediate Municipal Index) and SMB, (Market Vectors Short Municipal Index)

Top 20 Most Overbought (long term)



On the overbought side, a very interesting top ECH, which is the Chile ETF. As reported here earlier, Chilean stocks are indeed on fire, in particular, SQM the great chemicals and fertilizers company.


Next is ULQ, Claymore U.S. Capital Markets Micro-Term Fixed Income.

Note: You may receive technical analysis and alerts of these stocks, sent automatically to you, by entering the symbols in the Technical Trend Analysis Tool, (powered by INO).

Roubini: We Are in Trouble, U.S. Growth is Dismal, Unemployment to Rise

Professor Nouriel Roubini said in Davos this weekend that the U.S. growth outlook remains very dismal in spite of the great looking GDP figure released last Friday.

“The headline number will look large and big, but actually when you dissect it, it’s very dismal and poor,” “I think we are in trouble.”

He added than more than half of the growth was related to a replenishing of depleted inventories and that consumption was reliant on monetary and fiscal stimulus. As these naturally decline in 2010 the rate will slow to 1.5%in the second half of the year.

Unemployment To Rise

He says now that while the U.S. will not back into recession, U.S. unemployment will rise from the current 10%.

“It’s going to feel like a recession even if technically we’re not going to be in a recession,”

Bloomberg article.

Properly Diversifying Stock, and ETF Holdings: Correlations for January 2010 Reveal Many Interesting Combinations

With the end of the trading month, here are the updated stock, index and ETF correlations for the period December 2009 and January 2010. We post these at the end of every month.


Correlations are fundamental for stock diversification. Investors who wish to diversify should avoid either positively or negatively correlated stocks. The chart belows shows the correlations for the major general symbols that I follow. Specific sectors to follow.

(please click to enlarge)

The green and reds are those really highly correlated stocks, those pairs are to be avoided.

The best uncorrelated stocks

The pairs with the lowest correlations are:

• SPY and FXE (Euro)
• XLU (utilities) and UUP (dollar) and GLD
• XLU and ECH (Chile), and FXA (Aussie dollar)
• XLF (financials) and FXE
• UNG (nat gas) and EWZ (Brazil)

Those are certainly many interesting and varied pairs this month.

The Volcker Rule: Banks Back to Basics, Stop Ripping us Off

President Obama refers to the "Volcker rule" , as a new plan to limit what banks can do, raising the ire from the big banks, and in turn those sending stock plummeting.

The Globe and Mail had a great article on Paul Volcker this weekend. It says that Paul Volcker, the former Fed chief has long insisted that deposit-taking banks have a duty to safeguard public assets and must be restricted from speculative activities that put them at risk.

"Banks have a service responsibility to individuals, to businesses and to governments, for that matter. And they run the payments system. Those are very basic functions, which is the reason they are protected," Mr. Volcker told me last October.

For those same reasons, "they should be limited in their more speculative activities. I have expressed a view that they shouldn't be running private equity funds and they shouldn't be in the commodities markets," he said.

"And their trading activities should certainly be limited. I don't want everybody to become a hedge fund." In effect, Mr. Volcker was calling for an updated version of the 1933 Glass-Steagall Act, which set up a wall between U.S. investment and commercial banking until it was cast aside in the deregulation craze of the 1990s. At the time, Mr. Volcker was dismissed as an ancient relic by the banking establishment and marginalized by the Obama brain trust.

Closer Obama advisers, such as Treasury Secretary Timothy Geithner and top economic aide Larry Summers - both once staunch supporters of deregulation - lived in hope that Wall Street would clean up its own act and that public anger about the financial collapse would fade.
But the anger hasn't dissipated, the banks have returned to some of their old habits, and Mr. Obama badly needs a popular cause to restore his political fortunes.

Enter the slightly stooped Mr. Volcker, who at 6-foot-7 still stands out in a crowd of presidential advisers.

"He's very much an old-fashioned, nuts-and-bolts kind of guy who I think feels he's been vindicated by the times," says Robert Brusca, who as a young economist worked for Mr. Volcker when he ran the Federal Reserve Bank of New York in the late 1970s.
"There's something to be said about people who keep their fundamental values," Mr. Brusca said.

Mr. Volcker, whose formidable reputation as a central banker stems from his successful war on double-digit inflation in the early 1980s, railed against what he considered toothless reform efforts, even as he was largely ignored in official Washington. That's despite the fact he ostensibly had the ear of the president as head of the Economic Recovery Advisory Board.

Mr. Volcker had earlier fretted about the spread of credit-default swaps and other complex derivatives and said the only meaningful financial innovation in the past two decades was the development of ATMs.

Just last month, he had this to say to a bunch of senior global bankers: "I wish someone would give me one shred of neutral evidence that financial innovation has led to economic growth."
Critics will find much not to like in the Volcker plan, and influential bank lobbyists are sure to mount a full-court press to try to keep the proposed reforms stuck in the congressional wilderness.

And now that the U.S. Supreme Court has removed limits on how much corporations can spend in election campaigns, the cash-dispensing lobbyists will have more millions to spread around.
Despite his own reformist bent - "Glass-Steagall was probably a much better idea than people realize" - Mr. Brusca says it would be foolish to prohibit banks from proprietary trading, as the Volcker plan envisages.

That's partly because banks need to trade in the market constantly to gauge, for example, how liquid it is for a given security and what volumes and pricing would make sense.
Banks can't simply wait for an order from a client and slot it through to the market, says Mr. Brusca, who runs New York-based Fact and Opinion Economics.

"That's not how banking works. If it worked that way, then people wouldn't need banks," he said.
So far, we know little beyond the generalities of the Volcker plan. And by the time it makes its way through Congress, it may have morphed into something Mr. Volcker wouldn't recognize if it bumped into him on the street.

But if the policy makers can manage to fend off the advances of the lobbyists, the big deposit-taking institutions will look a little more like staid utilities than major risk-takers with public money.

That would certainly suit the tall man who has been pushing so hard to get banking back to its basics".

Australian Inflation Jumps: Rates Set To Rise Further, FXA ETF

Australias' Reserve Bank board meets on Tuesday February 2 to set the official cash rate target. Concerns are growing that the rate may rise even further as an unofficial measure of inflation had its biggest monthly increase in a year.

The TD Securities - Melbourne Institute Inflation Gauge rose by 0.8% last month, and the annual inflation rate rose to 2.6%.

The ETF that tracks the Australian dollar is FXA. We track all currency ETFs live here.



ABC News says that the steep rise in January was caused mainly by increases in the cost of travel, accommodation, utilities and education.

"TD Securities says the survey results, combined with last week's slightly higher than expected official inflation result for the December quarter, builds a strong case for the Reserve Bank to raise interest rates again at tomorrow's board meeting.

"It certainly almost guarantees a 25 basis point increase tomorrow to [an official cash rate of] 4 per cent," she told the ABC's business editor Peter Ryan.

"At this stage however, we're not looking for another follow up in March, unless we see maybe another very strong employment report or similar numbers like today which show that all the pressures are on the upside."

Goldman Sacs (GS) CEO Could Receive $100M Bonus

"This is Lloyd thumbing his nose at Obama,” said a banker at one of Goldman’s rivals, according to the UK's Times on Line in a report that Goldman Sachs, (GS) chief executive officer could be paid a bonus of up to $100M, deying President Obama's recent talks against big banks payouts.

"Bankers in Davos for the World Economic Forum (WEF) told The Times yesterday they understood that Lloyd Blankfein and other top Goldman bankers outside Britain were set to receive some of the bank’s biggest-ever payouts. “Goldman Sachs is becoming the focus of an increasingly acrimonious political and financial showdown over the payment of multimillion-pound bonuses.Last week the US President described bonuses paid out by some banks as “the height of irresponsibility” and “shameful”.

“The American people understand that we have a big hole to dig ourselves out of, but they do not like the idea that people are digging a bigger hole, even as they are being asked to fill it up,” he said last week.

Mr Blankfein took home his biggest bonus so far in 2007, when he was paid $67.9 million. His bank’s profits last year were $1.8 billion higher than in 2007. This leaves the bank with a justification to pay him even more although payouts will be made in shares rather than cash to make them more politically palatable.

Goldman declined to comment, but the bank will reveal the pay of its top five earners in a filing with America’s banking regulator the Securities and Exchange Commission by the end of next month. The bank — sometimes reffered to as the vampire squid — is disliked and envied by rivals in equal measure. It paid back the billions of dollars it borrowed from the Government under America’s state-funded financial assistance programme early, in part because it wanted to avoid political interference".

Switzerland Warns That UBS Could Collapse

Switzerland's justice minister said that UBS could collapse.

The warning was issued with reagrds to the talks with the United States over a high-profile tax fraud investigation. Switzerland and the United States negotiated an agreement under which UBS would provide information of about 4,500 account holders to US tax police. However, a Swiss court ruling earlier this month put the deal in doubt.

Eveline Widmer-Schlumpf told Le Matin Dimanche newspaper: "The actions of UBS in the United States are very problematic. Not just because they are punishable but also because they threaten all of the bank's activities,"

"The Swiss economy and the job market would suffer on a major scale if UBS fails as a result of its licence being revoked in the United States,"

The AFP in an article yesterday says that in Switzerland feel that banking secrecy is a source of pride and a key part of the economy, and many citizens have accused the government of failing to protect UBS.

"We have nothing to blame ourselves for. I don't think anyone could prove that we acted badly," added Widmer-Schlumpf.

Where Gold is Headed, Indian Perspective

Business Line, from The Hindu Perspective comments on the recent gold volatility. The recent cmmnets on bank regulations and the positive outlook for the US dollar have exerted a negative influence on commodity prices. Oil has fallen to less than $75 a barrel and showing signs of stabilising in the low $70s.

"Gold prices have already fallen below $1,100 an ounce with continued long liquidation and less-committed speculators quick to exit. Base metals complex is under pressure too because of uncertainties over the effect of Chinese measure. Favourable crop prospects in the northern hemisphere are seen capping agricultural commodities' upside.

In the short-term, growth signals, gyrations of the US dollar and market fundamentals of specific commodities will determine the price direction. It may be necessary, especially for speculators, to limit exposure to the commodity markets until the effects of recent developments unravel.
Gold: Weaker equity markets and a stronger dollar have weighed upon the entire precious metals complex. With China tightening, the dollar has appreciated against the euro more quickly than expected. For the second month in a row, gold ETPs have witnessed net outflows.

Already under pressure from a firming dollar, expectations of further strengthening are likely to continue to weigh upon the complex. Silver is seen as the most vulnerable as investors continue to liquidate. Foreign exchange strategists are sanguine, the dollar will continue to strengthen until the second quarter or until the time the US Fed begins monetary tightening cycle.

As we have maintained in these columns time and again, it is fickle speculative investor interest that poses the biggest risk to this market. Gold bulls continue to bet on further purchases by central banks. However, on current reckoning, it is at best a hope. So, while the yellow metal's allure will remain intact over the next few months, its glitter may appear to fade somewhat because speculators would exit due to weakening prices.

Physical demand, on the other hand, is far from robust. While consumers may be slowly getting used to high prices, there is nothing to suggest that jewellery demand in terms of volume is picking up markedly. As for India, the saving grace would be weaker international prices.
Base metals: Renewed concerns over growth and China's monetary tightening are exerting pressure on the complex. Long liquidation is now turning into short selling. This suggests there could be further downside to prices.

Lower prices are likely to spur physical activity in base metals, especially in the context of tight scrap supply and low inventories with producers, consumers and distributors. The key question is whether OECD demand will pick up and when. Until the situation in China becomes abundantly clear, market participants are likely to exercise caution".