Adam Sarhan MarketWatch Quote: With stocks at record highs, ISM data to set tone

Market WatchApril 1, 2013, 8:10 a.m. EDT

ISM manufacturing data are expected to show improvement

By Barbara Kollmeyer, MarketWatch

NEW YORK (MarketWatch) — With two U.S. stock indexes sitting at record highs, investors on Monday awaited data expected to show further improvement in manufacturing and a rise in construction spending.

Futures for the Dow industrials (CBE:DJM3) reversed early declines to add 15 points, or 0.1%, to 14,512, while those for the Standard & Poor’s 500 index (GLC:SPM3) ticked up 1 point at 1,563.75.

Futures for the Nasdaq 100 index (GLC:NDM3) added 4.50 points to 2,815.50.

European stocks were closed for an extended Easter break, while Asian markets fell after data from Japan and China left some underwhelmed.

Wall Street and most global markets were closed on Friday ahead of the Easter weekend.

It’s a big week for data, ending with the monthly U.S. jobs report on Friday. Monday’s numbers include the ISM manufacturing survey for March, which is expected to show a fourth consecutive month of improvement. Economists polled by MarketWatch forecast the ISM to match February’s level of 54.2%. Any figure over 50% signals expansion.

That data are due for release at 10 a.m. Eastern time. Markets will also zero in on the ISM’s employment gauge, which bounced back early this year and is often a good signal of broader hiring trends. Any employment trends are crucial this week ahead of Friday’s payrolls data. Why the jobs data is key for markets

Also Monday, the Commerce Department is expected to report a 1% rise in construction spending in February after a 2.1% fall in the first month of the year.

Beyond the data, investors are gearing up for the next round of earnings reports, said Adam Sarhan, chief executive of Sarhan Capital.

“It is very important for us to not only look at the actual data, but see how the market reacts to the data,” he said. “Clearly, the bulls are in control of this market evidenced by the great mini rotation and the fact that every pullback since this rally began in November has been shallow in both size (% decline) and scope (days, not weeks). As long as this healthy action continues, the market deserves the bullish benefit of the doubt.”

Wall Street finished on a high note last week, with the S&P 500 index (SNC:SPX) and Dow industrials (DJI:DJIA) both closing at record highs on Thursday. The quarter was also one for the bulls, with the S&P rising 10%, the best performance in a year.

With European markets closed for a holiday, weaker Asian markets provided a slightly downbeat backdrop for Wall Street. A slightly disappointing Bank of Japan tankan survey and a stronger yen pulled down the Nikkei Stock Average, while in China,manufacturing data that showed only a modest pickup also left some slightly gloomy. Hong Kong markets were shut for a holiday.

Among stocks in focus, pharmaceutical companies could get extra attention on Monday after India’s Supreme Court on Monday rejected a bid by Swiss-based Novartis AG (NYSE:NVS) (SWL:CH:NOVN) to grant patent protection to its blockbuster cancer drug Glivec.

Shares of Tesla Motors Inc. (NASDAQ:TSLA) leapt 9.1% in premarket after the company said sales of its Model S car exceeded the target set out for it in February. As a result, the company said it would amend first-quarter guidance to full profitability.

Shares of Apple Inc. (NASDAQ:AAPL) may come under scrutiny after a 17% drop seen in the first quarter and reports that it will cut iPad Mini shipments. Read: Stocks to Watch for Monday

Shares of BlackBerry (NASDAQ:BBRY) added 1.4% in premarket trade as investors continued to react to the company’s surprise operating profit for the fiscal fourth quarter on Thursday.

Cliffs Natural Resources Inc. (NYSE:CLF)  , which jumped 3% on Friday, was up another 2.6% in premarket dealings. J.P. Morgan added the stock to its analyst focus list.

EBay Inc. (NASDAQ:EBAY)  climbed 2.6%. J.P. Morgan raised its price target to $64 in the wake of the company’s investor meeting and repeated its overweight recommendation.


Adam Sarhan Reuters Quote: Copper extends rally on global stimulus hopes


By Chris Kelly and Harpreet Bhal
NEW YORK/LONDON | Fri Jul 27, 2012 2:39pm EDT

(Reuters) – London copper futures rolled gains into a fourth straight day on Friday, buoyed by growing expectations of further stimulus action from both the U.S. Federal Reserve and the European Central Bank.
Dollar-denominated copper prices received an additional boost from the euro, which rallied to a three-week peak against the greenback after French President Francois Hollande and his German counterpart, Angela Merkel, said they were determined to do all they can to safeguard the euro. <USD/>
Those comments followed a promise by ECB head Mario Draghi on Thursday to do “whatever it takes to preserve the euro.”
“There was a big relief rally after Draghi’s comments calmed the market down by saying the ECB will do whatever it takes for the euro zone, and the market is reassured by that,” said Nic Brown, head of commodity research at Natixis.
London Metal Exchange (LME) three-month copper firmed $98 to close at $7,568 a tonne, off an intra-day peak of $7,584, climbing further away from Wednesday’s one-month low of $7,344.25.
Still, prices of the red metal have slipped about 1.5 percent so far this month.
In New York, the COMEX September contract rose 3.25 cents to settle at $3.4260 per lb, near the upper end of its $3.3790 to $3.4390 session range.
Prices digested and maintained momentum after data showed second-quarter GDP growth in the United States slowed to 1.5 percent, as expected as consumers spent at their slowest pace in a year.
“The U.S. economy is growing, but today’s number was right on the fence between stronger growth and no Fed action, and weaker growth with Fed action,” said Adam Sarhan, chief executive of Sarhan Capital.
“Today’s GDP report is inconclusive … However, when you put this piece of the puzzle with the other pieces in the global economy, it’s still leaning toward further easing.”
Whispers are beginning to grow louder in hopes that the U.S. Federal Reserve will announce a third round of bond purchases, also known as quantitative easing, when it meets next week.
Investors worry that demand from top consumer China, which accounts for 40 percent of global copper demand, has been slow to pick up so far this year, dragging prices 9 percent lower in the second quarter.
But China’s refined copper consumption is forecast to rise by about 5 percent in the second half of 2012 from a year ago, a state-backed research firm said, led by higher demand from power cable makers as the government takes steps to boost the economy.
Still, the open interest in the LME copper contract has dropped to its lowest level in nearly five years, reflecting a lack of conviction about copper’s near term price direction. The latest LME data shows open interest at 233,839 lots, the smallest volume since August 2007.
Analyst Andrey Kryuchenkov at VTB Capital in London expects the rebound in copper and aluminium prices will fade next week in the absence of stimulus measure announcements from central bankers.
“I personally think that copper and aluminium will stall here and probably come back to the July lows simply because I don’t think, and economists also don’t believe, that QE3 is warranted in any way,” he said.
On aluminium, RBC Capital said in a note that price-induced shutdowns by aluminium producers such as Bosnia’s Aluminij Mostar could erode a market surplus forecast for this year, potentially paving the way for a price recovery.
“The analyst community is still working on the numbers, but (such) closures could be enough to seriously erode the previously expected surplus,” it said.
“Add that to the already tight physical market owing to load out queues at LME warehouses and you have a recipe for a decent short-covering rally,” it said in a note.
Bosnia’s top exporter, aluminium smelter Aluminij Mostar, will close 12.5 percent of its smelting capacity due to lower metal prices and higher power costs, and could cut more in September.
The roughly 45 million tonne a year aluminium market is seen in a 500,000 surplus this year, according to a Reuters poll earlier this month.
Benchmark aluminium did not trade at the close, but was last traded at $1,903 a tonne in after-hours business, just shy of its intraday high of $1,904.
(Additional reporting by Eric Onstad in London and Melanie Burton in Singapore; editing by James Jukwey, Keiron Henderson and Marguerita Choy)

Adam Sarhan Reuters Quote: Hedge funds cut commods net longs by $9bln in week

Fri Apr 13, 2012 11:06pm BST
* Sharpest drop in managed money net longs since Dec
* Copper price down 5 pct, open interest over the week
By Barani Krishnan

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April 13 (Reuters) – Hedge funds and other money managers slashed their exposure to U.S. commodities by around $9 billion this week, government data showed o n F riday, in the biggest such cut in four months that came on worries over China‘s slowing economy and fading prospects for new U.S. economic stimulus.
The value of net-long positions held by money managers across 24 U.S. commodity futures markets fell to around $90.7 billion for the week to April 10 from $99.3 billion a week earlier, according to Reuters’ computation of data issued by the Commodity Futures Trading Commission (CFTC).
The copper market took one of the biggest hits for the week, falling 5 percent in both price and open interest, or the number of contracts open for trading.
Speculators also cut their net long positions in U.S. crude oil to the lowest level since December.
The $9 billion drop in net-long values was the sharpest reduction shown by the CFTC’s Commitment of Traders (CoT) data since the week ending Dec. 20, when commodities tumbled on concern about the European debt crisis.
The CoT data is issued every Friday and tracks traders commitments beginning each Wednesday to the Tuesday of the following week. For the week ending this Tuesday, the total number of net-long contracts in the 24 markets held by money managers, including hedge funds, fell by 111,870, or 8.7 percent, to 1,180,535 contracts.
Investors pulled money out of commodities after minutes of the Federal Reserve’s March meeting — released last week — gave dim hope that the U.S. central bank would embark on a QE3, or a new round of government bond buying, that could flood markets with cash.
Concerns over China’s slowing economy added to the selloff. Data on Friday showed gross domestic product in the No.2 economy growing at its slowest rate in nearly three years in the first quarter. China is the biggest importer of base metals and one of the largest consumers of most major raw materials produced by the world.
“While the lack of QE3 and worries about China are enough to keep the long money in commodities on a tight leash, renewed concerns about Europe, particularly Spain’s debt, are making investors more flighty,” said Adam Sarhan, chief executive at New York’s Sarhan Capital.
(Reporting By Barani Krishnan; Editing by David Gregorio)

Adam Sarhan Gold Quote: The Economic Times

The Economic Times

The Economic Times

NEW YORK: Gold’s 20-day moving average falling below its 200-day and its brief foray into a bear market suggest momentum has turned bearish and a further pullback could be on its way.  Bullion’s 20-day moving average (DMA) dipped below its 200 DMA on Thursday, in what technical analysts termed a “death cross,” as short-term momentum has turned more negative than long-term momentum and could show that the current downtrend is pervasive.
“Any time there is a death cross. The market is telling us that the underlying strength has changed from bullish to bearish,” said Adam Sarhan, chief executive of Sarhan Capital.  Sarhan compared gold’s technical charts in December to a slow-motion train wreck , with the metal having plunged below its long-term upward trendline for the first time in three years and its key 200 DMA.  
Gold is on track to end the fourth quarter with its first quarterly loss since September 2008 when Lehman Brothers collapsed, marking the peak of the global economic crisis.
“When you start seeing a lot more bearish technical events occurring, more and more shorter-term traders are inclined to selling their positions,” Sarhan said. Spot gold rose 2 percent to above $1,580 an ounce on Friday in a rebound rally, a day after it briefly dropped more than 20 percent from its record high of $1,920.30 set on Sept. 6, flirting with the common definition of a bear market. The last time a clear death cross formed was in August 2008, following gold’s sharp rally toward $1,000 an ounce. The metal then tumbled to around $680 an ounce in October 2008, just two months after its 20 DMA plunged below its 200 DMA.
“A negative crossover in moving averages can be seen as a selling signal,” said Tim Riddell, head of ANZ Global Markets Research, Asia. “But in gold’s profile, it is probably a confirmation signal that gold has made a cyclical high in the third quarter, and will likely see a more protracted consolidation phase than the market would initially wish to see,” Reiddell said.

Quoted In Reuters & Discussing Gold

Gold rose 2 percent to a 1.5 month high on Monday on technical buying as political uncertainty in Italy threatened to accelerate the euro zone’s sovereign debt crisis.
Bullion was on track for its biggest one-day gain in two weeks as buying sentiment improved after Germany’s Chancellor Angela Merkel has ruled out using gold and currency reserves to boost the euro zone bailout fund.
The metal — a traditional safe haven which has recently taken to tracking riskier assets — has gained 4 percent in the last 5 sessions. U.S. equities on Monday were down nearly 1 percent on euro zone debt  worries.
“Gold does seem to be temporarily the safe haven. It’s not being driven by U.S. investors but rather by other sources of business, such as the Europeans,” said George Nickas, commodities broker with FC Stone.

Spot gold [XAU=  1784.10    -10.69  (-0.6%)   ] last rose 2.1 percent to trade at $1,791.01.
U.S. gold futures for December delivery [GCCV1  1793.70    2.60  (+0.15%)   ] gained 2.0 percent to $1,792.40.
Monday’s trading volume was on track to fall below its 30-day norm, consistent with the recent slower pace. U.S. gold futures posted its third lowest volume in the previous session.
“There’s no enthusiasm that I can see from the U.S. investing public. People are waiting for European situation to clear up and U.S. economic data to return to normal,” Nickas said.
Last week, gold posted its second consecutive week of gain, largely helped by market jitters in the euro zone.
Adam Sarhan, CEO of Sarhan Capital, said gold last week posted a “breakout to the upside” on weekly charts, as it closed above $1,700, which was also the neckline of the bearish double-top pattern from earlier this year.
“Gold managed to rally last week even though a slew of other risk assets ended in the red. Investors prefer the comfort of gold during times of global duress — Greece is on the brink of leaving the euro zone,” Sarhan said.
Also supporting was uncertainty ahead of Italy’s key parliamentary vote on budget reforms, which could test the leadership of Prime Minister Silvio Berlusconi in euro zone’s third biggest economy.
Holdings of the SPDR Gold Trust [GLD  173.19    -1.79  (-1.02%)   ], the world’s biggest gold-backed exchange-traded fund, gained 1.513 tons on the day to 1,245.064 tons by Nov. 4, the highest in more than a month.
Silver [XAG=  34.78    -0.08  (-0.23%)   ] was up 1.9 percent at $34.74, platinum [XPT=  1659.75    4.25  (+0.26%)   ] was rose 1.3 percent to $1,651.99, whilepalladium [XPD=  671.47    12.98  (+1.97%)   ] gained 1.3 percent to $659.72.

Reuters Quote: Copper caps worst monthly loss since June 2010

Wed Aug 31, 2011 2:41pm EDT

  * London copper breaks above 200-day moving average

 * COMEX copper still eyes death cross technical barrier
 * Labour talks continue at Vale's Canadian nickel ops
 * Coming up: China/U.S. manufacturing data Thurs.
 (Rewrites, adds New York dateline/byline, updates with New York closing copper price, adds
graphic and analyst comments)
 By Chris Kelly and Melanie Burton
 NEW YORK/LONDON, Aug 31 (Reuters) - Copper capped its worst monthly performance in more than a
year with a firmer close on Wednesday, as concerns about tightening supply and upbeat U.S. data
steered the rally.
 Losses in the base metals complex piled up in August, with aluminum CMAL3 posting its weakest
performance since May 2010, zinc's CMZN3 weakest since November 2010, and tin's CMSN3 greatest
monthly loss since October 2008.
 But the selling pressures came to a halt on the last day of the month Wednesday, with technical
momentum and supply-side restraints fueling gains in copper.
 "It is very much a case of refocusing on fundamentals. We had an awful Chilean production
report which highlights the challenges the industry faces in trying to grow supply this year," said
Gayle Berry, analyst at Barcap. [ID:nN1E77T0BQ]
 London Metal Exchange (LME) copper for three-month delivery CMCU3 broke above its 200-day
moving average at $9,286 a tonne at one point, before ending at $9,275, up $115 on the day.
 In New York, the key December COMEX contract HGZ1 jumped 6.30 cents or 1.5 percent to settle
at $4.2045 per lb.
 It too received a technical boost with an earlier breach of its 100-day moving average at
 But analysts said the move lacked conviction and a greater technical barrier stood in its way.
 "I still think there is still some work to be done," said Adam Sarhan, chief executive of Sarhan Capital in New York.
 "We are seeing a light-volume bounce up to a logical area of resistance ... there is also the issue of a death cross, which bodes poorly for the near-term outlook."
 A death cross occurs when the 50-day moving average sinks below, or crosses over, its 200-day moving average.
 (Graphic: )
 "As long as copper stays below its 50- and 200-day moving averages, the bears remain in control."
 Total copper trading volumes in New York reached about 29,000 lots -- more than 40 percent
below the 30-day average, according to preliminary data from Thomson Reuters.
 Copper received a boost from a report that the U.S. private sector added 91,000 jobs in August
while an index of factory activity in the U.S. Midwest in August and U.S. July factory orders were
better than expected. [ID:nN9E7H701V]
 "There are still a number of question marks when it comes to the macro outlook and there still
could be a lot of fear-driven weakness in prices ahead," Berry said.
 "The next month is going to be interesting because that is when seasonally you would expect
buyers to start returning to the market again so we should get a feel for how much of an impact the
slower economic data is having on actual metal fundamentals."
 Premiums for bonded copper in Shanghai have fallen more than 10 percent from last week due to
poor arbitrage and reduced demand for spot metal in the domestic market, marking the first fall in
premium since July, traders said on Wednesday.[ID:nL4E7JV1M0]
 In nickel, labour talks appear to be going smoothly at Vale's (VALE5.SA) Thompson mining,
smelting and refining complex in Manitoba, Canada where the current contract expires in
 "Talks continue in Thompson and we remain committed to reaching a deal," a Vale spokesman told
 Thompson has the capacity to produce around 60,000 tonnes a year of refined nickel, according
to Reuters Metal Production Database.
 Nickel CMNI3 ended up $25 at $22,200 a tonne.
 Metals database here
 Global metal stocks
 LME stocks vs prices
 Metal Prices at 1826 GMT
 COMEX copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
 Metal            Last      Change  Pct Move   End 2010   Ytd Pct
 COMEX Cu       420.20        6.05     +1.46     444.70     -5.51
 LME Alum      2469.00       44.00     +1.81    2470.00     -0.04
 LME Cu        9274.00      114.00     +1.24    9600.00     -3.40
 LME Lead      2578.00       20.00     +0.78    2550.00      1.10
 LME Nickel   22200.00      250.00     +1.14   24750.00    -10.30
 LME Tin      24400.00      400.00     +1.67   26900.00     -9.29
 LME Zinc      2291.50        6.50     +0.28    2454.00     -6.62
 SHFE Alu     17470.00       25.00     +0.14   16840.00      3.74
 SHFE Cu*     68360.00      110.00     +0.16   71850.00     -4.86
 SHFE Zin     17360.00       45.00     +0.26   19475.00    -10.86
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
 (Additional reporting by Harpreet Bhal in London and Euan Rocha in Toronto; Editing by Alison
Birrane;editing by Sofina Mirza-Reid)

Reuters Quote: METALS-Copper ends sharply lower amid commods sell-off

Tue Apr 12, 2011 2:55pm EDT

* Copper caught in cross-commodity liquidation

 * Goldman warning triggers commodity rout
 * Japan crisis spurs econ recovery concerns
 * Coming up: U.S. retail sales data on Wednesday
  (Recasts, adds New York dateline/byline, updates with New
York closing copper price, adds graphic and analyst comments)
 By Chris Kelly and Silvia Antonioli
 NEW YORK/LONDON, April 12 (Reuters) - Copper ended Tuesday
with its biggest one-day loss in about five weeks, caught in a
broad-based commodity rout led by a sharp drop in oil and fears
that Japan's nuclear crisis could stall a global recovery.
 Oil traded in New York has surrendered more than 7 percent
of its value in just two days after Goldman Sachs warned for a
second straight day prices in crude oil and other commodities
would fall. For details, see [ID:nN11117735]
 Without the support of a stronger oil price, the legs
holding up this latest commodity rally began to buckle.
 "All of these markets ... aluminum, oil, copper ... all had
big, big runs over the past few weeks. So what we are seeing is
just a sharp pullback," said Adam Sarhan, chief executive of
Sarhan Capital.
 The Reuters-Jefferies CRB index .CRB, a global
commodities benchmark, fell nearly 2 percent in its sharpest
one-day decline in a month.
 "They all took the stairs up, but are now taking the
elevator down. The question is how far down will this elevator
ride go?" Sarhan said.
 London Metal Exchange three-month copper CMCU3 shed $225,
or nearly 2.3 percent, to close at $9,630 a tonne, its largest
daily decline since March 9.
 On Monday, the metal rallied to a 5-week peak at $9,944.75,
just 2.4 percent away from its mid-February record at $10,190.
 COMEX May copper HGK1 fell 7.65 cents to settle at
$4.3835 per lb, near the lower end of its $4.3610 to $4.4750
session range.
 COMEX trading volumes grew to a hefty 65,800 lots by 2:01
p.m. EDT (1801 GMT), nearly two-thirds above the 30-day norm,
according to Thomson Reuters preliminary data.
 "Confidence has taken a hit now," said Alex Heath, head of
base metals at RBC Capital Markets.
 The confidence was also shaken after Japan's economic
minister warned damage wrought by last month's earthquake and
tsunami could be worse than initially thought for the world's
third largest economy. [ID:nL3E7FC092]
 "There is a lot of uncertainty, and whenever there is a lot
of uncertainty about the future and the risks of the unknown
are elevated, people, especially people sitting on gains,
become jittery, and they hit the sell button," Sarhan said.
 As a result, prices for U.S. government debt rallied, with
safe-haven demand boosting 10-year Treasuries by a full point.
 Higher inventories of copper in LME warehouses also
pressured prices, fanning concerns about sluggish Chinese
demand in the first part of the new year.
 Stocks have risen since mid-December and last rose 1,000 to
446,700 tonnes, the highest level since July 1. <MCU-STOCKS
 China's copper imports are unlikely to surge in April after
a 29.2 percent rise in March since importers are worried about
high stocks in Shanghai. [ID:nL3E7FB1K9]
 Aluminium stocks fell 2,275 tonnes to 4,575,250 tonnes, but
held near a record 4,640,750 tonnes hit on Jan. 20 last year.
 Aluminium CMAL3 closed down $29 at $2,660 a tonne, under
pressure after Alcoa Inc (AA.N), the largest U.S. aluminum
producer, missed Wall Street's first-quarter revenue target.
 "When a company like Alcoa misses revenues during a surge
in commodity prices ... if they can't make money during that
type of environment in the first quarter, what does that mean
for other industries and the rest of the market," Sarhan said.
 Nonetheless, soaring power costs, lucrative bank deals that
keep metal away from the market and strong demand growth are
likely to boost aluminium prices this year. [ID:nLDE72U13F]
 China is considering plans to either scrap or reduce export
tax rebates on some aluminium extrusion products.
 This comes after the metals-consuming giant decided to halt
plans to build new aluminium plants to tackle serious
overcapacity in the industry. [ID:nL3E7FC0WI] and
 Metal Prices at 1806 GMT
 COMEX copper in cents/lb, LME prices in $/T and SHFE prices in
 Metal         Last      Change  Pct Move   End 2010   Ytd Pct
 COMEX Cu      437.90    -8.10     -1.82     444.70     -1.53
 LME Alum      2659.00  -30.00     -1.12    2470.00      7.65
 LME Cu        9622.00  -233.00     -2.36    9600.00      0.23
 LME Lead      2725.00  -130.00     -4.55    2550.00      6.86
 LME Nickel   26700.00   -1005.0    -3.63   24750.00      7.88
 LME Tin      32500.00   -550.00    -1.66   26900.00     20.82
 LME Zinc      2469.00   -76.00     -2.99    2454.00      0.61
 SHFE Alu     16780.00   -100.00    -0.59   16840.00     -0.36
 SHFE Cu*     72310.00   -1060.00   -1.44   71850.00      0.64
 SHFE Zin     18590.00   -215.00    -1.14   19475.00     -4.54
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
  (Additional reporting by Rebekah Curtis in London; editing by
Keiron Henderson and Jeffrey Benkoe)