Technicals | May 09 2011
By Rudi Filapek-Vandyck
The most common theme in Friday's market update by technical commodities analysts at Barclays in London is "a deeper correction threatens". The analysts have long stuck to the view that any "correction" would prove at worst a "temporarily dip", but in recent market updates it became clear overall confidence was losing some of its solidity. The team has now implicitly come to the conclusion that investors heading for the exit always results in much larger sell-offs than can be accurately predicted and he who calls the guaranteed end to last week's weakness for commodities is either a genius, a clairvoyant or a reckless idiot.
It'll probably surprise few readers the technical team at Barclays has singled out silver and crude oil as most likely candidates for continued weakness, though a cautious tone also dominates the technical outlook for base metals such as copper and aluminium.
As far as crude oil is concerned, Barclays labels the recent correction as "incomplete". The analysts comment a key reversal week in WTI signals decline to an initial target near US$94.00/bbl while the expectation is that Brent futures could ultimately end up below US$100/bbl. All this would signal a buying opportunity as Barclays analysts have stuck to a bullish outlook on a medium term horizon.
Technical limitations
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