Morning Mumble: Marks & Spencer (MKS) (the relief trade) & precious metals, where is the support!?!?

Morning, today was busier than planned purely because of Marks and Spencer (MKS). Today's results were better than expected, albeit being short (they're a lot better than I expected). So on opening it was rude not to quadruple up. Merely on a technical basis, almost an admittance of being wrong but to cover those potential losses by trading on it. It could have been worse for the shorts and MKS had it not been for the covering early trading that enabled a temporary pause (trading opportunity) and to for me to reduce short losses. 

For those closing yesterday or going long, congrats. H/Y Results for 26 weeks ended 27th September 2014 show margin improvement and profit improvements, certainly without the significant declines that were expected. With guidance being upped the city long only investors will follow the positives (so they should). For myself it’s an opportunity to short on opportunity. Technically, 420/440 is significant, so MKS needs to stay above it...with Christmas and caution being given by the management the Food & Clothing giant may just improve its Food LFL over the festive period but clothing struggle to perform near the margin improvements that have been given today and revisions upwards (Discounting is already happening with other retailers.) 

In summary, food better than expected, online only 6% down (could have been worse) and clothing (at one point was ahead in womenswear) was still down. It's a very brave call to raise guidance but follow it with a sit on the fence with a statement...Despite some improvement in consumer confidence, market conditions continue to be challenging. As a result, we remain cautious about the outlook for the remainder of the year. However, we are confident that we are well set up for the key Christmas trading period. 

As was discussed yesterday in a conference call, with food prices being challenged (pricing and competition pressures) retail could benefit from the savings made in the food aisles of the big four. MKS has led a premium brand akin to Waitrose, so there's no reason why it shouldn't exponentially gain by people treating themselves to MKS instead of their standard fayre. 

To avoid disappointing, I remain negative on MKS, the share price rally does not validate the changes in the company but will trade the technical elements, currently long waiting the 440 level. There are glimmers of hope with the guidance revisions but the market is getting ahead of itself. There's pressure on to perform and this has been slow coming so far, history is an indicator of the future. 

Precious metals, with yet again a glimmer but disappearance of support. The targets, including mine (as mentioned the other day), are being revised due to the total lack of interest and support in the precious metals markets. Asia was absent of almost all support for gold and America wasn't fairing much better. Critically $1,146.80/oz. is no-man's land and the technical traders can subscribe no confidence to the price. Silver appears to be the lead with gold reducing its ratio, gold's ratio to silver is now approaching 74.6: 1. That must surely, without looking, be near the all-time high from 2009 (I should look but do not have the time). Technically something has to give, and gold, with this trade, one would be wise to keep an eye on any significant support for the long' in silver as this is likely to appreciate the most...Platinum Group Metals (PGM's) not exactly being loved with the Jo'burg physical on platinum being stressed (negatively).

Iron Ore, with the price being trashed and the economic data not looking so rosy, it was no surprise that the minor (I know) iron companies got trashed further. Atlas Iron (ASX: AGO) has been trashed, further than I imagined after that last update. Fortescue Metals (ASX: FMG) still having some safety but for how long? Over to GLEN for a piece of iron they do not really want but may have to. 

What are Centamin Egypt (CEY) playing at, their guidance not so long ago was maintained with 420K/oz.'s, less than a full calendar month ago. Today, there's a Sukari Update that advises a downwards revision in guidance due to lower monthly plant productivity during October and lower expected average grades for the fourth quarter from underground development ore. When should this update have come forth? Never mind, CEY kicked themselves two fold with the price of gold. If CEY's management have today only realised guidance and production will be lower, then who is hands on? Yes you could argue the % decrease until today did not require an update, but where there is a trend you'd be hard pushed to justify not updating earlier. 

Today's no news award goes to EMED, with an unsurprising extension (three months) to approve the Mining Permit for the Rio Tinto Copper Project, the Company confirms that it still expects to receive the final permitting before the end of the year. Now if there's a 3 month extension, the permit may come in time, but without removing ones socks 3 months takes us beyond the end of the year. Perhaps this update is due to the level of stale enquirers holding the stock. 

Not one comment on the wires of the lack of support for copper, off just over 4¢ a lb continuing the trend. It would appear someone is walking away with a health profit from some hefty trades. There's a few long faces over at the weald...after the last update would you have been a holder? As I type, in the left corner of my eye I note MKS is on the move positively again...nearing the 440 level (in between the top and bottom of this post I now have no position in MKS currently awaiting the 440 test).

Oil/Saudi Arabia if this momentum continues will not help many economies, stability in the oil price and gradual appreciation promotes growth. The declines in the short-term are a benefit to most economies but not the longer term. With oil under significant pressure the trading houses now have to realistically consider a lower hedge, those trading houses a head of the curve should benefit from this significantly (You're welcome). The bounce is expected (albeit short-lived) but it’s more a case of when. 

No time sadly to cover the JD Wetherspoon (JDW) like-for-like miss which the market is punishing...interim management statement.

Atb Fraser