Copper has been weak lately but has rebounded $0.12/lb to $4.47/lb (for April delivery). In the last few weeks Copper ran into stiff selling at $4.60. The market had technical support at $4.25 and was able to recover yesterday. Today we are seeing follow through.
One culprit of the weakness was higher Oil prices, which of course could dampen economic growth and demand for Copper and the like. Crude Oil soared to $100 on unrest in the middle east, but it has yet to breakthrough that barrier. Relative weakness in Crude has provided further support to Copper. As long as Oil (NYSE:USO) remains below $100, it shouldn’t have too much of a negative impact. We should also note the better than expected numbers on durable goods orders and jobless claims.
In other news Barclays Capital (NYSE:BCS) is reducing its exposure to Copper. They still see the market as tight but believe that Chinese demand has cooled off and exchange inventories are rising. Barclays is now more positive on Nickel.
Stockpiles at the London Metal Exchange continue to grow. They are up almost 20% in just two months.
Turning to the chart, we see that Copper has found support at $4.25, which has been previous support. Look for Copper to continue higher before battling resistance at $4.55. The market does have a chance to retest the high. However, a retest is no guarantee of a breakout.
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