Dennis Gartmann on Fast Money last night: bullish on steel and copper saying economies of the world should continue to recover. Wait a minute Dennis...isn't this so-called recovery going into it's 7th year now ? That's already a long time. At this point, I'd say anything in the way of a negative from a fiscal or monetary standpoint could send all economies back down. Also, if copper was looking so strong, it wouldn't be in backwardation.
Yes, spread in Copper, there is tendency for front month Dec/Mar in last week of Nov to go up. Spreads I get into in all markets are based on Seasonality but also signals I have developed, so I just don't put them on cause it is near end of November.
Morning Copper Market Report Wed 11 Dec 2013 07:29:35 CT Not surprisingly, the copper market continued to rise yesterday and in the process the March contract reached up to the highest level since December 3rd. Part of the gains in copper came from favorable currency market action and some might have been the result of technical stop loss buying in the wake of the upside breakout on the charts. It is also highly likely that talk of an impending US budget deal prompted some fund and fresh speculative buying of copper and other industrial commodities, and that lifted copper to new highs for the move. Clearly removing the US debt and deficit drag from hanging over the world economy, could ultimately be seen as more important than continuing QE3. While copper is showing more gains this morning, the gains are a little anemic when one considers the positive Chinese copper demand news flow overnight. However, news that Chinese copper production in November jumped up sharply and reached record levels probably tempered part of the upward track offered by the higher Shanghai copper close. As in other markets, copper needs positive Washington news, increased hopes for growth in 2014 and ongoing declines in the Dollar. On the other hand, copper was net spec short in the last positioning reports and therefore copper might not need as much positive fundamental news as other markets to return to the October consolidation highs. ----------------------------------------------------------------------------------------------------------------------------------------------------------- Commentary: As the report indicates, upward price action is pretty pathetic considering the backdrop. I think there is some short covering happening here. We are up a penny and a half this morning on the CME with the front month (March '14) being the strongest, but not by much.
One would think that equity markets might also be correlation factor for copper. THINK AGAIN. Over the past few days equities are down, but copper is holding it's own. March contract hit $3.31 this morning.
http://www.marketwatch.com/story/gl...eep-in-wolfs-clothing-2013-12-12?pagenumber=1 A stupendous article....take "that" Dennis Gartman. Anyone see a bright future economically here ?
The insanity continues with the spot month (Dec'13) hitting $3.35 today. This so much feels like a short squeeze.
I'm always early to the party it seems. I was shorting IWM back in 2007 before the big swoon. Seems were are in a similar period now. Copper is now in a fairly profound CONTANGO (sorry, not backwardation....that's normal). December delivery is up 2.5 cents while March is only up a penny. This must be due to decreased stocks on the LME now reported at 393k metric tons. Indeed, as I had reported on Nov 25th: "LME Copper Stocks were at 437,500 tons".
Interesting Report: http://www.cmegroup.com/education/files/copper-gearing-up-for-rebound-in-2014.pdf Note what happens when inventory levels rise. Recently inventory levels have decreased, but note how soft the price as become....relatively speaking. In the past, such a decrease would have resulted in a price spike for copper. This fact and recent price action makes the current situation so much dicier for the bulls.