Morning Futures Roundup

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Will Copper Continue To Shine In ’09?
 Fundamentals

Copper futures have been trading sideways for the past few sessions, after firmly establishing a base above the $3 level. The Copper market continues to rally, in spite of increasing inventory levels. LME stockpiles of the base metal have increased for three weeks.

There has been much discussion regarding China’s future purchases. On one hand, Copper users in China have been aggressively stockpiling the metal over the past few months, leading to more than ample inventory levels, which could inhibit price growth. On the flip side, China’s insatiable appetite for commodities is expected to increase in 2010, as economic conditions continue to improve.

At this point, it seems that forward-looking traders who are optimistic about China’s growth and Dollar bears are the driving force behind the current rally. Copper could find itself facing significant selling pressure if the Dollar is able to strengthen, which is not very likely at this point.

There is a large amount of economic data being released today and tomorrow, which may cause an increase in volatility. Of particular importance for Copper traders will be the housing value index data today and new home sales tomorrow. As far as the economy as a whole, traders will be mindful of today’s GDP revision and consumer confidence number heading into Black Friday.




Technical Notes
The March Copper chart shows prices breaking out of a wedge formation on the daily chart. The measure of the wedge suggests prices may test the 3.25 level. The sideways trading over the past week following the breakout of the wedge pattern suggests that traders are taking a pause and taking some profits off the table. The stochastic indicators are getting a bit overbought at the moment, suggesting this consolidation may continue in the near-term.


CLICK HERE FOR THE FULL-SIZED CHART

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