| March 2008 | (2) |
Where Do We Stand Now?
- Spot copper averaged $3.5896 on Comex during February, up
38.79¢, or 12.1% from $3.2017 during January and +99.29¢, or
38.2% from last February. The year to date average now stands at
$3.3957, up 81.26¢, or 31.5% over the first two months of 2007.
- Comex and LME warehouse stocks of copper fell 34,946 mt, or
18.3% during February to 155,355 mt and are off 86,000 mt or 35%
from 241,536 mt last February.
- Technically, the acid test is upon us. For several months
the chart formation for copper was comprised of lower highs and
lower lows following the peak close on Spot Comex at $4.0755 set
on May 23, 2006. Likewise, Cash copper on the LME posted its
high at $8,788 on May 12, 2006. Most recently, however, a wave
of buying across the entire commodity complex has changed the
picture dramatically. On the LME, Cash closed at $8,881 on March
6, thereby setting a new high, while copper prices on Comex
posted life of contract highs across the board. The only thing
missing at this point is that Spot copper is still shy of its
high. Clearly, the strong reversal we saw in February suggests
that the now rising trend will continue, thereby propelling Spot
to a new high and the significant drawdown of inventories
further supports this view. Indeed, last week saw Spot trade
above $4.00 on Comex, but thus far it has failed to close above
that level. Thus, given the volatility inherent in the market
and recognizing that we could see a new high in very short
order, the market would then confirm that potentially higher
prices are indeed on the horizon.
- Tin rose to a record high $19,250 per mt ($8.73) on March 7,
while lead traded at a premium to both aluminum and zinc.
- Gold posted a record high close at $986.20 on March 5, and
silver is now trading above $20.
- Although the dollar was marginally higher against the
British Pound, it fell against all other major currencies with
record lows to the Euro.
- Crude oil led the energy complex higher as it set
consecutive record high closes and finished last week, at
$105.15
- Equity markets are at or approaching correction territory. Through Friday March 7, the Nasdaq is off 22.5% from its high; the Dow Industrials is off 16% and the S&P 500 is down 17.4%.
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