The copper market continues to embrace the positives, which generally seem to begin and end inside the Chinese copper market. However, with the “combined” spec and fund Net Short position in Copper hitting a new record level at 27,499 contracts early last week, a large portion of the gains last week might have been simple short covering. On the other hand, seeing residual demand hope from China, rumors of stock pile buying in China and hope for a soon to passed stimulus package in the US, is apparently enough to leave copper on an upward bias on the charts. With some financing problems at one major copper producer being and infrastructure projects supposedly a major component of a number of global stimulus programs, one gets the sense that the copper market has some justification to rally. In fact, in the face of a US stimulus package and the large short positioning in copper, we can’t rule out a possible run up to the 175 level basis the March copper contracts. In fact, the February 3rd Commitment of Traders with Options report for Copper showed the Non-commercial position to be net short 25,413 contracts, with the Non-reportable position also net short 2,086 contracts, and that made the “combined” spec and fund position net short 27,499 contracts as of early last week and that clearly offers up the prospect of more short covering buying ahead.
Copper Market Commentary – 2009.02.09
This content originated from – The Hightower Report.