As expected the base metals shadowed the equity markets holding above their recent lows. While US equities came under pressure due to weekend profit taking, however, it appears that there is no immediate danger of another sell-off. That means that base metals may build upon the ongoing technical bounce, albeit painstakingly. Shorts may not be too bothered unless copper closes within 1525-50 dollars and aluminium within 1325-50 dollars band. Zinc and nickel have done quite well inching towards key 800 dollars and 7000 dollars levels respectively. Although with massive inventory overhang it is very difficult to be bullish on base metals in the near term, however, a short covering rally may be on cards if physical buying picks up in the next couple of weeks. The problem may further be aggravated for shorts if physical demand surges against a backdrop of good economic data and firmer equities. But hold your horses, as we have to worry about more than one problem, especially after the German Central bank warned about a threat of recession to the German economy.
NSTL
