Amid a general air of disbelief among locals, the LME complex flew higher on Tuesday. It was a day for short-covering from all quarters and for fresh buying from trend-following CTAs and fund managers, spurred by stronger than expected economic macro data from Germany and the US. Continued fears of a stoppage at Freeport's Grasberg copper mine kept the red metal buoyant, while a melting dollar bolstered the others.
Aluminium began the day with a visit to nearby support c. 2810, with a low of 2807, but after a lacklustre morning it rocketed higher in the afternoon with the spec community in overdrive across the board. Prices topped out just after the closing bell of the afternoon, reaching 2897 in the aftermarket.
There were few signs of any significant short-covering within C-3m, with Jun-3m rated at 1.00b (Lvl), though forward selling pushed backwardations beyond there wider by some $1.00-$1.50/mth to the end of 2010. As at cob Monday, two parties continued to hold an equivalent of 30-40% each of the LME's non-cancelled stock, in this morning's WC warrant banding update.
Trading resumed Wednesday morning at 2885 and after a peak of 2912 prices were back there at time of writing. Turnover remained watery by aluminium's standards, at only 1,350 lots so far. Having held immediate technical support, Cliff Green Consultancy now looked for a test of resistances, initially around last week's highs (of 2932), then 2960/70. The market remained firmly trapped in a range of the past 9 months, the technicians suggested, with a sustained break above the latter needed to complete a positive breakout.
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