MI Comment: Failure to break up tempts technical bears

Despite stronger oil and gold dragging the (Reuters/Jefferies-)CRB Index to 10-month highs, the base metals complex didn’t want to play on Tuesday. LME locals were at a loss to explain its lacklustre performance, which was half-heartedly attributed to a collapsing nickel market and to general risk aversion still stemming from concerns over the (US) sub-prime mortgage sector. Aluminium’s $10-range in the early part of the premarket was stretched to a $30-range at the end of the day, picking up to 2817 before sagging to 2787 in the afternoon, though it ended little-changed at the closing bell. Nearby spreads were much the same, while forward movement out to 2010 was mixed and limited to $0.50/mth. Two parties were ever present in the 30-40% bracket of the LME’s WC warrant banding report in this morning’s update. There was again little to get excited about on Wednesday morning with the markets markedly more summery than London’s weather, and with aluminium bobbing around above the 100-day moving average in thin volume. At time of writing prices had mustered a $12-trading range between 2790-2802, while turnover via Select stood at a measly 850 lots. Having failed to tackle ‘strong resistance’ c. 2830/40, technicians Cliff Green Consultancy had yesterday established fresh shorts, they wrote in a daily report. With buy-stops placed above nearby resistance levels, the trading strategists eyed an eventual test of the 2660 area.