Truce, Or Just Time Out? September 13th, 2019 by John Gross
Trade talks are front and center once again, and once again, base metals rose to the occasion.
Without exception, each and every one of the nonferrous team was in the black last week, with copper up another 6.5¢, and bringing the month to date gain to + 15¢, and reaching a 6 week high close of $2.68.
A brief glance at the copper chart shows the market targeting $2.70, followed by $2.75, and coinciding with the 52 week moving average.
The other base metal charts are also looking more positive, with support lines holding, and / or resistance lines being tested.
You will want to take a look at the first chart in this week’s report, as the Base Metals Barometer Vs Total Inventories is quite compelling.
Similar to the individual charts, the BMB held support, and appears to have the potential to breakout. Total inventories are hovering at 11 year lows, while ali stocks have fallen to their lowest level since September 2007.
We will leave it to others to determine how much more aluminum may or may not be held in hidden inventories.
So, if we are guided by the charts, and the charts alone, it looks like onward, and upward.
The problem arises, however, when we see, hear, read, and think about negative interest rates, another round of quantitative easing on the European side, trade tensions, expectations of the Fed cutting rates again, and of course, the assumption of a recession looming on the horizon.
This is indeed a dilemma, and only time will tell which side of market analysis is right.
In the meantime, and to state the obvious, the outcome of trade talks will in very large part determine the outcome of future global economic growth.
View Charts (PDF)