Copper Futures Consolidate as Equities Rise

Copper prices showed a slight gain on February 18, 2009, as equities made modest gains, halting a previous day's slide. The metal remained in a consolidation phase that began at the start of the year. Rob Kurzatkowski, a futures analyst with optionsXpress, noted that traders were following the equity market's upward movement after a sharp sell-off the previous day. The lack of clarity about government economic and bank-bailout plans had been hurting markets.

Key Takeaways:

• Copper futures settled 1.10 cents higher at $1.4535 per pound on the Comex division of the New York Mercantile Exchange in May.
• The stock market rose modestly, with the Dow industrials increasing by around 22 points and the March S&P 500 futures up by 3.90.
• Traders see a better equity market as an encouraging sign for the economy, which benefits copper prices.
• The recent consolidation in copper is ongoing, with the May futures holding above support around $1.40.
• If the market fails to hold above $1.40, it could retest December lows below $1.30, including the Dec. 26 contract low of $1.2710.
• Minor resistance is near the $1.55 level, with more substantial resistance around $1.65.

Statistics:

• May copper futures settled 1.10 cents higher at $1.4535 per pound.
• The Dow industrials increased by around 22 points.
• March S&P 500 futures rose by 3.90.
• January housing starts declined 16.8% to an annual rate of 466,000.
• January industrial production fell 1.8%.
• Capacity utilization slid more than forecast to 72%, compared to a consensus estimate of 72.3%.
• Inventories of copper stored in London Metal Exchange warehouses fell 1,125 metric tons on Wednesday.

Sources:

• Dow Jones Commodities News via Comtex
• Allen Sykora, Dow Jones Newswires; 541-318-8765; allen.sykora@dowjones.com
• Dow Jones Newswires 02-18-09 1350ET
• Copyright (c) 2009 Dow Jones & Company, Inc.