20000127

Comex copper futures tumble amid fund selling

NEW YORK: Comex copper futures lost their grip on higher ground as fund selling came in and pushed prices down for the second straight session.

Active Comex closed down 1.40 cents at 84.25 cents a lb after trading 84.10 to 86.20 cents. January ended 1.30 lower at 83.70 and February fell 1.40 to 83.75 cents.

"It's a further loss of traction," said one broker. "There isn't always a specific thing to point at. We just sort of ran out of steam and the market is exhausted."

In London, the three-months copper price also took a fall in late inter-office trading, dropping $20. The red metal was last quoted at $1,886/1,864 a tonne.

"To keep a market going on the upside, you have to have buying coming in constantly. When the buying stops, the market is typically not going to stay there," said the broker.

"If it starts slipping backward, everyone who is long is going to want to take a profit, protect their profit or keep their losses from getting out of hand," he added.

The 17,350-tonne jump in LME copper stocks on Monday took the market by surprise and pushed prices lower. Market players had expected some material to begin arriving but anticipated a steady stream and not one lump sum.

On Tuesday, LME stocks were up 1,850 tonnes to 805,075 tonnes. "It's not unexpected anymore. I think people are expecting more this week and next week," said one trader.

Chartists put resistance at 88.50 up to 89.00 cents for March delivery, with nearby support at 85.00, followed by 83.80 cents.

Final estimated volumes for copper were 17,000 compared to an official 9,547 contracts Monday, and official turnover of 8,495 lots Friday.

The nine-day relative strength index for March copper fell in line with over extended conditions to end at 27, following a the stock rise that jump-started selling and pushed the RSI down to 38 during its previous trading session.

Technical analysts usually interpret an RSI reading of 70 or higher as indicating overbought conditions and 30 or below as oversold.-Reuters