At the time we signed off Wednesday aluminium was careering lower after the December options play expired and prices had fallen short of even the 2850 Call series. The dollar had bounced and there had been no further warrant cancellations/stock withdrawals to fuel the rally, so resistance at 2850 stayed intact. As we went to press the market had fallen as far as 2793 and it continued to a low of 2764 in the am sessions. Prices bounced strongly with bargain hunters piling in there and over the pm sessions values regained 2820, only to flop back to 2780 while the dollar also see-sawed against the euro.
The situation in C-3m also relaxed and while Feb-3m stayed at 5.00b, the rest of the nearby structure eased further into contango throughout. Beyond 3-months tightness also slipped by $0.50-$1.50 per month.
On Thursday morning prices had so far gyrated loosely between 2786 and 2760, last trading at 2780 on turnover of 1,200 lots. Activity across the LME complex was subdued, locals reported, with traders now unsure of the market's next direction after the recent ramp-up. Cliff Green Consultancy in a report said preliminary indications suggested that the latest upward leg was complete after resistance around 2850 had contained strong attack. As such, aluminium looked vulnerable to renewed bouts of weakness, they added, and the trading strategists would instigate shorts staring hereabouts.
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