Could Crude Oil be Derailing Copper?

Copper has been having great difficulty extending its gains ever since the events in MENA began in earnest and pushed up the price of both crude and the liquid energies.

You might also note that I had posted some ratio charts here showing how money was flowing out of copper and into the precious metals. There was also a chart showing the CCI versus the CRB index detailing the money flow into the energy sector of the commodity complex at the expense of some of the base metals and even the food complex. Clearly there has been a decision among the hedge fund managers to reallocate funds that had been committed to the red metal to the precious metal and energy category.

Whether or not this trend continues will depend on what happens in MENA land but for now the exodus of some of the managed money from the copper market has left its chart sitting right on top of a significant chart support level. You'll note that both horizontal support near $4.21 and trendline support at the same level are converging exactly where the price is currently sitting. If copper falters here, it will indicate that money managers believe the rising crude oil price is going to slow overall economic growth and thus pull copper prices lower.

Stay tuned as this is a very volatile situation with no one quite sure how things over in MENA are going to be resolved.