This is why it is such an entertainment to watch the global financial markets talk themselves into exactly the same trap. "The end of the fall is here because the prices go up. The evidence is that the prices go up." And we see the analysts modelling the fundamentals scratching the wall in frustration, again, as they try to point out how meaningless the markets' very recent moves are.
Here is an example from the FT:
Traders pointed to China, which yesterday revealed a large increase in raw materials imports, reflecting in part the economic recovery but also Beijing's attempt to take advantage of lower prices to stockpile commodities. Iron ore and copper imports reached a record high last month, while crude oil imports hit their second best month at the same time.
Other analysts said supply and demand fundamentals were still weak, even taking into account China's swelling imports, and said that speculative money was the main reason behind the rally.
"Recent price strength is not based on fundamentals, but on financial flows," said Mike Wittner, oil analyst at Société Générale in London. He said investors' appetite for riskier assets such as commodities was "better entrenched, and more sustainable" than earlier this year.
That't it. "Recent price strength is not based on fundamentals, but on financial flows." Oh, how well I know this song!