I’ve always used copper more of a barometer of the overall health of the economy more so than a trading vehicle. Several years ago I remember trading copper when futures would move a few pennies in a day, now it is the Wild West moving a nickel to a dime frequently within a 24 hour period. Also in regards to the pricing of options I’ve experienced lack of movement in options for clients even with the underlying futures moving in the correct direction.
What I draw from this is do not trade copper but pay close attention to its movement. As seen in the chart above prices have traded lower the 3 weeks and 5 out of the last 6 weeks after failing to get above their 100 day MA; identified by the dark blue line above. This week prices have penetrated the 50 day MA identified by the light blue line. Moving forward my interpretation is a trade to the trend line in the coming weeks which represents a further 4% deprecation. Translation…there appears to be weakness globally and economies slowing around the world. If you notice during previous corrections in copper a number of other commodities also traded lower.
Past performance is not indicative of future results but I do expect further weakness in a number of commodities. To find out my viewpoint on particular commodities read my daily commodity update.
By. Matthew Bradbard
To discuss in more detail this chart or any other you can reach me at:
email@example.com or 954-929-9997
Risk Disclaimer: The opinions contained herein are for general information only and are not intended to provide specific investment advice or recommendations and are not tailored to any specific’s investor’s needs or investment goals. You should fully understand the risks associated with trading futures, options and retail off-exchange foreign currency transactions (“Forex”) before making any trades. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change without notice. Past performance is not necessarily indicative of future results.