Anyone watching the markets over the past few weeks knows what was earlier ignored or shunned is now all the rage. The crowd has rushed into technology stocks, and commodities have shot up as a crowded short trade was squeezed. A key beneficiary is copper.
BIG GAINER
Up 0.9% at $3.3310, the COMEX active contract is the biggest mover across futures markets this morning, as news of increased imports and exports from China drives speculation of strengthening demand from the world’s biggest consumer and elsewhere. The news piggybacks the heartening April labor report that eased concerns of an economic slowdown crimping demand. The rally in copper is part of a larger move that should have further to go.
BULLISH BREAKOUT
The positive response to the labor report resulted in copper breaking out from a double bottom formation; the measured move is $3.5130. Today’s rise affirms the breakout. Keep in mind this could be a countertrend rally within a larger downtrend after copper broke down from a triangle formation going back to October 2011.
ETF PLAY
It looks good for a position trade – JJC (iPath Dow Jones UBS Copper Total Return Sub-Index ETN) if you don’t trade futures – but not as something to own and forget about.
