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Time To Short Copper?

From Taki Tsaklanos: We have written extensively on the trends in the copper market in 2016. The copper price and copper miners were on fire in November, but things have cooled lately.

Copper rallied strongly from the bottom to the top of a down trend channel, as seen on this longer term copper price chart. It appears that copper’s rally has lost steam now, and that a secular breakout is unlikely in 2016. Short term oriented investors and traders smell a retracement (read: a short opportunity).

Although our viewpoints are mostly long term oriented, we do not lose sight of the shorter term opportunities. Copper is such a short term short opportunity.

The daily chart makes our point. Last year, copper was in a clear downtrend, which ended in March of this year (white circle on the chart). Between March and November, copper tried to break above the important $2.30 area. It was only successful to break out in November, and we rightfully called for a strong copper rally. We also recommended to look into copper miner Freeport McMoRan (FCX), which provided leverage on the copper price.

The longer term chart of copper shows how strong the $2.60 area is, and we recommended investors to become cautious. Right now, the short term chart (daily, seen below) suggests a retracement is in progress. It will take copper to the breakout level, at $2.30, as a likely scenario. Short term oriented investors and traders are looking at this as a juicy short opportunity. Long term oriented investors probably get a nice opportunity to take positions in Freeport McMoRan at discounted prices.

copper short opportunity

The largest exchange traded product tied to copper prices, the iPath Bloomberg Copper Subindex Total Return Sub-Index ETN (NYSE:JJC), was unchanged in premarket trading Monday at $29.33 per share.

This article is brought to you courtesy of Investing Haven.

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