Copper's Run Over

Sep.29.09 | About: iPath DJ-UBS (JJC)

By Brad Zigler

Anyone bull-riding copper this year scored pretty well. For the 34 weeks stretching from Christmas to August's end, there were only nine in which December COMEX copper closed lower. For the buy-and-hold investor, a 73% weekly winning streak takes the blue ribbon, most especially in the futures market.

September, however, hasn't been kind to copper. A look at the daily chart shows a definite plateau under $3 a pound. Look at the weeklies, though, and you get a more negative picture—five straight losses.

Technical indicators for copper look poor. MACD's turned negative, as has RSI. Worse still, the last two volume spikes occurred on down days. To boot, open interest is falling.

COMEX/NYMEX Copper (Dec. '08)

This is the advent of copper's low season, so prospects aren't bright for a near-term rally in the red metal. The December contract's broken through support at $2.75 and is aiming for the $2.575 level.

For investors in the iPath Dow Jones-UBS Copper Sub-Index ETN (NYSE Arca: JJC), recent price action has driven the notes below a key retracement level at $37.88 and now seems ready to fill a leftover gap between $36.50 and $36.68.

Looks like bull-riding season's over.

*Note: The monetary inflation rate is calculated daily and represents the change in our proprietary index over the last 12 months. We update long-term inflation in real time as well. Since 1999, the compound annual growth rate in our index is 5.0%.