Commodity Chart Of The Day: Copper

Includes: CU, JJC
by: Matthew Bradbard

Commodity Chart Of The Day

Weekly Copper

(click image to enlarge)

I've always used copper as more of a barometer of the overall health of the economy, moreso 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, with regard 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 the chart above shows, prices have traded lower the last three weeks, and five out of the last six 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.

Risk Disclaimer: The opinions contained herein are for general information only and not tailored to any specific investor's needs or investment goals. Any opinions expressed in this article are as of the date indicated. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.