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Copper Has Performed Well In The Face Of Adversity


  • Copper has been making lower higher and lower lows since the late December high.
  • The bullish pattern remains intact.
  • Tariffs are bearish for industrial commodities and distort prices.
  • LME stocks weighed on the price of the red metal.
  • If COMEX can hold $2.875 per pound, higher highs are on the horizon.

Copper is a bellwether commodity when it comes to industrial raw materials. Since Doctor Copper tends to diagnose the overall health and well-being of the global economy, the price of the red metal is often a reflection of growth or contraction.

Copper is an essential component of infrastructure building around the world. Over past decades China has been the demand side of the equation in the copper market as the world's most populous nation continues to modernize conditions for almost 1.4 billion people.

When the Chinese economy cooled in late 2015 and early 2016 and years of double-digit economic growth came to an end, the prices of many raw materials used in construction moved to multi-year lows and copper was no exceptions. After trading at highs of over $4.60 per pound on the nearby COMEX futures contract in 2011, the price of the nonferrous metal hit bottom at $1.9355 in January 2016. After a two-year rally, copper hit its most recent peak at $3.3345 per pound on the active month May futures contract at the end of December 2017.

Copper has been making lower higher and lower lows since the late December high

Since late last year, and on a short-term basis, the price of copper has been making lower highs and lower lows.

Source: CQG

As the chart of May COMEX copper futures highlights, the red metal established a bearish trading pattern over the first three months of 2018, falling to its most recent low at $2.9375 per pound on March 26. While the path of least resistance for copper has been bearish over recent months, from a longer-term perspective, the trend remains positive, and copper has been in consolidation mode.

The bullish pattern remains intact

A more than two-year bull market continues in early Q2 on the longer-term

The Hecht Commodity Report is one of the most comprehensive commodities reports available today from the #2 ranked author in both commodities and precious metals. My weekly report covers the market movements of 20 different commodities and provides bullish, bearish and neutral calls; directional trading recommendations, and actionable ideas for traders. More than 120 subscribers are deriving real value from the Hecht Commodity Report.

This article was written by

Andrew Hecht profile picture
Weekly commodities commentary and calls, from a Wall Street veteran
Andy Hecht is a sought-after commodity and futures trader, an options expert and analyst. He is the #2 ranked author on Seeking Alpha in both the commodities and precious metals categories. He is also the author of the weekly Hecht Commodity Report on Marketplace - the most comprehensive, deep-dive commodities report available on Seeking Alpha.

Andy spent nearly 35 years on Wall Street, including two decades on the trading desk of Phillip Brothers, which became Salomon Brothers and ultimately part of Citigroup.

Over the past two decades, he has researched, structured and executed some of the largest trades ever made, involving massive quantities of precious metals and bulk commodities.

Andy understands the market in a way many traders can’t imagine. He’s booked vessels, armored cars, and trains to transport and store a broad range of commodities. And he’s worked directly with The United Nations and the legendary trading group Phibro.

Today, Andy remains in close contact with sources around the world and his network of traders.

“I have a vast Rolodex of information in my head… so many bull and bear markets. When something happens, I don’t have to think. I just react. History does tend to repeat itself over and over.”

His friends and mentors include highly regarded energy and precious metals traders, supply line specialists and international shipping companies that give him vast insight into the market.

Andy’s writing and analysis are on many market-based websites including CQG. Andy lectures at colleges and Universities. He also contributes to Traders Magazine. He consults for companies involved in producing and consuming commodities. Andy’s first book How to Make Money with Commodities, published by McGraw-Hill was released in 2013 and has received excellent reviews. Andy held a Series 3 and Series 30 license from the National Futures Association and a collaborator and strategist with hedge funds. Andy is the commodity expert for the website about.com and blogs on his own site dynamiccommodities.com. He is a frequent contributor on Stock News- https://stocknews.com/authors/?author=andrew-hecht

Analyst’s Disclosure: I/we 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 (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The author always has positions in commodities markets in futures, options, ETF/ETN products, and commodity equities. These long and short positions tend to change on an intraday basis.

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