Don’t be Afraid to Get Feels with Dr. Copper

Copper is often referred to as the metal with a PhD. This moniker goes back to the days when the housing market was booming in the 2000’s and the demand for copper for housing both here in the US and in China was seen as a barometer of economic strength. Hence, Dr. Copper was said to have a PhD. in Economics.

That correlation came to end, like all correlations eventually do, with the financial crisis. Since the Financial Crisis the housing market has reversed and been booming but Copper went through a prolonged downturn from the start of 2012 until the end of 2015.

The chart below shows that after a 1 year consolidation following that fall, Copper started to move back higher. Has Dr. Copper been catching up on the new areas of Economics? The move higher off of the low and out of the symmetrical triangle consolidation quickly met resistance at the end of last year. It has since been consolidating in an ascending triangle. Is it now ready for a major move higher?

There are many signals that suggest it could be. First Copper moved over the 200 week SMA a few weeks ago. It had not been over that since early 2013. Next the Bollinger Bands® are squeezing. This often happens just prior to a big move. Momentum has shifted to bullish, with the RSI holding over the mid line in the pullback in price and now reversing higher. The MACD is also turning up to a bullish cross.

All of these combined suggest the small bounce so far may just be the beginning of a bigger move higher. A break over resistance at 2.80 would be a good entry signal or confirmation of continuation higher. And then over the 38.2% retracement of the long down leg at 2.97 a strong confirmation.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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