Last week, we discussed China and Gold futures as potential catalysts for resolving a multi-decade basing pattern in Dr. Copper.
If we're in an environment where Copper futures are printing fresh all-time highs, then we should spend some time identifying opportunities in the equities market that benefit from rising base and industrial metal prices globally.
Over the last 6-months, the Steel $SLX, Copper $COPX, and Metals and Mining $XME ETFs have underperformed the S&P 500:
However, the weekly RRG is hinting at a potential rotation back into these stocks during this final quarter of 2024. All 3 of these ETFs are pointing higher and rotating out of the lagging quadrant and into the improving and leading quadrants.
A full rotation tends to unfold over the course of 3-6 months, and we don't want to bet on this situation being any different.
With rotation potentially coming into base and industrial metals stocks over the coming months, let's take a closer look at these ETFs and some of the stocks they hold.
The GlobalX Copper Miners ETF $COPX is putting the finishing touches on a multi-year accumulation pattern:
The GlobalX Copper Miners ETF holds some of the world's largest copper-producing companies and trades tick-for-tick with Copper futures.
After several months of chopping around the breakout level, COPX looks poised to make new multi-decade highs.
We want to buy COPX on strength above 47, with a target of the former all-time high near 62.50.
The SPDR Metals & Mining ETF $XME is flirting with new multi-decade highs:
The SPDR Metals & Mining ETF holds companies exposed to various base and industrial metals, which will all benefit from rising copper prices.
After rallying nearly 400% off the 2020 low, XME formed a textbook multi-year base and is now testing the range's upper bound.
We want to buy XME on strength above 65.50, with a target of the former all-time high near 96.
The VanEck Steel ETF $SLX is on the verge of emerging higher from a multi-year base:
The VanEck Steel ETF is a market-cap weighted vehicle for exposure to the steel industry and should prosper from rising copper prices.
Steel stocks are a stone's throw away from resolving a multi-year accumulation pattern and resuming the underlying primary uptrend.
We want to buy SLX on strength above 70, with a target of the former all-time high near 114.
These trades will ultimately hinge on Copper futures. If the 29th element is making new all-time highs, the entire base and industrial metals space will thrive and reward us handsomely for holding these positions.
COT Heatmap Highlights
Commercial hedgers added over 97,000 contracts to their largest net-long US 10-Year T-Bond position in history.
Commercials trimmed nearly 44,000 contracts from their net-long Corn position.
Commercials added over 13,000 contracts to their net-long Natural Gas position.
