All That Glitters Isn’t Gold

From the Desk of Ian Culley @IanCulley

Metals are beginning to shine.

Gold’s new all-time high has captivated the masses. But all that glitters isn’t gold.

In fact, base and industrial metals are also providing ample trading opportunities.

Check out ol’ Dr. Copper challenging near-term resistance:

A decisive close above 3.91 set the path of least resistance toward the year-to-date highs at approximately 4.25.

It’s difficult to imagine a more bullish scenario for global equities aside from a continued expansion in the new highs list.

As much as I enjoy trading futures, I can’t ignore the money flowing into stocks.

If the expansion in new highs isn’t enough, stocks outperforming commodities should grab your attention.

With that in mind, here’re three equity plays to capture the developing move in base metals:

 First, Southern Copper $SCCO:

Southern Copper is forming an inverted head and shoulders with a neckline at approximately 84.

I like buying a decisive close above that level, targeting that hundred-dollar roll and beyond to 110.

If copper futures are trading above 4.00, you better believe SCCO is breaking out.

Next, the VanEck Steel ETF $SLX:

SLX has already taken out our risk level of 68. 

I like it long toward 110 (there’s that hundred-dollar roll again.) But only if it holds above our breakout level.

Last but not least, the MSCI Canada ETF $EWC:

Yes, EWC is predominantly composed of Financials and Energy names. But its weighting almost constitutes 25% Industrials and Materials.

I imagine the latter’s influence will only grow if the current rotation out of energy and into base and industrial metals continues.

Regardless, it’s a great-looking base – the type of base I like buying.

I’m long EWC on a weekly close above 36.50 with an initial upside objective of 48.

That’s it for today – just a few trade ideas.

The main takeaway: Metals are catching a bid. And Gold and Silver aren’t the only rocks in the hot seat.

Stay tuned!

COT Heatmap Highlights

• Commercial hedgers begin to unwind their historic long position in palladium, dropping almost five hundred contacts over the trailing four weeks.
• Commercials pull within six percent of their largest long position for corn in three years. 
• And commercials are less than four percent from a three-year record-long position in Minneapolis spring wheat.  

Click here to download the All Star Charts COT Heatmap.