From the Desk of Ian Culley @IanCulley
Gold did its part earlier in the spring, paving the way for the rest of the metals space.
Now, silver is posting fresh decade highs, uranium names are triggering buy signals, and Dr. Copper is slicing through overhead supply.
Plus, increasing copper demand has caught the smart money offside.
Check out copper futures with the Commitment of Traders profile in the lower pane:
Fading commercial (smart money) positioning tends to produce pain.
But even the strongest hands can find themselves on the wrong side of a trade. It happened to commercial hedgers back in 2020, and it’s happening again today.
Copper experienced an explosive rally, adding a dollar-fifty as surging demand forced strong hands to unwind their shorts in 2020 and 2021.
If Gold is heading to 5K, Copper is making its way to eight bucks – but first, it must exceed our rough initial target of 5.95.
Here’s a closer look at copper’s multi-year base breakout:
Dr. Copper is blowing through those former highs from 2021 and 2022 in a similar fashion to the 2020 rip-roaring rally.
Just what the doctor ordered!
Unfortunately, copper’s swift breakout increases the difficulty of entering a new long position.
A weekly close above 4.92 confirms the upside resolution. But where can we place a reasonable protective stop?
Yesterday’s low of 4.8415 marks a logical spot:
While it’s well below the market, it forces us to trade small (which is never wrong).
I always strive to build my position before price reaches a major breakout level. That way, I can add my last tranche – perhaps a third or quarter of my total position – based on a decisive weekly close.
After that, I become a net-seller.
Copper futures are trading amid a raging rally – a bullish data point for commodities and stocks.
Gold, Silver, and pretty much anything that’s pulled out of the ground is enjoying an extensive markup phase, including Uranium (stay tuned for incoming trade setups next week).
You can call it a commodity supercycle or label it an irrational market. All that matters is whether you catch the trend.
Are you riding Copper to new all-time highs?
–Ian
COT Heatmap Highlights
- Commercial positioning for copper went almost unchanged, with hedgers carrying a short position bordering on a three-year extreme.
- Commercials increased their short position for silver, hitting a new three-year record.
- Commercials reached a new three-year extreme regarding their short 30-year T-bond position.
Click here to download the All Star Charts COT Heatmap.
Trade of the Week
Today, we’re reiterating Hudbay Minerals $HBM, a $3.5B copper miner:
We highlighted HBM in early March, buying the breakout to fresh 52-week highs. Our target has been hit, but we want to continue to ride this rally as copper futures register new all-time highs.
We're buying strength above 10.35 on an upside resolution from a nine-year inverted head and shoulders.
If and when our orders are filled we're targeting 15 and 19 over longer time frames.
Thanks for reading.
As always, let us know what you think. We love hearing from you.
And be sure to download this week’s Commodity Report below!
Allstarcharts Team
