January 2016: In the midst of a Global Deflationary Spiral, the commodity index $CRB was below support that had been in place since 1973. Oil was trading sub-$30 and Copper was at post crisis lows of around $2/lb.
June 2018: In the last 30months the $CRB has bounced from 155 to 200. Not really very much despite oil’s recent run. Copper surged from $2 to $3.31.
Copper falls 11% in 3 weeks
Since June 11, Copper has fallen 11%. Today July 5, Copper futures indicate its off another 1.5%. From the chart below we can see price at key support at $2.875. It’s gotta hold here. On a measured move basis from the double top, price is projected to move into the low $2.60 area; another 11% lower from here if this last bit of support is broken.
The Monthly chart of Copper shows a darker picture. Price retraced 50% from the 2011 high of $4.60ish but is now rolling over. In my experience these big sweeping trend changes on a monthly chart are so important. They just don’t turn on a dime. I think copper goes much lower.
The tradeable ETN for Copper is JJCTF
It’s not just Copper – Look at Base Metals ($DBB)
Below is a weekly chart of the base metals ETF $DBB. You can clearly see price dropping out of the rising uptrend channel that has been in place since January 2016. Going lower from here.
I am bearish on commodities near-term. Aside from a fairly productive chart on oil, everything else is pointing down. Is it all trade talk related? No idea. I just don’t see any bullish charts. I am curious about the meager bounce over all. Is demand that tepid or has over-supply simply swamped the system?
Keep an eye on this stuff. They call it Dr. Copper for a reason. Its often a precursor / canary in the coal mine for other markets. Let’s see what the summer brings.