Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Two Ways To Play: Copper Takes a Dive

By

Strengthen your portfolio in good times and bad.

PrintPRINT

According to Bloomberg, copper is quickly becoming the worst-performing metal since the commodities market crashed in July.

Inventories worldwide have more than doubled in the past 4 months as global economies have contracted. The curbed demand for copper isn't helped by a 32% drop in US auto sales -- the worst since 1991 -- and a forthcoming report that could show homebuilders are breaking ground on the fewest homes in at least 50 years. Furthermore, China, the world's largest consumer of copper, is headed for its slowest growth in almost 2 decades.

For added perspective, according to the Copper Development Association, an average of 400 pounds of copper is used in building a single home and 50 pounds is used to build a car.

Year-to-date, copper prices have tumbled approximately 45%.

For more, see Professor Andrew Jeffery's Copper Prices Fall, Deflation Takes Hold.

From the Bull Pen: If you think the market is a discounting mechanism and that commodity prices are near their bottom, consider copper miner Freeport McMoRan (FCX). A sell stop can be set near $22.

From the Bear Cave: For those that believe copper stocks will suffer more downside pain, consider Southern Copper (PCU); one option is to enter on a rally to near $15 and set a buy stop around $16.

No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE