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Copper Weakness Is a Wait-and-See Game


Copper followers should continue to monitor this weakness, eyeing the recent pivot lows for one of three options: a breakdown, a retest and follow-through surprise, or an RSI divergence.

Since the late 2011 highs, copper has shown relative weakness to equities… and for that matter, to almost everything else on the trading planet. The crisis in Europe peaked around that time and dropped copper deep in the hole on escalated global growth fears. Those fears have morphed into a slow growth accepted reality that has kept the metal down. [Editor's note: The retail investor is most likely to have exposure to copper in an index fund such as First Trust ISE Global Copper Index Fund (NASDAQ:CU) or iPath Dow Jones UBS Copper Total Return Sub-Index (NYSEARCA:JJC).]

On November 3, I posted Copper Prices Heavy but Rebound Nearing. At the time, its RSI had dropped below 30 and a rebound appeared imminent. After a few more heavy days, the metal rebounded with equities. However, as equities picked up steam, rallying over 5% on most major indices through Friday, Copper continued to lag.

The bounce has been weak to say the least. Copper followers should continue to monitor this weakness, eyeing the recent pivot lows for one of three options: 1) a breakdown, 2) a retest and follow-through surprise, 3) an RSI divergence.

Trade safe, trade disciplined.

Editor's Note: Andrew Nyquist is an independent investor based in the Minneapolis area. This article originally appeared on his investing and economics site, See It Market.

Twitter: @andrewnyquist
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