Posted on December 3, 2020
We’re writing today to tell you that copper is about to blow its head off.
Yes, it had a tremendous run off the Batflu bottom, but as far as we can see, that’s about to change.
We’ve come to the end of the red metal trend.
Background: copper just flew above its 2018 summer highs at $3.30 to levels not seen since 2013.
She now sells for an electric $3.50 a pound, but according to our read, she’s also a wee stretched.
Yes, there are those who’ll tell you that post-Wuhan demand is about to skyrocket, and that sentiment certainly accounts for the bulk of the metal’s recent gains.
Others will point to dollar weakness as a catalyst, and they, too, have a point.
But at the end of the day, economic drivers and market prices ARE COMPLETELY SEPARATE PHENOMENA.
At least in the short-term.
And that’s why we believe we’re in for a pullback.
Take a look at the daily copper chart since March –
Technically, there’s good reason to believe we’re topping.
But we don’t believe it’ll get there.
Without news of a fat U.S. stimulus, we don’t believe current Chinese demand will be enough to sustain the metal’s recent gains.
And that means producers like Freeport MacMoRan (NYSE:FCX) should start to buckle.
Below is a daily chart of Freeport for the last year, and it clearly shows the knock-on effect of climbing copper (and gold) prices.
But it also shows a ridiculous trajectory over the last month.
Anyone who bought the stock over the period in question would be wise to take profits now.
Many happy returns,