Today, we revisit the persistent demand for copper, as it continues to manifest in technical breakouts

Remember, these are technical comments only. Just as you must be aware of fundamental data for the stocks we recommend based on technical criteria in the report, so too must you be aware of important data regarding delivery, market moving government releases, and other factors that may influence commodity pricing. We try to limit our technical comments to the most actively traded contracts in advance of delivery, but some contracts trade actively right up to delivery while others taper off well in advance. Be sure you check your dates before trading these contracts. For questions regarding this section or additional coverage of commodities email james.west@dorseywright.com.

Data represented in the table below is through 07/14/2020:

Broad Market Commodities Report

Portfolio View - Commodity Indices

When last discussed on June 24th, Doctor Copper was already pushing up against its pre-COVID levels at $2.66, as the shorter-term chart ($0.02 scale) for Copper Continuous HG/ gave six consecutive buy signals following its multi-year low of $2.12 established in March. Today (as of 7/14), HG/ resides at $2.92, on seven consecutive buy signals on the short-term chart and almost marking a full 10% gain from just three weeks prior! Notable qualitative and thematic hypotheses are also at play here. As stated in the Wall Street Journal this morning, “Global investors are piling into bullish wagers on copper prices, sparking the quickest rally in the industrial metal in years and signaling that many money managers remain hopeful about the economic outlook despite rising coronavirus cases in much of the U.S. Keep in mind the wide-ranging and fundamental uses of copper, spanning from electronics to house construction, underscoring its rationale as a leading economic indicator.

The rapidly improving technical picture can largely be attributed to front-month copper futures climbing in 12 consecutive sessions through Monday, reaching their highest level in over a year (wsj.com). Revisiting the shorter-term chart ($0.02 scale) for HG/, the seven consecutive buy signals previously discussed pushed copper into heavily overbought territory, most recently pulling back into a column of Os at $2.90. Despite the reversal down, HG/ remains heavily overbought and well-above its nearest support level at $2.56. Pivoting to the iPath Series B Bloomberg Copper Subindex Total Return ETN JJC, we also find technical strength. JJC sports an optimal fund score of 4.07 and strongly positive score direction of 2.67. Furthermore, the fund trades on five consecutive buy signals and also pulled back in the most recent trading session, now residing just below the top of its ten-week trading band. Weekly and monthly momentum are also both positive for HG/ and JJC, suggesting the potential for additional price appreciation. Further bullish confirmation for HG/ would come with a move to $3.00 on its default chart (pictured below), resulting in a spread triple top break. Further bullish confirmation for JJC would come with a reversal back up into Xs, resulting in a higher bottom.