Sunday, June 22, 2008

Copper - Strong Buy

I've been updating charts on copper for some time now - we had an attempt to breakout on copper prices at the beginning of the year, but we quickly sold off from that level, even as copper inventories stayed low. With the recent activity and technical changes, Copper could be once again attempting at the resistance line.

The two charts are different time frames. The longer time frame shows that we could still have prices falling to 325-350 area, but with the technical landscape changing, it is looking less and less likely. The recent action suggests buying from overseas again as the emerging economies are holding up better than the US. As long as Copper inventories stay as low as the charts show, that means, according to Econ 101, that the supply/demand picture supports higher prices.

**Notice the ADX indicator on the shorter time frame which has recently hit bottom - this has shown great buy signals in the past.
I would put a plan into place to go long copper equities, and even start accumulating large portions of the junior miners because their reserves will now start to be noticed by the large caps, even if they are not mining those reserves. The large caps will start to use their cash by gobbling up the juniors and turn those reserves in revenue. We'll look for some juniors this week and post an analysis on a couple.

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