Copper has been noisy again in early Thursday trading, as the all-time high came and went. However, the longer-term trend remains.
Copper
Copper markets jumped early on Thursday to reach as high as $6.87, but have since fallen pretty significantly as energy has dissipated after the breakout to a fresh new all-time high. Ultimately, this looks like a market that is going to struggle continuing this momentum, at least in the short term, but over the longer term, one would have to think that the lack of supply of copper is going to continue to be a major factor.
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A pullback from here could open up a drop down to the $6.50 level, but I think at that point in time, market memory would have to start to come into play as it was previous resistance. That being said, if we were to simply turn around and break above the top of the shooting star, that is a strong sign as well, as it shows buyers have jumped back into the market to reaffirm their commitment to the copper market being bullish.
Supply Deficits and Rate Sensitivity
Ultimately, this is a market that remains very noisy and very sensitive to interest rates. Interest rates did rise slightly during the session, so that is working against it, but with the biggest problem being a lack of supply, sooner or later that comes into the picture as the electrification of the world's economy continues to be a major factor.
Overall, I do like copper. I do like the idea of buying dips, and really at this point I don't have any interest whatsoever in shorting the market because of the longer-term, well-established fundamentals. There is a lack of production coming out of Chile, and that is going to continue to be a problem for the market as well. I remain bullish of copper going forward.
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