Copper Futures: Then vs Now. An Update On Our Long Term Thesis

Research Notes For 09 to 13 June > https://www.unum.capital/post/r0913june

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We have a long history discussing Copper, beginning at the lows during Covid at $2.31.

This is an update.

What we saw then (time-stamped chart below): The potential for a post 2001 to 2003 cycle run-up.

How it's developed thus far...

Lester Davids

Senior Investment Analyst: Unum Capital

Reference:

Our comment in May 2020 (seen in the yellow block) was as follows:

"The YTD deteriorating global economic backdrop has put pressure on risk assets including industrial commodity Copper. Also adding pressure has been the expectation of lower Chinese economic growth which is a key driver of the commodity. While the short term pressures may remain, a review of the monthly chart reflects a similar technical structure as was the case for the period for August 1998 to January 2002 where we saw: (1) a price surge (marked in yellow on chart) - October 1992 to January 1995 / December 2008 to March 2011. (2) Consolidation from February 1995 to February 1999. (3) A double bottom developed in March 1999 and October 2001 (green rectangle marked on chart). The period for 2001 to 2003 saw the consolidation continue however this was a "break" of the previous downward sloping parabolic back to the 1995 peak. While questions remain over the global economic outlook, the question from a long term technical perspective is: are we at a similar juncture to the 2001-2003 period where further consolidation will be seen before move higher? (Yep, I see the December 2003 breakaway gap that has the potential to be filled over the longer term)."