Copper Continues to Look Bullish
Tuesday, April 18th, 2006
By George Leong, B.Comm. for Profit Confidential
Copper prices are on a tear, driven by strong demand from the construction and electronics sectors, where copper is used as a key raw material. Combine this with production shortages and rising demand out of China and India, and you have an ideal setting for a strong copper market.
In London trading, copper prices have risen over 30% this year and are up over 300% since late 2001. In trading in London on Monday, copper continued its hot streak, surging to a new record high of $5,940 a ton.
Copper continues to look quite bullish on the charts and suggests more upside moves ahead. In trading on the New York Mercantile Exchange’s COMEX division, the basis May high grade copper continues to look quite bullish and set a new contract high of $2.734 a pound on Monday.
The near-term technical picture looks extremely bullish as the underlying technical strength is quite strong. The recent breakout from a Rectangle formation at between $2.10 and $2.30 was quite impressive. The strong breakout at $2.30 was accompanied by rising volume on the break above the 20-day and 50-day moving averages of $2.4365 and $2.3102, respectively. The moving averages are trending upwards, which helps to confirm the strong bullish trend.
Relative Strength, a key driver of momentum, is also extremely strong at over 80%. It is the highest level since a break to $2.3163 in early February.
The MACD is also in a nice uptrend and exhibiting a strong buy signal that has been in place since March 17 when the breakout materialized.
The trend is clearly bullish and established. But you can expect to see some near-term selling pressure due to the extremely overbought condition on the chart.
Sustained strength could see May copper surge past $2.80 a pound to further record highs
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George is a Senior Editor at Lombardi Financial, and has been involved in analyzing the stock markets for two decades where he employs both fundamental and technical analysis. His overall market timing and trading knowledge is extensive in the areas of small-cap research and option trading. George is the editor of several of Lombardi’s popular financial newsletters, including The China Letter, Special Situations, and Obscene Profits, among others. His trading advice on stocks and options is also found on his daily trading site, Daily Profits. He has written technical and fundamental columns for numerous stock market news web sites, and he is the author of Quick Wealth Options Strategy and Mastering 7 Proven Options Strategies. Prior to starting with Lombardi Financial, George was employed as a financial analyst with Globe Information Services.



