Tuesday December 10, 2013
By Christopher Mistal and Jeffrey A Hirsch
Copper has a tendency to make a major seasonal bottom in December and then a tendency to post major seasonal peaks in April or May. This pattern could be due to the buildup of inventories by miners and manufacturers as the building construction season begins in late-winter to early-spring. Auto makers are also preparing for the new car model year that often begins in mid- to late-summer. Robust emerging-market growth and a generally weak U.S. dollar over the last decade is also keeping copper’s longer-term trend bullish. Traders can look to go long a May futures contract on or about December 13 and hold until about February 24. In this trade’s 41-year history, it has worked 28 times for a success rate of 68.3%. This trade has produced gains in ten of the last twelve years. Losses were in 2006 (end of housing bubble) and 2012 (copper peaked in February).
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