Doctor Copper: What's the Doc advocating

Anxiety is a thin stream of fear trickling through the mind. If encouraged, it cuts a channel into which all other thoughts are drained. Arthur Somers Roche

Dr Copper: What’s Up, Doc?

Updated Feb 14, 2024

This analysis will examine Doctor Copper’s historical and current trends, a leading economic indicator. Since late 2022, we have predicted that Doctor Copper is poised to trade to new highs. The recent increase in Doctor Copper’s price could be a positive sign that the economic recovery is gaining momentum. By staying focused on the trend, we can make informed investment decisions and take advantage of the opportunities presented by Doctor Copper’s upward trend.

Once upon a time, copper prices were considered a leading indicator of the economy’s health. However, this relationship changed with the advent of quantitative easing (QE). The Federal Reserve’s (Fed) manipulation of the markets through an ultra-low interest rate environment made copper nothing more than a disconnected commodity from financial markets.

The Copper Conundrum: Navigating the Price Dynamics and Seizing Emerging Opportunities

While the positive divergence signal did not materialise, there is a positive development in the bullish pattern for copper. If copper can achieve a close at or above 4.05 on a weekly basis, preferably on a monthly basis, it would set the stage for a move to the 4.50-plus range. It will also position copper to trade past 5.10 in 2024. Market update Dec 9, 2023

As we delve into the intricate dance of copper prices, the metal currently grapples to cross the $3.90 threshold. If the current trend doesn’t take a swift turn, we might see copper prices tumble to the $3.60 range before they muster the strength to challenge the $4.20 to $4.44 territory.

At this juncture, the production of copper doesn’t seem poised to offset the looming shortfall. This sets the stage for a unique scenario where both the fundamentals and technical analysis (TA) factors coalesce, pointing towards a bullish direction. Adding another layer to this complex narrative, psychological factors also signal a bullish long-term trajectory. In essence, we’re witnessing a well-rounded, long-term trifecta in motion.

Counterintuitively, the lower copper trades, the more robust the bullish outlook becomes. This is because a lower trading price would take a bullish picture and convert it into an extraordinarily bullish one – a unique quirk of this market.

The narrative becomes even more compelling when we consider the demand trajectory. Copper, with its extensive applications in electricity-related technologies and green energy initiatives, is set to experience a surge in demand. In 2022, we saw this trend take flight as global electric vehicle (EV) sales soared past 10 million units, a significant leap from the previous year. Case in point, XPeng, a prominent player in the EV market, reported a doubling of their EV sales in June 2022, further underscoring the sustained surge in copper demand.

As we cast an eye towards the future, global EV sales, encompassing both battery-electric vehicles (BEVs) and plug-in hybrids (PHEVs), are projected to hit 14.1 million units in 2023. This represents a whopping 34% growth in EV sales compared to 2022, suggesting an even more pronounced increase in copper demand. The ongoing expansion in EV sales, paired with the burgeoning EV-charging ecosystem, points towards a consistent and potentially escalating demand for copper in the years to come.

On the supply front, the picture is equally complex. A copper deficit is on the cards for 2023, fueled by strained South American supply chains and increasing demand pressures.

Currently, the copper market is grappling with a supply-demand imbalance. With demand set to rise due to copper’s widespread applications and supply poised to fall short, the stage is set for a fascinating market dynamic. This, coupled with the psychological market factors, sketches a long-term bullish narrative for copper, making it an intriguing space to watch.

Copper Surge: Seizing the Opportunity on the Horizon

However, this has created an opportunity for savvy investors who understand mass psychology and can exploit the crowd’s misconceptions. Despite the masses assuming that copper is no longer a helpful indicator and abandoning it, they have also failed to jump into the markets, leaving them on the wrong side of the market.

Investors who understand the market dynamics can take advantage of this disconnect between copper and the financial markets by investing in copper ETFs. The demand for copper is expected to increase with the global economic recovery, particularly in China, the world’s largest consumer of copper. Moreover, the US dollar is projected to experience a multi-year top, meaning it will be worth less than other currencies. This devaluation of the US dollar will trigger inflationary forces, making commodities like copper more expensive.

Therefore, investing in a copper ETF can be wise, as copper prices are expected to rise. At the same time, the US dollar is projected to hit a multi-year top, triggering inflationary forces. Despite the disconnect between copper and financial markets due to the Fed’s manipulation, traders who can effectively use market psychology and technical analysis can potentially benefit from the current copper market and make a killing.

In conclusion, despite the disconnect between copper and financial markets, investing in a copper ETF makes sense in the future. Copper is an essential commodity in various industries, and with the global economy recovering, its demand is likely to increase. Furthermore, the US dollar’s devaluation is expected to trigger inflationary forces, making commodities like copper more expensive. Therefore, investors who understand market dynamics and use market psychology and technical analysis to their advantage can benefit from the current copper market.

Copper Update March 2023

The Importance of Focusing on the Trend:

Staying focused on the trend is crucial, as it can be our ally amid all the noise surrounding us. The recent increase in Doctor Copper’s price could be a positive sign that the economy is recovering, and we should keep a close eye on this development.

Doctor Copper’s Price Increase and Its Implications:

Let us not be swayed by the noise and instead concentrate on the trend, for it is our friend, and everything else is our foe. The rising price of Doctor Copper could indicate that the economic turmoil is due to “manflation” rather than real inflationary forces. However, as the dollar is expected to peak for several months in 2023, North America will finally understand the true meaning of inflation.

The Volatility of Inflationary Environments:

Inflationary environments tend to boost stocks, but the action can be volatile. The initial stage of the next breakout is likely to be volatile and rangebound, which will test the patience of most market participants. However, this range-bound action will create the foundation for a buying opportunity of epic proportions.

Doctor Copper as a Leading Economic Indicator:

Doctor Copper is a leading economic indicator, and the monthly charts suggest that the MACDs are about to experience a bullish crossover. The upward trend in Doctor Copper is encouraging for the overall stock market. For speculative plays, savvy investors may consider investing in copper stocks such as FCX, SCCO, and CPPMF.

The Impact of Macroeconomic Factors on Doctor Copper:

In conclusion, macroeconomic factors such as rising inflation, increasing energy costs, and climbing interest rates have impacted Doctor Copper in 2022, putting pressure on prices. Although Doctor Copper prices hit an all-time high in 2022, they could not sustain these gains and were volatile for most of the year.

The Global Shortage of Doctor Copper and Its Future Implications:

However, the world is currently facing a global shortage of Doctor Copper, fueled by increasingly challenging supply streams in South America and higher demand pressures. The deficit will inundate global markets throughout 2023, and one analyst predicts the shortfall could extend throughout the rest of the decade.

Historical Insights: Our past calls on Doctor Copper.

Now, let’s delve into history’s tapestry, recognizing that those who glean lessons from the past are poised to navigate the future with wisdom, avoiding the pitfalls that echo through time.

2019 Outlook

Copper continues to put in a bullish pattern, which is dangerously close to generating a bullish signal. A bullish signal will/should positively impact the overall market. Consider also that the current consolidation in copper has been relatively mild, so the odds of a strong move are pretty significant.

The Tactical Investor alternative Dow Theory states that if the utilities trade to new highs, it is almost always an indication signal that the Dow industrials will pursue a similar route, and that’s what’s taking place right now. For the record, the Dow Utilities soared to new highs in September, and so far, the Dow is following in the footsteps of the utilities. The transport sector and copper should outperform the markets. While many experts were predicting a crash, we at most, were looking for a pullback ranging from mild to wild. However, the long-term trend is still bullish, and in such an atmosphere, it is dangerous to short a market

vast amounts of money have left the market, demonstrating that the crowd is bailing out at precisely the wrong time. History has never been kind to the masses, and we don’t think the pattern is going to change shortly.

2015-2016 outlook

In reality, copper clearly showed that the economy was far from healthy, and its downtrend clearly validated this fact. In the past, the financial markets would have marched more or less to the same drumbeat as copper. The chart below illustrates that this no longer holds. Instead of crashing with copper, the financial markets soared to new highs. Dec 2015

Is Doctor Copper Ready to Put in a Bottom?

There is speculation on what will happen when copper finally puts in a bottom. Will financial markets rally in unison with copper, or will they continue to diverge as they have in recent years? Copper is currently signalling that a bottom could be close at hand, as it has triggered several positive divergence signals.

However, it is essential to note that if copper cannot hold above 2.40, there is an excellent chance that it will drop to the 2.20 range again. The ideal setup would be for copper to trade to new lows and trigger a buy signal. It is worth noting that elite players often create the illusion that the market is ready to break out, a ploy known as a head fake, designed to fool regular market technicians and the masses into thinking a bottom is in place.

Investors who understand market dynamics and use technical analysis and market psychology to their advantage can benefit from the current copper market. Although copper has been disconnected from the financial markets due to the Fed’s manipulation, traders who can use market psychology and technical analysis effectively can potentially kill by investing in copper ETFs. As copper prices are expected to rise while the US dollar is projected to hit a multi-year top, triggering inflationary forces, investing in a copper ETF makes sense going forward.

Copper; Do or Die Time

Taking into account trends and market psychology, it’s difficult to predict the exact bottom of copper prices. However, positive signals, such as positive divergence signals and the potential for a buy signal to be triggered, indicate that a base could be closed. While the trick of a “head fake” has worked in the past, it’s important to consider other factors that could come into play, such as economic indicators and market sentiment.

The goal should not be to predict the exact bottom but to catch the main move and avoid trying to time the market too precisely. A monthly close above 2.50 would be a strong signal that a base is in place and that copper is attempting to mount a strong rally. Investors willing to take risks can consider opening positions in key copper stocks. As long as copper does not close below $2.20 on a monthly basis, the outlook will remain neutral.

7 more reasons to consider buying Doctor Copper

Its prices are trading in the extremely oversold ranges; for the past decade, copper
has traded above 2.40. The only exception was the financial crisis of 2008.
FCX has stated it’s going to suspend operations at several of its North American mines. It will suspend operations at its Miami mine In Arizona, reduce production by 50% at its Tyrone mine in New Mexico and adjust productions at other U.S. sites.
Glencore PLC
A major copper producer, shocked the markets by stating it would suspend production at two locations for 18 months. Two mines (the Katanga and the Mopani mines) are located in the Democratic Republic of Congo and Zambia. These two mines account for roughly 1.9%- 2% of the global output of copper.
Chile’s state-owned Codelco has gone on record stating that they will “cut costs to the bone”. They have also delayed many expansion projects; two notable expansion projects that have been delayed are at Chuquicamata and Andina complexes.
Numerous key technical indicators are trading in the extremely oversold ranges, and many have triggered positive divergence signals, which could be construed as a bullish development.
The mantra out there for a while has been that China is in deep trouble. Thus, it must have shocked many bearish analysts that China imported 350,000 metric tons of copper, up 4% from the same period last year. This is something to pay attention to as it could be the beginning of a new trend. China accounts for roughly 45% of the total copper demand. Analysts are now offering diverging stories, with some reversing course and stating that there could be a copper deficit this year, while others continue to stick with their predictions that there will be an oversupply of copper until 2016. Regardless of the outcome, diverging opinions are a good sign as it indicates that the experts really know nothing. Knowing nothing is usually a signal that some sort of turnaround is in the works.
While Chinese imports of refined and semi-refined copper products were flat in August, its concentrates imports surged approximately 20% from a year ago and over 18% from the previous month. Could this be the beginning of a new trend?

Nibble and Don’t Bite

Taking into account trends and market psychology, it’s difficult to predict the exact bottom of copper prices. However, positive signals, such as positive divergence signals and the potential for a buy signal to be triggered, indicate that a base could be closed. While the trick of a “head fake” has worked in the past, it’s essential to consider other factors that could come into play, such as economic indicators and market sentiment.

The goal should not be to predict the exact bottom but to catch the main move and avoid trying to time the market too precisely. A monthly close above 2.50 would signal that a bottom is in place and that copper is attempting to mount a strong rally. Investors willing to take risks can consider opening positions in key copper stocks. As long as copper does not close below $2.20 monthly, the outlook will remain neutral.

Copper Investments worth looking at

Doctor Copper is trading at oversold levels and showing potential signs of a reversal. For those willing to take on some risk, there are a few plays to consider, such as SCCO, FXC, COPX (Global X Copper Miners ETF), and JJC.
However, it is essential to tread cautiously as the copper trend is still neutral at best and far from showing a positive signal. It may be more beneficial to focus on sectors starting to trend upward, such as the biotech sector. Despite the negative sentiment surrounding copper, history has shown that buying assets when they are cheap and unloved can lead to profitable opportunities.

Indecision is debilitating; it feeds upon itself; it is, one might almost say, habit-forming. Not only that, but it is contagious; it transmits itself to others. H. A. Hopf

FAQ

Q: Why was copper historically considered a leading indicator of the economy’s health?

A: Copper was historically considered a leading indicator of the economy’s health because it is an essential commodity in various industries. As such, changes in demand for copper can provide insights into changes in the overall economy.

Q: Why has the relationship between copper prices and the economy’s health changed with quantitative easing (QE)?

A: The relationship between copper prices and the economy’s health changed with quantitative easing (QE). The Federal Reserve’s (Fed) manipulation of the markets through an ultra-low interest rate environment made copper a disconnected commodity from financial markets.

Q: Is investing in a copper ETF a wise decision?

A: Investing in a copper ETF can be a wise decision as copper prices are expected to rise, and the demand for copper is expected to increase with the global economic recovery, particularly in China, the world’s largest consumer of copper. Furthermore, the US dollar’s devaluation is expected to trigger inflationary forces, making commodities like copper more expensive.

Q: Why is it important to focus on the trend when investing in copper ETFs?

A: Focusing on the trend is crucial when investing in copper ETFs, as it can be an ally amid all the noise surrounding us. The recent increase in Doctor Copper’s price could be a positive sign that the economy is recovering, and we should keep a close eye on this development.

Q: What is the impact of macroeconomic factors on Doctor Copper?

A: Macroeconomic factors such as rising inflation, increasing energy costs, and climbing interest rates have impacted Doctor Copper in 2022, putting pressure on prices. Although Doctor Copper prices hit an all-time high in 2022, they could not sustain these gains and were volatile for most of the year.

Q: Why is Doctor Copper considered a leading economic indicator?

A: Doctor Copper is considered a leading economic indicator because the monthly charts suggest that the MACDs are about to experience a bullish crossover. The upward trend in Doctor Copper is encouraging for the overall stock market.

Q: What is the global shortage of Doctor Copper, and what are its future implications?

A: The world is currently facing a global shortage of Doctor Copper, fueled by increasingly challenging supply streams in South America and higher demand pressures. The deficit will inundate global markets throughout 2023, and one analyst predicts the shortfall could extend throughout the rest of the decade.