Here is the chart of Copper (CPER) trying to hold at support this week. One of the problems showing up is that all the commodities are breaking down. Support is right here, right now. The reason it is called support is because the chart has bounced here before. I want to be optimistic to buy here if it holds and let someone else own it if it doesn't. One of the concerns is the momentum rolling over (PPO indicator) just above zero. The two examples of that in 2018 and 2019 were not friendly to holders of the ETF at that time.
One of the ways to analyze the commodities demand is through the stocks that produce them, such as FCX for Copper. Price is trying to bounce off the 40-week moving average. Momentum is rolling over on the PPO, but the indicator is making higher highs and higher lows. If copper is going to improve, we should se the momentum indicator on FCX hold up above zero and start to turn higher. That would be a great setup for a big move higher.
I did record a video about Commodities on the weekend, which warns of the precarious levels that we are currently at on 4 or 5 different charts.
Commodities could be a big clue as to whether or not the world turns higher or lower from here. Pay attention to either result for broader implications!
Greg Schnell, CMT, MFTA
Senior Technical Analyst, StockCharts.com
Author, Stock Charts For Dummies
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