We were noting Copper is back at the bottom of it's channel so here's a nice short-term play that can make a quick 100% by April:
Dollar 106.45, Oil $68.77 and Friday USO finished at $69.75 so I do feel good that we took the money and ran in the end. Now we’re back at $71.69 but we’re not looking to force a play – just judging the new range.
Brent is $72.95, Gasoline $2 means oil is likely to head back to $70 (but only if $2.00 holds) and /NG rejected at $3 yet again – now $2.893.
Gold is back over $2,600 ($2,616), Silver $31.27, Copper $4.10, which has been the bottom of the range since April so it’s good for a bounce play if we test it again (/HG).
CPER is a Copper Fund and it hasn’t been below $25 since April and only for a day or two so here’s a nice short-term play for Copper:
-
- Sell 10 CPER April $25 puts for $1 ($1,000)
- Buy 10 CPER April $22 calls at $4 ($4,000)
- Sell 10 CPER Jan $26 calls for $1 ($1,000)
That’s net $2,000 on the $4,000 spread that’s 100% in the money and if CPER is not up on Jan 17th, we simply sell 10 April calls and further lower the basis, which makes it hard to lose (though we may end up owning it if Copper fails to hold $4. Let’s put this in the STP just so we remember to track it.
Here are additional trade notes from Boaty:
🚢 Based on the technical analysis and current market conditions, here's an assessment of copper as a short-term trade around the $4 level:
## Current Technical Setup
- Currently trading at $4.13, down 1.85% recently[1]
- Technical indicators showing oversold conditions[9]:
- RSI at 29.204 (oversold territory)
- StochRSI at 0 (extremely oversold)
- Williams %R at -96.598 (oversold)
## Bearish Factors
- Moving averages showing strong sell signals across all timeframes[9]
- Chinese banks extended fewer loans than expected (500B yuan vs 700B forecast)[1]
- Recent China stimulus package failed to provide direct economic support[1]
- Technical trend remains downward biased in short term[5]
## Bullish Potential
- Price finding support near $4 psychological level
- Historically, Q4 has been the strongest period for copper[3]
- Long-term forecasts remain bullish with Q4 2024 target of $10,265/tonne[7]
- Oversold conditions could trigger technical bounce
## Trade Consideration
For a short-term bet off $4, consider:
- Using tight stops below $3.95
- Looking for initial target of $4.30-4.40 range
- Watching Chinese economic data as key catalyst
- Monitoring technical indicators for reversal signals
The risk/reward looks favorable for a short-term long position given the oversold conditions, but position sizing should be conservative given the current downward momentum and Chinese economic concerns.
