Three Top Ways to Trade a Potential Rebound in Copper

by | Sep 2, 2022 | Markets

Investors may want to keep an eye on copper stocks.

For one, we have to consider copper prices may be bottoming out, too. In fact, the copper pullback may be overdone, especially with the green energy boom. After all, copper is in the turbines and solar modules that help generate power, and it’s in the transmission lines that carry electricity to customers, and in electric vehicles.

Plus, according to Bloomberg, “Energy research firm BloombergNEF recently published its first global copper outlook, factoring in demand from the technological changes needed to wean the economy off fossil fuels. Its topline finding is striking: Copper demand will increase by more than 50% between now and 2040.”

One way to trade a potential copper rebound is with Freeport McMoRan (FCX).

After losing more than a third of its value on declining copper prices, and an earnings report miss, a bottom may finally be in place. The copper stock has become wildly oversold, and is just starting to pivot from double bottom support. We’re also seeing RSI and Williams’ %R start to pivot higher, too. Helping, ConocoPhillips CEO and FCX Director, Ryan Lance just bought $988,300 worth of FCX stock at an average price of $31.88 each.

Or, we can look at copper ETFs, such as Global X Copper Miners ETF (COPX).

Oversold at $29.48, the COPX ETF is starting to show signs of life again, too. With an expense ratio of 0.65%, the ETF provides investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive Global Copper Miners Total Return Index, as noted by Global X ETFs. Some of the ETFs holdings include Oz Minerals Ltd., Teck Resources, Glencore PLC, Southern Copper Corp., and Ivanhoe Mines Ltd. to name a few.

Or, we can take a look at the Barclays iPath Bloomberg Copper Subindex ETN (JJC).

According to Barclays, “The iPath Series B Bloomberg Copper Subindex Total Return ETNs are designed to provide exposure to the Bloomberg Copper Subindex Total Return. The Index currently consists of one futures contract on the commodity of copper (currently the Copper High Grade futures contract traded on the COMEX) which is included in the Bloomberg Commodity Index Total Return.”

The JJC ETN is also showing signs of life after finding support at $17.23. From here, we’d like to see the ETN challenge $20 a share, near-term.