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Copper ETFs and Copper Stocks About To Move Big

By: Chris Vermeulen | Monday, December 31, 2012

With 2012 now behind us it's time to start looking for some new long term investments which have big potential gains in the new year. Copper is one metal that has caught my eye.

The long term monthly chart of the copper ETF JJC shows a potential cup and handle pattern accompanied with bullish volume characteristics. Last year copper traded sideways in a narrowing range. This type of price action tends to bore traders and investors forcing them to look elsewhere for new to trades. The saying is "If the market doesn't shake you out, it will wait you out"

You can see on the monthly chart that the interest in this commodity diminished. You can tell because of the sideways movement and declining volume. I like to focus on investments which are out of favor but are showing signs of another big trend starting. getting on the train before it leaves the station can make for a fun ride.

Take a look at the charts, analysis and my best copper stock setup below:


JJC - Copper Total Return ETN Profile

Description: The index includes the contract in the Dow Jones-UBS Commodity Index Total Return that relates to a single commodity, copper (currently the Copper High Grade futures contract traded on the COMEX).

JJC Copper Total Return ETN Profile


Copper Miner Stocks ETF COPX - Weekly Chart

This ETF holds a basket of copper mining stocks which is showing signs of a new trend starting. Take a look at the top holdings stocks and fund breakdown to get a feel for the exposure it provides.


COPX Top Ten Holdings

  1. Inmet Mining Corporation (IEMMF): 6.62%
  2. KGHM Polska Miedz SA (KGH): 5.24%
  3. Xstrata PLC (XTA): 5.04%
  4. Grupo Mexico, S.A.B. de C.V. (GMEXICO B): 4.89%
  5. Jiangxi Copper Company Limited H Shares (00358): 4.83%
  6. HudBay Minerals, Inc. (HBM): 4.82%
  7. Antofagasta PLC (ANTO): 4.78%
  8. Southern Copper Corporation (SCCO): 4.75%
  9. Lundin Mining Corp (LUNMF): 4.55%
  10. Kazakhmys PLC (KAZ): 4.55%

COPX Market Cap Breakdown

The Next Rising Metal "Bear to Bull"
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Best Copper Stock Setup - LUNMF

After reviewing the main holdings in this fund I noticed one stock that looks ready to start a new bull market. Lundin Mining. shares look to be building a Stage 1 base and could break out and start to rally any week. Keep in mind 3/4 stocks move with the broad market so we do want the major indexes to find a bottom or at least trade sideways if we want copper stocks to start their run.

Best Copper Miner Setup
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Copper Futures, ETF and Stock Trading Conclusion:

Copper has lost its shine over the past 12 months but could start to make headline news in the near future. I like both COPX and LUNMF if we see further strength.

 


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Author: Chris Vermeulen

Chris Vermeulen
President of AlgoTrades Systems
www.TheGoldAndOilGuy.com

10126 Hwy 126 East, RR#2
Collingwood, ON, L9Y 3Z1

Chris Vermeulen

Chris Vermeulen, founder of AlgoTrades Systems., is an internationally recognized market technical analyst and trader. Involved in the markets since 1997.

Chris' mission is to help his clients boost their investment performance while reducing market exposure and portfolio volatility.

Chris is also the founder of TheGoldAndOilGuy.com, a financial education and investment newsletter service. Chris is responsible for market research and trade alerts for of its newsletter publication.

Through years of research, trading and helping thousands of individual investors around the world. He designed an automated algorithmic trading system for the S&P 500 index which solves his client's biggest problem related to investing in the stock market: the ability to profit in both a rising and falling market.

AlgoTrades' automated trading systems allows individuals to investing using either exchange traded funds or the ES mini futures contracts. It is supported by many leading brokerage firms including:

- Interactive Brokers
- Trade MONSTER
- MB Trading
- OEC OpenECry
- The Fox Group
- Dorman Trading
- Vision Financial

He is the author of the popular book "Technical Trading Mastery - 7 Steps To Win With Logic." He has also been featured on the cover of AmalgaTrader Magazine, Futures Magazine, Gold-Eagle, Safe Haven,The Street, Kitco, Financial Sense, Dick Davis Investment Digest and dozens of other financial websites. His list of personal and professional relationships approaches 25,000, people with whom he connects and shares is market insight with out of his passion for trading.

Chris is a graduate of Seneca College where he specialized in business operations management.

Chris enjoys boating, kiteboarding, mountain biking, fishing and has his ultralight pilots license. He resides in the Toronto area with his wife Kristen and two children.

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