Copper's Stealth Rally - Major Indices and Commodities Updated

Published on December 18, 2017 @ 7:20am

A big move to the upside Friday and an even bigger move today. Just goes to show the power of the 3X3 DMA when we mentioned early Friday the major indices were in a position to resume their moves higher following a pullback to the 3X3 DMA on both the NASDAQ Composite and the S&P 500.

Both updated charts as of this morning's open are provided here again, and as you can see, once they pulled back to their 3X3 DMA's (blue lines), both indices resumed their trends higher.

The bottom line - like we reiterated in last Thursday's edition - we still see no technical or fundamental signs of a major reversal yet, which continues to support our strong bullish stance across the major indices for the time being in SPXL and DDM - two primary bullish leveraged ETF's tracking the S&P 500 and the DOW respectively.

Oil continues to try and grind out the possibility of another move higher soon, but the price of WTI Crude on the daily chart here needs to find its way above $59 (horizontal blue line) if our long trade in GUSH is going to pan out. At this point, it clearly still has some work to do, but one big day to the upside would likely spark another new leg up in oil.

The concern is still the series of lower highs in crude over the last several days, so we'll see if that trend changes as soon as early this week. If it doesn't, we may need to cut our oil trade. However, if we can get that one good move to the upside, and more importantly a break above $59 per barrel, we'll obviously stick with it.

We continue to flirt with the idea of getting long gold again, as the primary ETF tracking gold in GLD "appears" to have potentially bottomed on at least a short-term basis - all while the dollar appears to be on the verge of staging another leg down.

Both daily charts of GLD and the U.S. Dollar Index are provided here. The divergence on an extremely short-term basis is clearly there, but with the major indices still in thrusting mode to the upside, there's still a good possibility of further volatility in gold on a short-term basis.

Again, if you're willing to accept the risk of a head fake move in gold (a potential move back to the downside), there's technical and fundamental context to get long gold on both a short and long-term basis right now.

We've continued to talk about the possibility of a developing long-term melt-up in commodities for quite some time. And, although commodities in general have been somewhat all over the map for months, we are starting to see a lift there.

This chart of COPX, the primary ETF tracking junior copper miners, has picked it up dramatically in recent days. However, it's literally at a very key pivot point right now - one that's likely to be very definitive for copper going forward.

You can see here the ETF is up against its 50-day simple moving average (green line) after bouncing sharply off its 200-day simply moving average (yellow line). This all comes while it recently broke above its 25X5 DMA (purple line).

There's plenty of fundamental context supporting the idea of higher levels in copper with Trump's agenda to focus on infrastructure buildout, the ongoing theme for tax reform and cheap money to support it, as well as an increase in manufacturing exports via a lower dollar.

We're seeing a continued lift in one of our previously suggested long-term ideas in Freeport-McMoRan Inc. (FCX), as well as a lift in BHP Billiton Limited (BHP) - another copper play we're on the verge of suggesting any day now.

The bottom line is any significant follow through from current levels is likely to spark a sharp move higher for copper miners, and precious metal miners in general. All we need is another strong move to the upside, and we're in on BHP.

Actions To Consider Today:

Hold GUSH with a near-term target on WTI Crude of $63 and change.

Trail gains in any individual company ideas with protective stops you're comfortable with.

Individual Company Updates:

None

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