Casting a wary (short-term) eye on copper

Key Points

• Copper has been trading sideways in a large range for roughly three and a half years
• This critical industrial metal is about to enter a brief - but especially challenging - time of year
• Short-term traders should be alert for an opportunity, while anyone looking to buy copper might be best to show just a little more patience

Copper tends to dip in late September

The chart below shows copper trading sideways for almost three and a half years in a very large range.

All "predictions" of why copper will plummet or soar during that time have fallen by the wayside. In the absence of a major trend, the best bet for copper trading has been to look for short-term trading opportunities. One such opportunity is now approaching.

The chart below displays the annual seasonal trend for copper futures. Note the period highlighted, which extends from the close on Trading Day of the Year (TDY) #183 through TDY #191. For 2024, this period extends from the close of 2022-09-20 through 2022-10-02.

The chart below displays the cumulative $ +(-) for copper futures held long only during Trading Day of Year #183 through TDY # 191 starting in 1980. 

The table below summarizes copper performance during this period.

What the research tells us…

The history above suggests that commodity traders consider playing the short side of copper futures in the very near future. For anyone considering such a position, close attention must be paid to position sizing and one's own tolerance for risk, and where to place a potential stop-loss order. For all other traders and investors, the late September-early October period is, at the very least, a good time to stand aside the copper market.