Why Copper Stocks Look Interesting Again: A Price Chart Analysis

It’s not just Freeport McMoran. Other copper mining stocks have perked up as well.

A price chart analysis of copper stocks shows why investors might want to consider the sector again. After a strong run-up in price coming off of the March, 2020 pandemic lows, the group peaked in early May and began to sell-off. Months and weeks of decline may be ending if you look closely at price chart indicators.

Copper the metal looks like this on a daily closing basis:

After breaking out above the red-dotted downtrend line earlier this month and blasting upward toward the May high, the metal has sold off. This type of action is not unusual after the sudden continuous upward kind of action from early to mid-October. Now that the metal is back to the area of the up trending 50 and 200-day moving averages, things could get interesting again.

The Global X Copper Miners ETF now looks like this:

The downtrend line connecting the early May peak with the mid-September high was broken to the upside in early October. Price took off and peaked at just above 40 before selling hit. The moving average convergence/divergence indicator (MACD, below the chart) is diverging positively from the July low onward. Although the price has pulled back, it remains above both the 200-day and 50-day moving averages.

Vedanta’s daily price chart looks like this:

This New York Stock Exchange copper miner has been in basic up trend mode since at least March. You can see how it tends to move higher, pull back to the area of the 50-day moving average (in blue) and then continue higher. Note that Vedanta’s price remains steadily above the up trending 200-day moving average (in red).

The Southern Copper Corporation daily price chart looks like this:

The South American copper miner in October broke above the down trend line that connects the May peak with the August high. Even with this week’s pull back, it remains above the 50-day moving average (in blue). Note that the moving average convergence/divergence indicator (MACD, below the price chart) is diverging positively from the June low to the September/October lows.

Here’s the daily price chart for Teck Resources:

Despite this week’s selling, the copper miner remains in an uptrend, above both its 50-day moving average (the blue line) and the 200-day moving average (the red line). That both the short-term and the long-term moving averages are in up trends is regarded as solidly bullish by most price chart analysts.

These are not buy recommendations. That copper is a metal needed for the manufacture of semiconductors and that these chips are in demand globally is likely having an effect. How long this dynamic might continue is unknown but right now copper stocks might be worth studying.

Not investment advice. Do your own research and always consult with a registered investment advisor before making any decisions.