The rout in metals continues today after yesterday’s Federal Open Market Committee (FOMC) announcement. Have investors finally realized that all risk assets, not just stocks, have benefitted from accommodative central bank easing?
Weakness in the commodity markets, especially metals, seems to suggest that markets are slowly accepting this truth.
But, it’s not all Ben’s fault.
Metals have been trending lower for some time. That’s why I wanted to get you on the short side of copper earlier this month. I saw the short-term dead cat bounce as nothing more than a golden opportunity to bet against this metal.
When I wrote on June 10 (Copper’s Relief Rally a Gift to Investors), copper futures closed at $3.24. I recommended selling short between $3.21 and $3.25. You had a chance to get in over the following five days, as copper traded as high as $3.28… but well below the $3.35 level where I advised placing a stop-loss order.
If you made this trade, you’re likely very happy today.
Here’s an updated chart of copper futures…
The price of copper is more than 5% lower than it was when I made this call.
Getting short at $3.21 (the low end of my sell short range)… you could be sitting on open profits of as much as $3,800 today. If you got short from the higher price, $3.24, open profits should total $4,500.
And that’s just on one futures contract.
Of course, the futures market wasn’t the only way to play this trend. I sent another specific recommendation – an easy way to bet against copper – to Boom & Bust subscribers on May 1. This pick, which I can’t reveal here, is also handing us a worthwhile gain of more than 13%.
This just goes to show there’s money to be made on both sides of the market. And that, my friend, is music to our ears… especially on days like today.
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