Oil and Copper – Buy Shares

Oil and copper are two key industrial inputs. Additionally, the growing presence of investors in commodity markets mean that they are a leading indicator of global sentiment around industrial production. At the moment they’re both saying the same thing – buy shares.

This is a controversial call, given the Euro pressures markets are under. Last week’s piece (Australia 200- Oversold) started a twitter war. You can read it here: http://blog.cmcmarkets.com.au/2012/05/23/australia-200-oversold/

Before you get out your flame-thrower, have a look at the charts below. I’m a firm believer in evidence based trading, and there is evidence here. On a number of occasions, this blog has highlighted the importance of oil and copper as market indicators, most recently in Copper Tells the Tale http://blog.cmcmarkets.com.au/2012/05/16/copper-tells-the-tale/

Copper – Hourly

Copper dropped through the highlighted support at US $3.44 a pound, but has now bounced back through. Additionally, there appears to be a triangle break-out – two good reasons from a charting perspective to look for further gains in copper.

Oil – Hourly

Interstingly, oil is showing a similar profile. If West Texas Intermediate (WTI)  crude oil rises above US $91 it, too, will break out of  a triangle.

I was stopped out of my long trade in the Australia 200 on Friday night when it fell below 4,022. I’m generally reluctant to re-enter a trade after a stop out (taking losses can put me off balance, and lead to poor decision making). Nonetheless, these two key markets have me considering the following trade:

BUY Australia 200 at current market, with a stop loss order below the recent low at 4,013.

About michaelmccarthycmc

Chief Market Strategist - CMC Markets and Stockbroking Regular on ABC, BBC, Bloomberg, Channel TEN, CNBC, SBS and SKY
This entry was posted in Commodity, Market, Shares, Stocks, Trading and tagged , , , , , , , . Bookmark the permalink.

5 Responses to Oil and Copper – Buy Shares

  1. Pingback: Oil and Copper – Buy Shares | CMC Markets Blog | BP Share Price

  2. dv34 says:

    Yes, breaking levels on fourth attempt and sellers will likely disappear till a bit higher, agree bullish stocks/ commodities bearish USD short term

    • michaelmccarthycmc says:

      Hi DV – was discussing this morning the signs of the bottom – almost universal bearishness is one of them. Starting to get worried too many of us are bullish…….

      • dv34 says:

        well could be just a bear flag on the charts above, the key words were ‘short term’, I think you have to be pretty nimble against the trend I think these will hit a bit of resistance not too far ahead probably around 61.8% triangle extensions and old resistance levels

  3. Pingback: Oil and Copper – Buy Shares | CMC Markets Blog | Oil Shares - BP Share Price

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