April 12, 2005

Sell Copper

Copper is just about the only major industrial futures contract that is still trading on its highs....and Copper is REALLY high. Historically, when Copper ends a bull market, it has a tendency to go down in a big way, and it does so very quickly (examples below), and to me, appears to  be set up to do so once again....As I mentioned in my April 11th newsletter, I believe the whole "commodities are going through the roof" thing is way, way overdone and assumes that high prices can remain high prices indefinitely.....

I am selling (shorting) Copper, using both futures and options, with the expectation it will fall 40 to 50 cents during the next 3 to 6 months....I may be dead wrong, but similar to the Unleaded Gas we shorted last week, I think the initial stage of the move could be lightning fast and if this idea looks sensible to you, it should be moved on immediately....Most markets tend to go down a lot faster than they go up....

Here is the big picture....At these levels, sideways is not what it typically does...

Here are some examples of how Copper has topped out during the past 30 years....

Here is the current July contract....I am selling futures and buying puts looking for, at least, 40 cents on the downside. If I am right, I see no reason to expect the sell off  to be any different than all of those shown above....

Thanks....Give me a call if you are interested (and don't "wait to see what happens")...There is a lot of money being thrown at commodities today, and everything seems to be doing something.....

Bill Rhyne

800-578-1001
770-514-1993