48
COPPER TOPS IN MAY
Copper prices tend to peak out when construc-
tion season is underway. Supplies have built up,
but demand tends to decline. Producers have a
tendency to ship inventories when prices are
the highest during periods of strong demand
(page 149). However, builders order hand-to-
mouth rather than stockpile copper tubing for
plumbing installations when prices get too high.
This could be one explanation for this short term
seasonal tendency.
Traders can look to sell copper on or about
May 11, and then exit on or about May 31. This trade
has racked up 23 wins out of the last 37 years.
Impressively, 2007 and 2008 totaled $10,163 in
profits. However, the global economic rebound
and growth in China in 2009 created a demand
spike causing copper prices to rise during this
seasonally weak period.
Nevertheless, at press time in 2010, this
trade came right back to life, as copper prices
declined on schedule, creating another win for
this seasonal trade. Always evaluate technical
timing indicators, macroeconomic trends, and
fundamentals before executing any trade, espe-
cially seasonal trades.
Besides selling a futures contract, one way
to capitalize on this event is to look at iShares
DJ US Basic Materials (IYM), which contains
natural resource companies that mine iron ore,
aluminum, and, of course, copper among other
metals. Notice the striking similarities of the
seasonal tendencies between the price moves of
this ETF in relation to the price of copper. See
pages 133–138 for additional correlated trades.
Chart courtesy TradeNavigator.com
COPPER (HG) BARS AND ISHARES DJ US BASIC MATERIALS (IYM) CLOSES
(WEEKLY DATA JANUARY 2009–MAY 2010)
ENTRY EXIT PROFIT/
YEAR DATE CLOSE DATE CLOSE LOSS
1973 5/10 65.90 5/30 71.05 $1,288
1974 5/10 129.80 5/30 107.50 5,575
1975 5/12 55.30 5/30 54.70 150
1976 5/12 71.30 6/01 69.70 400
1977 5/11 66.00 5/31 60.40 1,400
1978 5/10 59.50 5/30 65.90
–1,600
1979 5/10 85.10 5/30 79.40 1,425
1980 5/12 88.60 5/30 93.40
–1,200
1981 5/12 82.10 6/01 81.50 150
1982 5/12 72.95 6/01 61.50 2,863
1983 5/11 80.80 5/31 78.35 613
1984 5/10 63.70 5/30 64.15
–113
1985 5/10 65.50 5/30 60.75 1,188
1986 5/12 63.90 5/30 63.10 200
1987 5/12 66.95 6/01 66.90 12
1988 5/11 94.40 5/31 91.30 775
1989 5/10 122.50 5/30 114.50 2,000
1990 5/10 118.40 5/30 111.50 1,725
1991 5/10 102.25 5/30 96.65 1,400
1992 5/12 101.10 6/01 102.30
300
1993 5/12 82.25 6/01 80.40 462
1994 5/11 98.00 5/31 103.75
–1,438
1995 5/10 124.25 5/30 130.50 –1,563
1996 5/10 124.50 5/30 115.50 2,250
1997 5/12 113.30 5/30 119.10
–1,450
1998 5/12 79.30 6/01 75.95 837
1999 5/12 71.00 6/01 63.50 1,875
2000 5/10 82.85 5/30 81.15 425
2001 5/10 75.95 5/30 76.25
–75
2002 5/10 73.85 5/30 75.20 338
2003 5/12 75.20 5/30 78.25 –762
2004 5/12 118.75 6/01 129.25 2,625
2005 5/11 144.25 5/31 145.65 –350
2006 5/10 368.80 5/30 367.40 350
2007 5/10 356.65 5/30 330.35 6,575
2008 5/12 374.95 5/30 360.60 3,587
2009 5/12 208.60 6/01 231.90
5,825
37-Year Gain $17,313
MAY SHORT COPPER (JULY)
TRADING DAY: 8—HOLD: 13 DAYS
Copper Seasonal Pattern since 1972
c01_CTA_2011_pgs_12-119_c01_cta_2011_pgs_12-119 7/21/10 2:03 PM Page 48
MONDAY
2
TUESDAY
3
WEDNESDAY
4
THURSDAY
5
FRIDAY
6
SATURDAY
7
SUNDAY
8
Sell in May and go away. However, no one ever said it was the beginning of the month.
— John L. Person (Professional trader, author, speaker, Commodity Traders Almanac,
nationalfutures.com, 6/19/2009, b. 1961)
Sell stocks whenever the market is 30% higher over a year ago.
— Eugene D. Brody (Oppenheimer Capital)
Those that forget the past are condemned to repeat its mistakes,
and those that mis-state the past should be condemned.
— Eugene D. Cohen (Letter to the Editor Financial Times, 10/30/06)
During the first period of a man’s life the greatest danger is not to take the risk.
Soren Kierkegaard (Danish philosopher, 1813–1855)
Doubt is the father of invention.
— Galileo Galilei (Italian physicist and astronomer, 1564–1642)
Start Short Cattle(V)—61.8% Accuracy Since 1976—End Jun. 15—Page 44
Motherʼs Day
MAY
FN:
SB(K)
c01_CTA_2011_pgs_12-119_c01_cta_2011_pgs_12-119 7/21/10 2:03 PM Page 49

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