112
COPPER STARTS TO BUILD A
BULLISH FOUNDATION
Copper prices tend to form seasonal bottoms
during the month of December (page 149).
Traders can look to go long on or about
December 14 and hold until about February 23.
This trade in the last 38-year history has worked
26 times, for a success rate of 68.4%.
Cumulative profit is a whopping $64,463.
One-third of that profit came from 2007, as the
cyclical boom in the commodity market mag -
nified that seasonal price move. However, this
trade has produced other big gains per single
contract, such as an $8,213 gain in 2003, and
even back in 1973, it registered another sub -
stantial $9,475 gain. The biggest loss was for
$5,000 back in 2006. These numbers show this
trade can produce big wins and big losses.
The futures contract does have electronic
access, and there are options on this commodity.
But due to the potential volatility and thinness of
the market, options are a consideration but are
also not as actively traded as other commodities.
Therefore, let’s introduce a stock that mirrors the
price moves of copper without the excess
volatility. The chart below shows BHP Billiton’s
(BHP) prices overlaid on copper’s. This company
mines copper, silver, lead, and gold in Australia,
Chile, Peru, and the United States.
Notice the price correlation to copper. The
bottom line on the graph illustrates copper’s
average seasonal price moves, which BHP tracks
rather closely. See pages 133–138 for additional
correlated trades.
Chart courtesy TradeNavigator.com
COPPER (HG) BARS AND BHP BILLITON (BHP) CLOSES
(WEEKLY DATA JANUARY 2009–MAY 2010)
ENTRY EXIT PROFIT/
YEAR DATE CLOSE DATE CLOSE LOSS
1972 12/14 49.65 2/27 62.20 $3,138
1973 12/14 77.00 2/26 114.90 9,475
1974 12/13 57.00 2/24 58.50 375
1975 12/12 54.70 2/23 59.40 1,175
1976 12/14 60.50 2/22 67.00 1,625
1977 12/14 60.50 2/24 56.20
–1,075
1978 12/14 70.35 2/22 90.20 4,963
1979 12/14 101.00 2/25 121.00 5,000
1980 12/12 85.85 2/23 84.15
–425
1981 12/14 76.65 2/22 73.95 –675
1982 12/14 67.60 2/22 77.30 2,425
1983 12/14 66.65 2/22 66.35
–75
1984 12/14 60.35 2/25 58.00 –588
1985 12/13 64.35 2/21 64.65 75
1986 12/12 61.10 2/23 62.90 450
1987 12/14 97.70 2/22 89.60
–2,025
1988 12/14 125.10 2/22 129.25 1,038
1989 12/14 102.65 2/22 108.00 1,338
1990 12/14 106.00 2/25 109.70 925
1991 12/13 97.20 2/21 100.40 800
1992 12/14 99.70 2/22 99.50
–50
1993 12/14 79.80 2/22 86.75 1,738
1994 12/14 128.75 2/22 129.45 175
1995 12/14 122.70 2/23 114.20
–2,125
1996 12/13 96.20 2/21 109.70 3,375
1997 12/12 82.90 2/23 73.70
–2,300
1998 12/14 67.10 2/23 62.65 –1,113
1999 12/14 81.60 2/24 84.65 763
2000 12/14 88.60 2/23 80.10
–2,125
2001 12/14 68.50 2/26 70.85 587
2002 12/13 73.65 2/24 79.20 1,388
2003 12/12 98.40 2/25 131.25 8,213
2004 12/14 133.15 2/23 149.50 4,088
2005 12/14 191.30 2/23 219.95 7,162
2006 12/14 307.00 2/26 287.00
–5,000
2007 12/14 296.95 2/25 375.70 19,688
2008 12/12 144.10 2/23 145.75 413
2009 12/14 316.85 2/23 323.45 1,650
38-Year Gain $64,463
DECEMBER LONG COPPER (MAY)
TRADING DAY: 10—HOLD: 47 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 112
MONDAY
12
TUESDAY
13
WEDNESDAY
14
THURSDAY
15
FRIDAY
16
SATURDAY
17
SUNDAY
18
LT:
C(Z), W(Z), CC(Z), LH(Z)
OE:
LH(Z)
LT:
SP(Z)
OE:
SP(Z), CL(F)
There is nothing like a ticker tape except a woman—nothing that promises, hour after hour,
day after day, such sudden developments; nothing that disappoints so often or occasionally
fulfils with such unbelievable, passionate magnificence.
— Walter K. Gutman (Financial analyst, described as the “Proust of Wall Street”
by New Yorker, You Only Have to Get Rich Once, 1961, The Gutman Letter, 1903–1986)
The symbol of all relationships among such men, the moral symbol of respect for human beings, is the trader.
Ayn Rand (Russian-born American novelist and philosopher,
from Galt’s Speech, A tlas Shrugged, 1957, 1905–1982)
I keep hearing Should I buy? Should I buy? W hen I start hearing Should I sell? that’s the bottom.
— Nick Moore (Portfolio manager, Jurika & Voyles, TheStreet.com, Mar. 12, 2001)
The men who can manage men manage the men who manage only things, and
the men who can manage money manage all.
— Will Durant (Historian, writer, and philosopher 1885–1981)
The only title in our democracy superior to that of President is the title of citizen.
— Louis D. Brandeis (U.S. Supreme Court justice 1916–1939, 1856–1941)
Start Long Copper(K)—68.4% Accuracy Since 1972—End Feb. 23, 2012—Page 112
DECEMBER
c01_CTA_2011_pgs_12-119_c01_cta_2011_pgs_12-119 7/21/10 2:03 PM Page 113

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