Copper prices and COPX ETF breakout signal bullish long-term implications. There are no signs of upside exhaustion indicating potential for sustained upward movement. Breakout underscores positive outlook, suggesting further growth potential in copper and mining stocks.
Copper and Copper Mining Stocks Breakout
In recent times, copper prices have undergone a notable breakout on their chart, surpassing the previous resistance point of around $3.97/lb. This occurrence signifies a crucial turnaround phase for copper and its related mining stocks, many of which are also experiencing their breakout moments.
The Global X Copper Miners ETF (COPX), holding approximately $1.52 billion in assets and being the largest ETF in the copper sector, presents investors with a liquid and cost-efficient means to gain comprehensive exposure to copper mining stocks.
With an expense ratio of 0.65%, COPX offers a well-balanced exposure to copper miners, ensuring that no single stock dominates more than 6% of the ETF. Geographically, the ETF’s largest exposures are to Canada, accounting for nearly 37%, and the U.S., with just over 10%.
COPX itself has broken out from a prolonged consolidation pattern in the form of a triangle, dating back to early 2022. This breakout suggests a bullish trend in the intermediate term, targeting approximately $47.00, near the 2021 high.
Based on insights from Katie Stockton and Will Tamplin of Fairlead Strategies, COPX shows no signs of slowing down based on overbought or oversold measures. This suggests that there’s probably more upward movement coming soon after the recent breakout.
Relative Performance and Long-Term Implications
The breakout observed in COPX holds significance not only in absolute terms but also in relative terms, as evidenced by the COPX to S&P 500 ratio surpassing the 200-day (~40-week) moving average.
This indicates a period of intermediate-term outperformance by COPX compared to the broader equity market. However, taking a long-term view, the trading range established since 2021 maintains a neutral relative strength bias.
Analyzing a monthly bar chart of COPX reveals a secular uptrend above the monthly cloud model, accompanied by a bullish upturn in the monthly stochastics.
This suggests a likely shift of the monthly MACD (moving average convergence/divergence) back onto a “buy” signal for the first time since 2020.
The positive movement in monthly indicators implies that the breakouts observed in copper and COPX carry bullish long-term implications.
