What’s behind copper’s rollercoaster ride? … where Luke Lango says the next profit wave is about to hit … some well-deserved “congratulations” on market wins
After jumping 39% between mid-February and mid-April, the price of copper nosedived roughly 10% in less than two weeks.
Let’s begin today’s Digest by looking at what’s behind this volatility, and why you’re going to want to hang onto your copper positions despite the recent weakness.
For newer Digest readers, we’ve been bullish on the red metal for years at this point thanks to research from our macro expert, Eric Fry.
Copper is critical for a healthy, growing global economy… it’s a “must have” for tech/AI advancements (due to massive computing needs and copper’s role in computing hardware) … and it’s a lynchpin component of green energy technologies. Yet studies show that our current copper supply is woefully insufficient to meet coming demand.
The following price chart provides a visual on the recent rollercoaster ride.
To explain what’s been happening, let’s go to Eric’s lead analyst in Investment Report, Thomas Yeung:
Prices of copper surged [two weeks ago] after traders with short positions on the U.S.-based Commodity Exchange (COMEX) were forced to cover positions. The panic buying sent the spread between COMEX and London Metal Exchange (LME) to almost $1,300 per metric ton, causing many analysts to label the event as a short squeeze.
In a strict sense, copper’s swing last week was the very definition of a “short squeeze.” Short sellers were forced to close their positions to cover losses…
However, this “squeeze” was unlike anything we’ve seen in recent history.
What makes this recent short squeeze different…and long-term bullish
Thomas explains that the typical commodity squeeze happens when there’s an immediate shortage of the physical good.
In this situation, futures speculators realize they have no way of settling the physical contracts they owe. This forces them to panic-buy back their near-term contracts that are about to expire.
A friend who trades commodities contracts found himself on the other side of this same situation a few years ago. His bad bet on the price of wheat had him facing the possibility of an 18-wheeler filled with bushels of wheat pulling up outside of his apartment, looking to offload the cargo.
Returning to copper, its recent short squeeze was different than what we traditionally see. Here’s Thomas explaining:
COMEX copper saw prices of all futures contracts go up. No matter if you’re delivering copper in May 2024… January 2025… or March 2026… all copper futures contracts are trading in a narrow $4.74 to $4.78 band.
That tells us that there’s both an immediate and long-term shortage of the red metal. The COMEX “squeeze” we saw last week wasn’t just traders attempting to close out their near-term positions on physical delivery issues… but they were also buying back copper years into the future.
What this means for copper’s price looking ahead
In short, it suggests a significant shortage of physical copper resulting in much higher prices to come.
Thomas points toward UBS Group that just revised its forecast for this year’s copper deficit from an earlier estimate of 73,000 tons to a stunning 390,000 tons. And it projects next year’s deficit will be even bigger.
Back to Thomas for the impact on copper’s price:
[UBS] believes LME copper prices will reach $11,500 per metric ton by year-end and $12,000 by mid-2025.
Citi analysts, meanwhile, have called investors “right to push copper up from $8-8.5k/t to $10.5k/to over the past 3-4 months.” Prices on the LME also have converged upward to meet COMEX prices.
Essentially, the world is producing far too little copper to supply the insatiable needs of electric vehicles.
Bottom line: Don’t let the rollercoaster ride throw you out. Stay long copper.
If you’re an Investment Report subscriber, you can read more in last week’s weekly update by logging in here.
If you’d like to learn more about joining Eric and Thomas in Investment Report, click here.
Meanwhile, our hypergrowth expert Luke Lango is urging investors to position themselves in AI-related software stocks
Move aside, chip stocks. It’s time for the software stock boom.
That’s Luke’s advice for how to play the summer rally he believes is about to kick in.
Luke’s forecast borrows from the Dot Com boom. In short, during the first wave of Dot Com profits, it was the internet infrastructure stocks that soared. But in the second wave, software stocks that did business on top of that infrastructure took over the market leadership.
Luke sees the same pattern repeating today. We’ve already had explosive returns from chip stocks – most notable, Nvidia. But now it’s time for software to take over.
Here’s Luke with more:
For nearly two years, AI chip stocks have been the market’s biggest winners because they provide the industry’s ‘picks and shovels.’ That is, in order for companies across the globe to develop AI models, they first need chips to build those models on.
It’s the AI Boom’s ‘first derivative,’ if you will – the first wave.
But we think that trend has mostly played out. Companies spent billions on a chip buying spree in 2023 and 2024. So, what will they do now?
They’ll create new AI models and applications – which is exactly why software stocks should boom this summer and into 2025.
Luke suggests we’re going to see hundreds of new AI models and applications as we move into next year. He says that by the end of 2025, we’ll be “drowning in AI software.”
Luke highlights AI software providers C3.ai and Palantir – management at both companies report that demand for AI applications is soaring. C3.ai’s execs used the term “staggering.”
By the way, legendary investor Louis Navellier also is bullish on Palantir.
From Louis and his research staff, last week:
Palantir is wrapping up May with a bang, with its announced win of a $480 million AI contract with the U.S. Department of Defense.
Palantir stock has moved slightly higher on this news, but this contract award could mark the start of another strong run for this AI software play.
You can read the free analysis right here.
Finally, let’s end today with a few well-deserved “congratulations”
In Saturday’s Digest, our fellow Digest-writer and Editor-in-Chief Luis Hernandez highlighted the 130% winner that Louis’ Growth Investor subscribers just took on their Builders FirstSource, Inc. (BLDR) position last week.
I’ll echo Luis’ congratulations to the Growth Investor subscribers. But they’re not the only ones cashing.
Last Thursday, Eric Fry’s Speculator subscribers took partial profits on their HP calls to the tune of 130% in less than one month. This happened after HP’s revenues and earnings both topped analyst estimates, and the company’s PC sales increased for the first time in two years.
By the way, it was only two weeks ago that Speculator subscribers locked in 115% gains on Corning. Eric is truly one of the best in the business.
Meanwhile, about two weeks ago, Luke Lango’s Early Stage Investor subscribers took partial profits on a handful of positions:
- Taiwan Semiconductor (TSM) for ~80% profits
- Arteris (AIP) for ~50% profits
- Arhaus (ARHS) for ~140% profits
- Impinj (PI) for ~425% profits
Luke’s subscribers have been racking up a series of big wins this year as the AI sector has continued jumping.
And a final “congratulations” goes to the traders who follow Jonathan Rose over in Masters in Trading Live. They just closed their strangle trade on Foot Locker for a 30% gain. This trade lasted only three weeks, during which time the S&P traded sideways.
This was an interesting trade. Jonathan’s awareness of what the big money was doing in the options market alerted him to the likelihood of a big move coming with Foot Locker. The issue was “in what direction would that move go?”
Jonathan recommended that his followers cover their bases by initiating two positions: one bullish, one bearish. That way, they’d be covered if Foot Locker popped in either direction, as long as the move had enough volatility.
Fortunately, volatility is what they got. Foot Locker’s price soared, causing the gains on the bullish leg of the trade to net out to a 30% win on the entire position.
Jonathan’s trading approach to earnings and market-moving events is one of the most lucrative we’ve seen. Meanwhile, we continue receiving fantastic feedback about his ability to make complex trading topics simple.
We couldn’t be happier Jonathan has joined our corporate family through Masters in Trading Live . To learn more about joining him and cashing in on upcoming volatility plays, click here.
It’s always nice to put a few bucks in your pocket, especially when the broad market is moving sideways. So, a well-deserved “congratulations” to all.
Coming full circle, if Eric, Thomas, Luke, and Louis are right, the next congratulations might be coming from leading copper and/or AI-software plays. Give them a good look today.
Have a good evening,
Jeff Remsburg
