Blackmont Capital analyst George Topping has identified one potential bullish signal for copper — a decline in non-commercial (or investment) short positions.
As of March 3, there was a net short position of copper contracts on the NYMEX of 24,900. That is down nearly 10% from the end of February, when there was a net short position of 27,300 contracts, or about 680 million pounds of copper. Copper prices also rallied last week as inventories were drawn down.
"We expect the NYMEX short positions to continue to fall as holders become less sure of their positions," Mr. Topping wrote in a note to clients.
"A temporary copper price rally can result if speculators rush en masse to cover their shorts."
He recommended low-risk exposure to copper through Capstone Mining Corp., HudBay Minerals Inc., and Freeport-McMoran Copper & Gold Inc.
