Copper Positioning is Very Extended But It's Probably Not a Top

A number of market observers have voiced concern about heavily crowded speculative positioning in copper, and bears are coming out of the woodwork. Normally I would be inclined to share these concerns, especially since I am negative in the short term on US equities and credit as I laid out earlier this week in US Soft Patch. So why on earth am I not cutting out of copper when it holds a PhD in economic growth? While I always have doubts, some recent developments are leading me to seriously consider pressing my longs despite every bone in my body screaming that Positioning Bros and Soft Patch Bros are going to publicly have their laughs at me for even suggesting this.

For recent subscribers, I would encourage you to read Copper is Ready for Primetime from two months ago when copper just started to break out through $4/lb.

I’ll start with a fundamental update, and then some fascinating recent developments that oddly nobody seems to be catching onto.