December Comex High Grade Copper futures rose sharply higher on Monday after the FBI closed its investigation against U.S. presidential candidate Hillary Clinton. Copper traders ignored the sharp rise by the U.S. Dollar and instead focused on the possibility of increased demand for industrial metals if Clinton wins the election on Tuesday, November 8.
Clinton is the “status quo” candidate so if she wins it should be business as usual in the financial markets. She currently leads in the polls and barring any last minute surprises, should win. Although there is still risk going into the election, copper traders seem to be betting early that she’ll win.
Also supporting copper prices is the recent strong economic data from China. With the Chinese economy improving, traders expect to see increased demand for industrial metals.
The main trend is up according to the daily swing chart. Momentum is clearly to the upside after the market cleared several former tops earlier. Based on the current upside momentum, the next target is the March 18 top at $2.3290.
After today’s early rally, the rest of the day will be all about momentum and whether investors will continue to buy strength even when the market is trading at an eight month high.
The first upside target is the steep uptrending angle at $2.3245. Crossing to the strong side of this angle will put the market in a bullish position. This is followed by the main top at $2.3290. This is another trigger point for an acceleration to the upside.
The market is in the window of time to post a potentially bearish closing price reversal top. This will occur on a close under $2.2650. If long, I’d get a little nervous if the copper market started to break below this level on an intraday basis.