Pullback in Base Metals Suggests It Is Time to Buy

During times of heightened volatility, it is a natural reaction of most investors to turn to hard assets such as precious metals and base metals. That has been the case since the North Korean missile tests earlier this month. Much has been written over the past several weeks about rising gold and silver prices, but an interesting trend we will investigate in this article is that attention has turned away from industrial metals such as copper, aluminum and zinc. The recent retracement in the prices of key funds related to base metals suggests that now could be the time to buy. (For related reading, check out: Breakouts in Base Metals Suggest It Is Time to Buy,)

PowerShares DB Base Metals Fund

Investors who bought into base metals at any point over the past couple of years have been handsomely rewarded with one of the strongest uptrends found anywhere in the public markets. Taking a look at the chart of DBB, you can see that the combined support of the upward-sloping trendline and the 200-day moving average (red line) have consistently acted as guides for the placement of buy and stop orders. The recent pullback has sent the price of the fund toward another key level of support, the 50-day moving average, which is a level that bullish traders could use as a signal for timing their entry. Most of the bulls will also likely look to place their stop-losses below $16.25. (For more, check out: 4 ETFs for Trading the Surge in Commodities.)

A retracement toward key levels of support suggests that base metal prices could head higher in the months ahead. …read more

Read more here: Pullback in Base Metals Suggests It Is Time to Buy

Category: DBB, JJC, JJU

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