Copper prices have been rising for several months and investors have been flocking to all things related to the industrial metal. There are several possible reasons for the rise in price, including dollar weakness, fears of inflation and even hopes of a strengthening economy. There are currently no ETFs physically backed by the metal, but there are a couple that track miners. Global X Copper Miners ETF (NYSE:COPX) and iPath DJ-UBS Copper (NYSE:JJC) are both trading near all-time highs and offer investors an alternative to trading an individual stock in this group.

IN PICTURES:


However, looking to some of the individual names, there are many that have been showing incredible strength and could continue to rise with the metal. Freeport-McMoRan Copper & Gold, (NYSE:
FCX) for instance, has doubled in just the past five months. Over the past two years, FCX has actually rallied approximately 100 points from its December 2008 low of $15.70. Despite the incredible run in FCX, the stock is showing few signs of weakness. It recently cleared a small consolidation, and is trading near all-time highs. The $110 level should be watched as the most recent breakout level for support on any weakness. Looking above, traders should monitor just above $127 as a possible level of significant resistance. This level coincides with all-time highs, and is where FCX topped out in the last bull market.

Source: StockCharts.com

Southern Copper Corporation (NYSE:SCCO ) is a copper stock already testing all-time highs. SCCO has also experienced a sharp rally from its summer lows and is currently in a consolidation between the $40 and $47.50 level. It already cleared a smaller channel it was following within the base and is now attempting to clear its base. SCCO already poked above the base; traders should watch to see if SCCO can hold above $47.50 in the near term.

Source: StockCharts.com

Encore Wire Corporation (Nasdaq:WIRE) is a copper stock that is in the midst of a breakout. WIRE was late to the breakout party earlier this fall, as it continued to consolidate while its peers were rallying. However, it finally cleared stiff resistance near $22 and has followed through nicely. WIRE may be a little extended for traders looking to initiate a position, but it should be monitored as a possible candidate for buying on a pullback. (For more, see The Anatomy Of Trading Breakouts.)

Source: StockCharts.com

Lihua International (Nasdaq:LIWA) is a Chinese copper stock showing an interesting pattern. LIWA cleared an important level near $9.50 in October and rallied into the $13 level in a few weeks. It has since been trading in a consolidation and is now attempting to break out of this pattern. Traders should monitor the $13 level, as LIWA has struggled with clearing this level in the past; a move above it would take LIWA to all-time highs.

Source: StockCharts.com

Bottom Line
While the trend in copper stocks is well underway, they remain worth watching for traders, as copper may have room for even higher prices. If it continues on its trend, the miners should be the primary beneficiaries. Traders shouldn't chase stocks that are extended, but these stocks are definitely worth watching for possible buying opportunities. (For more, see Taking A Shine To Copper.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Joey Fundora did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Economics

    India: Why it Might Pay to Be Bullish Right Now

    Many investors are bullish on India for all the right reasons. Does it present an investing opportunity?
  2. Investing Basics

    Building My Portfolio with BlackRock ETFs and Mutual Funds (ITOT, IXUS)

    Find out how to construct the ideal investment portfolio utilizing BlackRock's tools, resources and its popular low-cost exchange-traded funds (ETFs).
  3. Investing

    3 Things About International Investing and Currency

    As world monetary policy continues to diverge rocking bottom on interest rates while the Fed raises them, expect currencies to continue their bumpy ride.
  4. Chart Advisor

    These 3 ETFs Suggest Commodities Are Headed Lower (COMT,CCX,DBC)

    The charts of these three exchange traded funds suggest that commodities are stuck in a downtrend and it doesn't look like it will reverse any time soon.
  5. Trading Strategies

    4 ETFs To Trade the Russian Ruble (RSX, ERUS)

    Discover which exchange-traded funds (ETFs) provide investors with the greatest exposure to the Russian ruble and learn about the risks that come with each.
  6. Chart Advisor

    3 Charts That Suggest Now Is The Time To Invest In Real Estate (VNQ, SPG,PSA)

    Real estate assets have some of the strongest uptrends around. We'll take a look at three candidates poised for a move higher.
  7. Chart Advisor

    Stocks With More Upside Due to Bear Traps (TAP, SPY)

    A bear trap is a pattern that typically leads to at least a short-term rise in prices. Here are stocks exhibiting the pattern.
  8. Products and Investments

    Are Dividend Stocks a Good Substitute for Bonds?

    Are dividend paying stocks a good substitute for bonds in a low interest rate environment?
  9. Mutual Funds & ETFs

    When Is the Right Time to Change From Mutual Funds to ETFs

    Find out how to determine when it's the right time for you to switch from mutual funds to ETFs, including the benefits of ETFs and who they are best for.
  10. Investing Basics

    An Introduction To Structured Products

    Structured products take a traditional security and replace its usual payment features with a non-traditional payoff.
RELATED FAQS
  1. What is Fibonacci retracement, and where do the ratios that are used come from?

    Fibonacci retracement is a very popular tool among technical traders and is based on the key numbers identified by mathematician ... Read Full Answer >>
  2. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  3. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  4. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  5. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  6. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center