This remains a choppy market for US Equities in the near term as part of a stellar ongoing intermediate-term uptrend, which has shown no evidence of deterioration despite any of the recent DeepSeek and/or Tariff-related volatility spikes. Despite the positive recovery in Technology lately, the broader market continues to lag, and indices like Equal-weighted S&P 500, DJ Transportation Avg., and Russell 2000 remain well off highs hit last December. However, sentiment regarding tariffs and their possible negative implications for the US Stock market has gotten quite bearish for both the Equity and Bond markets in recent weeks, which I believe is a positive. I suspect that any weakness this week into/post-CPI should create an attractive opportunity into mid-month. Rallies back to new all-time highs will take time, but it’s expected that the next large move should involve both stocks and Treasuries pushing back higher after this minor consolidation has run its course. Intermediate-term trends are bullish, and pullbacks at this point will likely hold at 6000 before pushing up above 6121. Such a move would likely coincide with a move up to 6300.
Monday’s early weakness reversed just as S&P Futures had reached 6014 on Sunday’s pre-market global open and rallied sharply about 70 points to close in on last Friday’s opening price.
Large-Cap Technology dominated performance on Monday, along with Energy, while Financials and REITS proved to be the laggards.
Unfortunately, despite Monday’s progress, technical trends remain mixed, and it’s difficult to put too much stock into Monday’s gains, given the lack of a consolidation range breakout. Until/unless 6021 is exceeded in SPX, there stands a chance for volatility, specifically given tariff fears combined with the important CPI print this coming Wednesday and Chair Powell’s speech.
Last Thursday’s important downside reversal has not properly been overturned by a move back to new weekly highs. While Monday’s gains might seem to be significant to some, the near-term trend remains choppy at best, and prices still look like they might show some downside volatility this week ahead of a bottoming in price.
As discussed, while I expect an eventual upside breakout to this ongoing range, it pays to wait until proven at a time when both US Dollar and US Treasury yields have begun to churn sideways. In plain English, it should be fairly clear in the weeks ahead when Equity indices break out of their consolidation, along with when the US Dollar index and US Treasury yields break down from their own short-term consolidations. As discussed, there could easily be some short-term backing and filling this week, making SPX attractive on weakness.
Key levels for the SPX lie near 6021 for both SPX cash and Futures. Meanwhile, areas of support for SPX lie at 6044.84, then 6020 for the cash index. S&P Futures have support near 6067.
S&P 500 E-mini Futures
Copper breakout should lead to a test of last May’s highs
Last week’s Copper breakout coincided with the start of a very seasonally bullish period for this important base metal. February tends to be the most bullish month of the year for Copper, and generally, February-April has proven to be a positive seasonal stretch performance wise, for this base metal, which is often looked upon as being a leading indicator for the economy (Hence the nickname “Dr. Copper.”)
I am bullish in the short run and expect a further rally to test and possibly exceed prior May peaks by a small margin. However, I don’t suspect that rallies will have too much longevity past the spring months. I’ll discuss some of the cycles I watch for copper later in this report, but for now, this is only a tactical advance. I expect a likely challenge of Last May’s highs, though one which might face headwinds into April/May, which is not dissimilar from last year.
Overall, any pullbacks in the short run in COMEX Copper should make this highly actionable to buy dips for further rallies back up to near $5.25.
Copper Futures
Copper has entered the most bullish seasonal time of the year
As shown below, Copper’s recent gains make sense given the bullish period of seasonality for Copper, which starts in February and normally runs through April.
While the past few days in February have already wildly surpassed the average gain in Copper most years, the average return of the last 15 years shows February along with July, then October-December as being a seasonally positive time.
Given the fact that some of the intermediate-term cycles show the possibility of weakness into 2026, I’m inclined not to put too much stock into this rally for now. However, I do see this rally continuing into March/April timeframe before a possible peak.
Copper Gains
Copper’s Short-term cycles look to trend up into March before beginning to back off
This past week’s breakout looks to be part of a cyclical uptrend that began late last year, and likely still shows gains until this Spring before beginning to back down.
As shown in this short-term cyclical composite since 2016, Copper’s short-term cycle has normally been ruled by the 200-day trading cycle along with the 279-day, which tends to be some of the most accurate for the period of 2016 into 2025.
However, both daily and weekly Copper cycles start to decline in the second half of 2025, and could translate into better early year strength which then could face strong resistance, particularly if prices push up to test last year’s May peaks in the months ahead.
In the short-run, it looks right to favor additional gains for Copper but it’s hard to consider this recent trend something that might extend all year.
Copper Short-Term Cycle
Copper weekly cycle suggests a possible Decline from Summer 2025 into early 2026 before rally up to 2028
When studying weekly Copper cycles, the cycle composite shows that the last four intermediate-term peaks all proved successful.
Furthermore, the composite lows from Fall 2023, September 2019, and January 2009 all roughly coincided with meaningful intermediate-term lows.
The most important weekly cycle seems to center around a similar one for SPX which spans around 180 weeks in length, which seems to point higher from October 2023 into October 2027. However, this weekly cycle does peak out in the 1st Quarter of 2025 and goes lower into January 2026 before turning back higher.
In the short run, the daily cycle composite is positive until March, before the weekly cycle seems to exert its influence. Thereafter, both daily and weekly Copper cycles seem to go down.
Overall, I like being long Copper and Copper-related stocks for the next few months. However, upon evidence of this stalling out and/or starting to turn down, one should favor Gold and/or Silver over Copper.
Copper Cycle
One interesting relationship concerns the ratio chart of COPX (Global X Copper Miners ETF) vs. GDX (VanEck Gold Miners ETF), which shows whether Copper miners or Gold miners are preferable in the current environment.
As can be see, the ratio of COPX to GDX fell to multi-year lows in the last week, which might seem troubling for those who have bought COPX and trying to figure out how to participate in an upward move in Copper by utilizing an ETF instead of buying Copper Futures.
Thus, Copper Miners have been lagging Gold miners substantially in recent weeks, and this relationship doesn’t yet seem to be at a level where it would reverse.
While DeMark indicators have just triggered weekly exhaustion counts using TD Sequential indicator, the TD Combo indicator is not yet present, and both Combo and TD Buy Setup could take another few weeks of relative losses before this is in place.
The bottom line is that while Copper has just begun what appears to be a meaningful breakout in trend, the Copper Miners don’t look to be as attractive as the Gold miners at the present time.
COPX/GDX
