The iPath Bloomberg Copper Subindex Total Return ETN (NYSEArca: JJC) is one of this year’s best-performing commodities exchange traded products. JJC is higher by almost 8% over the past month and 15.4% year-to-date.
Industrial metals like copper, nickel, iron and steel have all rebounded in recent months as traders bet on improving global economic conditions would bolster demand for the base metals after prices hit multi-year lows.
“Doc Copper created a series of lower highs below line over the past few years. Earlier this year it hit falling resistance again and backed off. Over the past 6-weeks, Copper has witnessed some bullish price action it hasn’t in the past few years, which is breaking above falling highs,” according to ETF Daily News.
While China is often seen as the dominant force behind copper’s price action, Trump’s pledge to bolster U.S. infrastructure is seen as the catalyst for the red metal’s sturdiness this year.
A near-term issue for copper is the ability of the Trump Administration to get its ambitious infrastructure efforts off the ground, something many market observers believe will not happen until next year. Additionally, if that effort does not approach the $1 trillion in expenditures promised by the president on the campaign trail, markets could be disappointed.
“Doc Copper weakness over the past few years seemed to have little impact on the broad market. Will Doc Copper’s strength over the past few months and breaking above multi-year falling resistance, have a positive impact on the broad market and suggest that some economic strength is around the corner? In our humble opinion it is too early to tell,” notes ETF Daily News.
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JJC currently resides almost 12% above its 200-day moving average and 7.7% above its 50-day moving average. The ETN is up almost 35% over the past year.
Similar to index-based exchange traded funds, ETNs also track some sort of index as part of their investment strategy. However, an exchange traded note, like the name implies, is a type of debt note that trades on an exchange. Additionally, the underwriting bank that issues ETN shares may choose to stop share creations.
For more information on Copper ETFs, visit our Copper category.