Buy The Rumor, Sell The News

We couldn’t have had a clearer example of this than last week’s copper price action (and potentially what happened in the crypto space over the weekend...but that's for another time).

🔹 Just moments after 𝗧𝗿𝘂𝗺𝗽 𝗮𝗻𝗻𝗼𝘂𝗻𝗰𝗲𝗱 𝗮 𝗦𝗲𝗰𝘁𝗶𝗼𝗻 𝟮𝟯𝟮 𝗶𝗻𝘃𝗲𝘀𝘁𝗶𝗴𝗮𝘁𝗶𝗼𝗻 into copper imports, the CME copper price spiked, closing the day up 𝟯% and dragging the CME premium over LME copper higher.

🔹 Within 𝟮𝟰 𝗵𝗼𝘂𝗿𝘀, the outright price, CME/LME arbitrage, and spreads eased as the initial panic subsided. Market logic returned as traders realized the US has 𝟮𝟳𝟬 𝗱𝗮𝘆𝘀 𝘁𝗼 𝗽𝘂𝗯𝗹𝗶𝘀𝗵 𝘁𝗵𝗲 𝗿𝗲𝗽𝗼𝗿𝘁 and another 𝟵𝟬 𝗱𝗮𝘆𝘀 𝗳𝗼𝗿 𝗽𝗿𝗲𝘀𝗶𝗱𝗲𝗻𝘁𝗶𝗮𝗹 𝗮𝗰𝘁𝗶𝗼𝗻. This led to profit-taking and outright selling, pulling prices back within recent ranges.

This pattern is common in commodities trading. Markets overreact to headlines before the full implications are understood, leading to extreme price moves—until calmer heads prevail.

💡 Key takeaway:
Whipsaw price action like this can stretch margins and stop out even well-placed trades if not carefully managed. 𝗔𝗿𝗲 𝘆𝗼𝘂𝗿 𝗿𝗶𝘀𝗸 𝗰𝗼𝗻𝘁𝗿𝗼𝗹𝘀 𝗽𝗿𝗲𝗽𝗮𝗿𝗲𝗱 𝗳𝗼𝗿 𝗺𝗮𝗿𝗸𝗲𝘁 𝘀𝘄𝗶𝗻𝗴𝘀 𝗹𝗶𝗸𝗲 𝘁𝗵𝗲𝘀𝗲?