Lumber futures fall below its 200 day moving average as the decline continues

Technical Analysis

First break below the 200 day moving average since October 2020

The fall in lumber futures has continued today with the contract price falling below its 200 day moving average for the first time since October 2020. The moving average currently comes in at $862. The price is trading around $842. The low price reached $829.20.

The next downside target on the daily chart comes in near a swing area (see green numbered circles) around $818.  Below that is a another swing low at $776.  The end of 2020 closing level was at $717. Going negative on the year would be a big relief for homebuilders who have struggled with the high cost of materials including lumber.  The high for the year reached $1733.  Since then, the price has declined by some 51% over the last 28 trading days.  The bubble is bursting.

Having said that, the traditional price has been more between say $200 and $500.  So at levels greater than $800, there is room to go until the price was back toward more traditional prices. Nevertheless the heat is much lower that was 28 trading days ago, and that is a relief to homebuilders (and could also slow the price increases for housing).

Looking at copper futures, the price is lower as well today and moves closer to its 100 day moving average of $4.20. A move below that moving average would be the first break since June 2020. Earlier this week, the price move below its 50 day moving average (white MA line) at $4.42.  Although lower, the price of copper still remains well above its 2020 closing level of $3.52.

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