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Shares in Glencore (LSE:GLEN) seem to have developed a consistent downward momentum at the moment, making them a possible candidate for shorting with CFDs, financial spread bets, options or other instruments. The shares have seemingly peaked at 310.55 in late February and have been heading downwards since then.

Share price action has not been overly volatile, but selling has been consistent, and our analysis of short term institutional investor sentiment demonstrates this is largely negative too. We are not talking about a big sell off in Glencore stock, but more often than not, it closes the day down at the moment.

Technical analysts were calling a new high of 356 about a month ago, but the price is well off that right now. The stock seems to have lost a lot of the bullish momentum that had been driving it previously.

Hand over of power at Glencore may be a downward driver

The company is heading into a bit of an inter-regnum period, with CEO Ivan Glasenberg due to step down at the end of June. Glasenberg is meant to be seeking re-election to the board on 29 April. Gary Nagle will be taking over from then, and Tony Hayward is also planning to step down after his final term as chairman. So it is all change at Glencore: it could be good, it could be bad, but in the meantime the market is quietly trimming its exposure to the company while investors wait for the new captain to climb aboard.

The key price to also pay attention to here is copper. We are still bullish on the prospects for copper and we have seen copper futures continue to rise. Some analysts see Glencore’s exposure to copper as a big positive factor, and last month JP Morgan said it was upgrading Glencore to overweight. There is also nickel and aluminium to think about, with prices in these metals also hitting multi-year highs.

The market is also broadly positive about the global economic recovery story in 2021, and the associated demand for base metals. Traders need to be aware of this, as once the market buys into the commodities boom story, Glencore will reverse. But it is just looking a bit rudderless at the moment.

Bigger investors are trimming their exposure to Glencore

Right now big investors are selling Glencore stock and are not feeling particularly positive about it. These are influential players in the stock like hedge funds for example. We don’t imagine Glencore price decline is going to turn into a longer term trend, but the pattern is there, and it is an established one which has yet to break trend. Investors are bullish on Glencore in the longer term, but short term they don’t like the stock. And we are seeing that amply illustrated in the share price action.

We would anticipate Glencore will move to the upside eventually – drivers could be the next AGM, further positive price moves around its core commodities or eventually the arrival of Nagle. Investors should not under-estimate the depressing effect an inter-regnum can have on a share price, as senior management sits on its hands and awaits a new broom.


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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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