Copper futures spiked nearly 4 percent in 35 minutes on Tuesday, before retreating somewhat. The move was sufficiently powerful that it caused CME Group to automatically trigger a 10-second pause in trading. According to traders and metal experts, fundamental and technical explanations help to explain the surge.
"We're hearing from our institutional customers that on the European close, somebody's booking profits on a big trade. So what we saw is a spike that hit stops, and really, hedge funds have been short copper, and I think you hit some stops and the market rallies," Rich Ilczysyzn said on CNBC's "Futures Now."
The move automatically triggered what the CME refers to as a "stop spike event," according to spokesman Damon Leavell, whose company runs the exchange on which copper futures are traded. At noon EDT, trading in the copper futures market was automatically paused for 10 seconds.