The Copper Top
Wednesday, February 3, 2010 at 04:52PM This action in Copper prices is starting to spook me a little.
As you may or may not know, we've been using Copper as a leading indicator to stock prices, and for just reasons. Copper bottomed well ahead of the March lows, and signaled through every little pullback in the last year that the trend would continue. Take a closer look at where that relationship stands as of now.
As of late, Copper prices have taken roughly a 15% haircut, and look heavy as hell. This has also dealt a heavy blow to stocks like Freeport McMoran and Southern Copper, which are both down between 22-25%.
I speak of this only as a market barometer, which is also a good indicator of the global growth story. As you can see, right now that story is hurting.
Equities have been trading well the last few days, but there has been a reluctance to break the 1105 level in the S&P. The McClellan has been able to reset from its extreme oversold levels, but I haven't bought any calls or any stock in over two days. Nothing looks good.
If this level holds, I am going to continue to add bearish positions, looking for more downside in equities.
That is, of course, unless the market can find some leadership. Sustainable leadership. Also, I need to see Copper stabilize. Otherwise, I am just sitting here, waiting.
I just finished giving an hour and a half presentation tonight on the topic of Market Breadth Signals for Swing Trading. The chart of the night definitely goes to the S&P and McClellan Summation Index comparison, which has nailed every major turning point through the beautiful divergent signals it provides. Another reason to be careful here.
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Reader Comments (22)
Jeff,
Great info., thanks for all your insight.Quick question, do you always use 1 year charts for your trendlines(channel studies)? Looking forward to your "Open house"....
Mike
Spot on! So much that tonight you are a major global visionary dead on with this one! With that, there will be noise tomorrow with Cisco’s earnings. My advice, there are pro’s (the big elephant funds that make us little people hurt at the snap of a finger – so, I ask you, ‘have you had experience stopping a stampede lately?). For me, sleep tight, my cash is there and safe tonight. Where is yours?
This is a technical trading site – and for me, I really try and ignore all the political noise to turn me into a fundamental trader. But even a race car driver understands the caution with weather changes, so here is my fundamental concern: “our Nations debt and who will get the tax baton.” All said, with this year’s great earnings season, something is happening behind the scenes. So, why not respect the checkered caution flag flying on the race track? Now, it is lights out!
I lied; I did not go to bed: I kept looking at charts because I was just curious to what I was missing. Then it dawned on me, I have no alerts (set today) on the DIA, SPY, QQQQ or IWM. So, I set some and the easiest to explain is the SPY, I went out 5 yrs, daily line chart. With that, I have roughly a $108.85 support line – so, I put in a TOS alert at $108.50 for shorting. I have no plan, as of tonight cuz, I will look at the market in the A.M. and refine these thoughts. Now, good night.
This fundamental story on copper would help confirm the OA.........not that he needs confirmation!
http://www.oilprice.com/article-the-coming-copper-crisis-and-price-forecasting-is-there-a-better-way.html
Jeff, I wasn't able to attend the TA meeting last night, however, I will be watching the recorded session and be mesmerized!
Sincerely.
Thanks for the great comments Jeff. I'm on your site multiple times daily now and its worth every penny...Lets see what happens next!
Jrl774
CAB everyone that has cash is at Cabelas looking for elephants guns. But, once I pick my favorite, I think I will sit back and figure out the directions of the elephants are headed. Time to go shopping!
UHAL - everyone is packed and headed to a new place of opportunity - at least for those that looked and listened - you are making money.
TM - so beaten down that this car maker is not going to let GM (government motors & the Washington 'union' minded rats) run their life - look out their batteries are charged. Just don't let the 'power' of the Washington folks play a dirty trick and beat it down one last time.
2010 or is this 2009; the charts look the same. The $TRAN broke support, the $RUT, FXE, UDN, UUP --- the bears have the elephants running fast - it's a stampede. I love it!
BVN - I have a play at the $30, my alerts surround this one for some direction.
GS - come back to the $150, then we will decide your direction. If I sound giddy, I wanted this move. I am not much of a sideways trader. So, clean out the pipes to get back to some good trading. This is a blessin'
I just can't tell - I watching the hourly on the SPY. On 1/29, we hit bottom and bounced on the 2/1 - so, I am on the sidelilne, in a wait mode.
FXE - below the 50% FIB (my Fibs are drawn off line charts) but is this the start of a morning star? PLus, if you go back to last March, can we call this a support level? As we all know, when the FXE goes up, normally, the market goes up.
MA - dipped my toe in for some Feb OTM calls. Out by this day or soon. Don't like the option decay to hold to long.
Tiny ascending triangle in F. Good entry point at $11 and $13/13.50 short term price target. Although, last attempt to hit triangle top failed so maybe it breaks down. Screw it though - I'm long here!
Also, gravestone doji in GS yesterday told me to go short. I love myself for listening to.. myself. Cash out now or let it keep going down through 150? Hmm.
Also, I was short ANF and M and today's earnings screwed me. Anyone think they're going back down or is it time to cut my losses?
Dollar is up, stocks are down, gold is getting crushed, all is right in the world again.
Bogus - just got home - meetings all afternoon - 'bogus' where is all the sell off volume - OR - is this just like last year? the beginning of the big one - all I can say is 'cowards' - if you really think this is the big second wave down - then get to work and dump your stocks - do it! I am ready for you, so make my day 'ya big bad bears'!
ONE WEEK - what a difference! Go back and read this past week – ‘right here at this blog’. It goes to show you that you have to be your own trader (study from others but stand on your own). I have learned that there are some great trades (by others on many sites). BUT, beauty (the picture or charts) belongs to the time you send the trade to the desk to the time you exit to cash. And, then there is cash on the side ready to go to work! It is in your hands!!!!
What do you guys think of C? To me it looks like its getting ready to fall some more, but maybe this is just basing pattern? There seems to be support around 3.10, but it also just made a lower high. I'm sure there is real good support at 0 where the stock belongs though.