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Copper, Copper … is this the topper?

 

Copper is forming a 30-month descending triangle

 

The monthly and weekly graphs below display a possible descending triangle in Copper dating back to the late 2011 low or mid 2011 high, depending upon how the upper boundary is drawn. A decisive close below $3.00 would complete this pattern and generate a target as low as $2.04.

An immediate completion of this descending triangle top raises an important question about trading psychology. Should Copper close decisively below $3.00 this week (let’s say we get a $2.95 close), how difficult would it be to short Copper following a straight-line 25 cent decline? If you are like me, I would say that shorting a 25-cent decline would be a difficult trade to execute. Yet, often times the most difficult trades to enter become the most profitable trades.

 

3.10_HG_monthly 3.10_HG_weekly

$HG_F, $JJC

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Hey Silver bulls, it’s time to cut the B.S. and start buying

 

Silver bulls are all talk and no action

I have traded futures markets since 1975. For those of you who failed basic math, this means I have traded for almost 40 years. I have seen every conceivable market situation.

Every market has its perpetual bulls and perpetual bears. But of all markets, Silver attracts the most fanatical bulls of all. When Silver bulls are right (BTW, that is not very often — Silver has experienced significant price gains in only five years since 1972) it is because they are brilliant. When Silver bulls are wrong (nearly 85% of the years since 1971), it is either because they have been victimized (by the exchanges mostly) or because most other market participants “just don’t get it.”

So, Silver bulls, here is your chance to scoop up your worshipped metal at an historical bargain price. The charts you publish on your blogs verify this fact. Relative to the vast ever-increasing glut of fiat money printed by central banks, inflation-adjusted pricing or the standard set by some robed Spanish king 500-plus years ago, your metal has never been cheaper.

So, it is time for you to put your money where you mouth is. As a trader I do this every day. I am presently short Gold and Copper. If I am wrong on these trades I will count than as loses, not as part of a grand conspiracy against me. Losing trades are called losses. When I lose on a trade, I am a loser, not a victim.

I have put my money where my mouth is to be short precious metals. If I am wrong — so be it, I am wrong on more than 60% of the trades I do. If I am right, also, so be it. A trade is a trade is a trade is a trade. Silver is something to trade, not an idol to worship. So, it is time to put up or shut up!

A review of the metals charts is in order.

The daily Silver chart has penetrated an extremely important “line in the sand” at 2615. The longer term chart would indicate Silver is headed toward a retest of the 2008 high at 2150+. But, here is the good news, Silver bulls — the market is probably much closer to the lows than to the highs. After all, Silver is getting closer to zero than its 2011 high of $49.

4.15_SI_daily

4.15_SI_quarterly

Actually, the charts in Gold looks more bearish to me than do the Silver charts. Now, this is interesting because I am on record as being a super-cycle bull on Gold. Wait just a minute! I am a long-term bull on Gold, yet I am short! To a Silver bull, this is would be sacrilege. To a trader, this is a trade. That is the major difference between traders and Silver bulls. To traders, markets are just a tool. To Silver bulls, Silver is an idol to worship.

The massive decline on Friday completed a massive top on the daily, weekly and monthly Gold graphs. The charts can be defined by a single word — UGLY! Should Gold rally, short sales in the 1520 to 1540 zone would be highly appropriate. There are various downside targets in Gold depending upon whether one uses a closing price chart, a candle chart or a bar chart. The lowest target I have is around 1131. Do I think Gold can go that low? Not really. But a decline to the low 1300s is very possible. In fact, two days like last Friday and we will be there.

4.15_GC_monthly

4.12_Gold_closing weekly

4.15_GC_weekly

The longer-term chart in Platinum is also negative. The decline on Friday would indicate that the market is headed toward the lower end of its broad trading range at 1375 or so.

4.15_PL_weekly

The weekly Copper chart also remains quite bearish, although as I pointed out this past week, the CFTC COT data are extremely constructive. Yet, price is always king, and the burden of proof is belongs to the bulls.

4.9_HG_daily

Finally, let me point out another fascinating chart development — in Crude Oil. The Crude Oil weekly chart displays a symmetrical triangle within a larger symmetrical triangle, as shown below.

4.15_CL_weekly

A case can be made that the shorter-term triangle was completed this past week, along with a H&S top pattern. However, this breakout is not yet convincing. The chart indicates a possible target of 77.35. Conventional wisdom holds that there is only one way energy prices can go — up. This is why the 77.35 target is probably correct.

4.15_CL_daily

 $SI_F, $GC_F, $PL_F, $GLD, $SLV, $HG_F, $JJC, $CL_F, $OIL

 

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Trading futures- and forex-related ETFs is for fools

It is idiotic to trade an ETF/ETN when the underlying futures contract can be traded

If you cannot see the attached PDF, click here.

[scribd id=115345564 key=key-wftypqzvufr2me01ry4 mode=scroll]

 

#ETFs, $GLD, $SLV, $UNG, $SPY, $JJC, $OIL, $IAU, $FXE, $UND

 

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Copper completing significant bottom

 

Copper has a history with the compound fulcrum pattern

All chartists know about the H&S pattern, triangles, rectangles, trendlines, wedges, etc. But, what about the compound fulcrum? This is a rare pattern originally used with point and figure chartists.

Copper has a history with this pattern. In the 1970s Copper formed the pattern, as shown by the P&F chart I was keeping at the time (yes, I used to keep charts by hand). Copper eventually went to $1.40 from this pattern.

The daily Copper chart is completing an 15-week  compound fulcrum, pending a decisive close above the early July high.

 

Markets: HG_F, $JJC

 

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Copper, stopper, build a topper?

 

Some charting evidence of a pending top exists in Copper.

This evidence includes the likely build up of a large volume of sell stops just below the market. The weekly chart shows that the rally from the October 2011 low has simply retested the double top completed last September. My macro friends tell me that demand for Copper in China is on the wane — and China has been the world’s biggest driver of Copper prices in recent years.

Also note on the weekly chart the possibility of a 29-month H&S top pattern. We are a long way from having this pattern come into play, but if prices start down keep it in the back of your mind. But, remember, I am NOT a big fan of up-slanted necklines on H&S tops.

The daily chart displays a clearly defined 2-month symmetrical triangle. Because this triangle has five contact points it can serve as a top pattern — pending a close below the existing March low. There are no doubt stops gallore below the February and March lows. Markets — almost magically — are drawn to important chart points. These stops could result in follow through, which could possibly put a top in the market for 2012. Thus…Copper, stopper, build a topper.

Even if a downside penetration is not made, this pattern could still prove to be bearish. Over the years I have noticed that the upside completion of a 6-point triangle with three distinct highs and three distinct lows is the last gasp of a bull trend.  This is NOT true for four-point triangles, which tend to thrust prices considerably higher.

Thus, should prices move out of the top of this pattern and suddenly reverse back into the pattern it would be a significant sell signal. The failure of patterns to result in an expected move often times has great technical significance. The critics of classical charting principles fail to grasp this nuanced concept.

Markets: $HG_F, $JJC

 

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Three very sexy price charts

 

Can a high/low/close bar chart actually be described as “sexy?” Well, if it can, I have three markets that meet the definition.

 

 

 

 

 

Copper ($HG_F)

I am sorry, but I got caught sleeping at the switch. I am not in this market. This is what happens when I do not have an order in place. A major top has been completed on the weekly chart as shown below. There is plenty of empty space below this market. This market should work its way toward the 2010 low at 275.

Notice on the daily chart that the top was completed with a breakaway gap. This is a very powerful signal.

 

Soybean Oil ($ZL_F)

The Bean Oil weekly weekly chart is possibly forming a classic descending triangle. This pattern is far from complete, but a chart to keep your eye on.

 

Nasdaq ($QQQ)

I continue to believe the stock market is experiencing a bear market rally. The strongest broad index has been the Nasdaq, primarily lead by Apple and few other choice names. The daily chart exhibits a possible rising wedge. Under this interpretation, the market put in a reversal day today, having tested the upper boundary of the wedge.

I would not be surprised to see some additional testing of upper resistance before the market finally rolls over. I did not do any shorting today. I remain short a one-third position in ES_F from early August. I want to extend my short position, but a one-day reversal is a sign of a pending top, not a top itself.

Markets: $QQQ, $NQ_F, HG_F, $ZL_F, $JJC

 

Copper bear market continues to unfold

Silver is also setting up for a sell signal.

I last commented on Copper in a June 1 post titled, “Major chart top in Copper – Target is 360.” The bear flag identified in that post appears poised for completion. A move and close below the June 2 low of 403.25 (July contract) would put the finishing touches on the red metal. The chart below is a closing price chart — the close-only flag would be completed today by a close below 408. Such a close would have initial targets of the May 12 low at 385.35 and the November low at 360 to 365. The diamond top projects to 363.

In my opinion, if Copper has really rolled over (if the bull trend from the December 2008 low has run its course), the most likely target for a bear thrust on the weekly chart is the 2010 low at around 276. The bull trendline on the weekly log chart has been penetrated. Keep in mind that the violation of a trendline is not a signal in my trading, but simply indicates a change in a market’s behavior.

Selling Copper on weakness has not been a profitable manuever. If the flag is confirmed, Copper should be shorted on 700 to 800 point rallies.

A postnote on Silver. This market is setup to signal a H&S failure. I will short Silver if the June 3 low at 3506 is penetrated, risking about 50 basis points.

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Major chart top in Copper — target is 350

Bear flag retest of diamond top is turning down

Two chart observations are worthy of note on the nearby daily futures graph. First, the decline in early May completed a 4+ month diamond top. This is a major reversal pattern. Second, the rally from the May 12 low is tracing out a bear flag. The decline today may indicate that the May 31 high will be the high of the flag.

The weekly chart of JJC, the Copper ETF, shows that the dominant trendline from the late 2008 bottom has been violated. Keep in mind, the violation of a bull trendline is not, in and of itself, a bearish signal. It does recognize that a trend change is in the process of developing.

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