JJC Copper Weekly and Daily Charts Sideways Triangle

Copper is the most important thing to watch tomorrow morning. It is more important to watch the JJC 43.65 level rather than the broad indexes since 43.65 tells you who wins moving forward, bulls or bears. JJC starts at 43.39, 26 cents under, in the bear camp (as measured by Keystone's algorithm).  Copper is the only major sector that has not cooperated with the market rally, and Dr. Copper is a leader not a follower.  Therefore, the markets are in quandry, wondering if the rally is for real and sustainable, or, if it is a short-lived event, ready to roll over into the abyss. JJC 43.65 will tell you the answer.

On the weekly chart, the price is moving across a sideways triangle pattern for many months. Note how the bears have been unable to rupture the lower trend line since May. Obviously, if the lower trend line gives way and price drops under 43 and heads lower, the broad markets are in a heap of trouble. Last week, JJC bounced off the lower trend line once again keeping the bulls and bears guessing. The indicators and price action has a sideways nature to it so copper is playing its cards close to the chest. The 200-week MA is stone-cold flat which also shows no preference to bulls or bears.  When the QE stimulus occurs in the coming weeks and months, copper will bounce and probably tag the upper trend line at 45-46 but the question is, does price fail first, say down to 40 to initiate the Bernanke and Draghi money pumping, or, do markets simply keep running higher to the 46 print since all traders now are 100% sure that markets will be forevers supported by central bankers?  This week we will know the answer. Note how the summer 2010 collapse in copper prompted Bernanke to announce QE2, at Jackson Hole, which is only ten trading days away this year, and also the late summer, early Fall collapse last year that prompted the Operation Twist and ECB's LTRO 1 and 2 that saved the day and created the strong market rally from December into this year. Price keeps teasing 42 in recent weeks but is now supported by the Bernanke and Draghi put.  Traders will only trade off promises so long, the central bankers must deliver the goods in the coming days.

On the daily chart, the black lines show a close up version of the weekly chart triangle pattern. The blue sideways symmetrical triangle is now in play and the 43.39 print on Friday tagged the upper rail so watch tomorrow to see if price is spanked down to the 42.50-ish again.  The market bulls want to see JJC break out of the blue triangle, up thru 43.40, then up thru the neon green line at 43.65, and the upside rally will continue in full force, the wine flowing like water.  Conversely, the bears need to spank price down keeping it under 43.40. If the bulls run up thru, then the bears have a last line of defense at 43.65. Of course, if JJC receives the spank down from the blue triangle and then drops thru 42.50 and lower, the broad markets will roll over. In general, the daily chart favors sideways movement going forward as well. China is a wild card and as evidenced by Wen's comments last week, if there is the slightest hint of China stimulus coming, copper will shoot higher. Convesely, if the China stimulus remains on a milk carton (no news from China concerning stimulus plans), then copper will leak lower.  JJC 43.65 is for all the marbles, it tells you who wins moving forward. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.