Saturday, March 8, 2014

COPPER Weekly Chart Descending Triangles

Doctor Copper is in sick bay but no one pays attention. Copper is a key indicator since it provides a direct measure of the housing and auto industries. The average car contains about 50 pounds of copper and average house about 400 pounds of copper. A strong move higher with copper indicates a strong robust economy where the housing and automobile sectors are running on all cylinders which will create jobs and an all around successful path ahead. Weak copper indicates a sick stagnant economy with housing and automobile sectors slowing down. Weak copper creates a deflationary outcome. In recent years, composite materials and aluminum have been taking a small amount of market share from the doctor but copper will always rule the roost.

The bullish euphoria is rampant in markets with traders now saying SPX 1900 and higher is guaranteed; maybe next week. Copper says otherwise. Copper collapsed -4.3% in the Friday, 3/7/14, session, and is down -3.3% this week overall. The descending triangle patterns are extremely ominous. Considering the serious juncture that copper now experiences, it is amazing that traders ignore this key 'other yellow metal'.

The red triangle has vertical sides of about 1.00 and 1.25 with a base line at 3.25 so the downside targets are 2.25 and 2.00, if the 3.25 fails. It failed. The blue triangle has vertical sides of about 1.50 and 1.75 with a base line at 3.00 so the downside targets are 1.75 and 1.50 if the 3.00 level fails. This is intense. If copper drops under 2 in the coming months the world will be mired in deflation like the Great Depression, exactly the opposite of what 95% and more traders and analysts now expect. There is near universal agreement currently that Treasury yields will continue higher and inflation will accelerate. The slight up in yields this past week with the 10-year yield spiking to 2.82% immediately had many proclaiming 3% and higher on the doorstep. Imagine the surprised looks that will appear on future faces if copper fails.

This battle at 3.00-3.25 is very important. Market bulls must send copper higher immediately. Economic trouble may cascade to the forefront very quickly if copper loses the 3.00 level. The indicators have been content with moving sideways and not providing the nod to either side but this has gone on long enough and a decision will need to be made. The importance of the month of March is becoming more and more apparent each day. Watch copper. 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.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.