Sunday, October 11, 2015

GLNCY Glencore Daily Chart Fibonacci Retracements

Coal, iron ore and mineral mining and commodity giant Glencore was flushed down the toilet after the May top in the markets. GLNCY is bludgeoned from nearly 10 to 2 a -80% crash. The blue lines show the Fibonacci retracements from the top in May to the bottom two weeks ago. The purple lines show the Fibonacci retracements based on the drop from the July high down to the low two weeks ago. It is interesting how the 38.2% Fib of the wider range lines up exactly with the 50% Fib on the shorter range. Price has not yet kissed the 38.2% Fib at 4.19 based on the crash from 7.63 to 2.06.

The 50-day is coming down to greet the Fib at 4.19 so this may serve as a magnet for price. The indicators are long and strong except for the money flow that wants to see price retreat for a day or so to catch its breath before making a higher high. The recovery is very impressive and occurred at the height of panic and fear as many thought Glencore would crumble into dust. Large holders of Glencore stock jumped from windows after they sold all their shares no longer able to cope with the commodity collapse. Fortunately the windows were on the ground floor.

Price will typically reverse to the upside at the height of negativity, when the 'blood is flowing in the streets' as the old Wall Street adage says. Glencore may establish  more of a sideways range going forward.

Glencore is important since it created fear in credit markets. There is ongoing worry about the bond exposure to energy, oil, gas, mining and commodity stocks. High yield bond instruments are exposed to between 10% and 25% of debt in these sectors and if the stocks begin falling down the rabbit hole a much larger financial contagion will result. With Glencore making the solid rocket shot recovery over the last nine days, long traders are drinking Fed and ECB wine and celebrating the ongoing happy times that will never end since central bankers will print money forever. 

Global disinflation and deflation remains an ongoing concern and the big drop in Glencore reinforces the deflationary theme. 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.

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