COPPER Weekly Chart Sideways Symmetrical Triangle Breakdown Sideways Channel Copper Enters Bear Market

Over the last year, copper has fallen from almost four down to 3.15, a drop of over -20% thrusting copper into a bear market.  When Dr. Copper is sick, the entire economy is sick. The two main consumers of copper are housing and auto's with the average house requiring about 400 pounds of copper and the average car about 40 pounds of copper. If copper is dropping, these two key sectors are far weaker than anyone realizes. We have watched the sideways symmetrical triangle play out over the last year resulting in a collapse out the bottom of the triangle. Copper has fallen from 3.80 to 3.15, -17%, in only three months. Any other time that copper has taken a tumble like this, the SPX should be over 100 handles lower. Alas, the printing press trumps all, and with the Fed and especially the BOJ weakening the yen, and pumping the stock market higher to create the wealth effect, the central bankers are preventing the economic forces of copper to correct markets.

Price is now at the lower rail of the long-term blue channel so this area may serve as support for a few weeks.  Keystone's 80/20 rule says 8's lead to 2's and 2's lead to 8's, so the failure at 3.20 should lead to 2.80. The copper lows in 2010 were saved by the Fed's QE2 that created the dramatic launch into the 2011 top. The 2011 low was saved with Operation Twist and the ECB's LTRO 1 and 2 easy money programs. The 2012 summer low was saved when Draghi pledged to support the euro by all means necessary, while at the same time Chairman Bernanke promised QE3 Infinity, money printing without end. Copper pulled back again late 2012 when Bernanke announced QE4 Infinity and Beyond which replaced Operation Twist with all out purchases, a much stronger money-pumping method. That provided a spurt, then roll over and collapse in price. Looks like the central bankers are exposed as Emperor's not wearing any clothes (Hans Christian Anderson).

Of more interest is the China property bubble since many real estate loans were written using copper as collateral. With such a dramatic drop in copper price, this behavior may precipitate the popping of China's property bubble. More collateral would be required on that paper.  Also of interest is that WTIC crude oil is showing the same sideways symmetrical triangle pattern and note the big fight at 88 these days, exactly at the lower trend line of the triangle, so oil may go the way of Dr. Copper. In a deflationary environment, copper and oil can move far lower as the globe experiences an extended static period of zero or very little growth. 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.