COPPER Weekly Chart; Overbot; Rising Wedge; Negative Divergence

For decades, the biggest users of copper were housing (plumbing) and automobiles (electrical motors and wiring). When Doctor Copper was sick, the economy and markets would catch pneumonia. An ole Wall Street adage is "every boom has a copper roof" or "a solid market is built on a copper roof." There are many variations. This has not changed. King Copper always rules the roost and in the present day, copper is serving as a proxy for the build-out of the artificial intelligence (AI) boom.

As a rule of thumb, when copper is sick, so is the stock market and the economy. All three lie in bed together. AI has been around for 4 years already. Time flies when you are having fun. Where's that cure for cancer? AI was supposed to cure cancer. Does it need another 4 years or will we hear any day that cancer is cured? It sounds like stupid talk like 15 years ago when idiots said everyone would own and be driven around in an autonomous car by now. These are fleece sweater wearing tech people talking their book.

Isn't it interesting that all these smart people spew about AI all day long and no one is able to provide short simple explanations of AI and what it is doing to save companies money? Maybe nothing. Maybe it is costing them money. If your company is running efficiently with its current enterprise system that controls the flow of work through the facility, why would you be an idiot and disrupt all that, and take on all those costs and hassles, to squeeze out small amounts of productivity? It would be CEO malfeasance.

Copper is a great proxy for AI and the data centers. AI has handed the US stock market big gains over the last 4 years; it saved the stock market from giving up the ghost providing a 4-year reprieve to the bloated balloon. You can see in the chart, copper followed a nice uptrend channel and then for the last 2 years, copper catapults higher on the glory of AI and data center construction for as far as the eye can see.

However, price moves higher into the rising wedge pattern never a good sign. The collapses from rising wedges can be quite dramatic. Price is squeezed-in by the tight standard deviation lines so a big move is on tap. Tight bands do not predict direction but the assumption is down and it may be a biggie over the coming weeks.

Price makes higher highs but the chart indicators are all in negative divergence (red lines). RSI and stochastics are coming off overbot levels. Copper should receive and begin a multi-week neggie d spankdown. The chart is beautiful during the last 4 years, but ugly from here forward; that sounds like people's relationships. The ADX pink box shows that copper was/is in a strong uptrend but is just about to fall below 26-28 indicating that the strong trend higher has petered out and is no longer in place.

The Aroon is what you would expect at an important top. The green line is overbot so all the copper bulls believe copper will go up forever. Comically, the red line is oversold showing that there are no copper bulls remaining. They have all left town and are now bullish on copper as well. The copper boat is fully loaded to the bull side with everyone partying long into the night but no one realizes the waterfalls are quickly approaching.

Keystone is not playing copper or its derivatives long or short currently but obviously, short is the path forward for copper on the weekly basis. It never ends well if someone starts poking around Copperhead Road. 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.