Tag Archives: copper

MSM: Copper Sinks!

By Biiwii

NFTRH has been bearish on copper for years now due simply to one chart; a long-term monthly view that is as ghastly as any I can recall.

I mean, sometimes markets are really complex, difficult to manage and screw ups abound.  But this right here?  This one simple chart has been idiot proof bearish since forever.

copper

Copper sinks to 2009 levels as China worries weigh

The copper market fears that “the plunging stock market could destabilize the economy and impact resource demand,” said Colin Cieszynski, chief market strategist at CMC Markets.

“Copper is now at a big turning point technically,” he said.

If prices can “bounce back above $2.45 soon, it could be a bear trap washout and may signal a bottom,” Cieszynski said. But if they don’t, and $2.45 becomes new resistance, “look out below as a measured move from the $2.45 to $2.95 channel of the last few months suggests $1.95 could potentially be tested down the road.”

Colin, the copper market fears nothing; at least nothing that has gone on lately.  The copper market made a top and has been bear flagging through a bear market since 2011.  WTF are you talking about, 2.45??  Copper is and has been bearish.  Stop whipsawing a world full of MSM reading substance abusers.

Gold’s Ratio Signals

By NFTRH.com

A brief snapshot of counter-cyclical gold’s macro signals vs. other metals (and broad commodities) that are more positively correlated to economies, using weekly charts…

Each week NFTRH updates many charts of nominal US and global stock markets, commodities, precious metals and currencies over multiple time frames.  But we also cover economic data and indicators, with the first macro chart below (Palladium vs. Gold) still barely holding its economic ‘UP’ signal from January, 2013.  At that time a coming economic up phase did not seem likely, but PALL-Gold and fundamental information gleaned from a personal source in the Semiconductor Equipment sector gave us a good risk vs. reward on that stance.

While it can be argued that using an indicator like Palladium (positive economic correlation) to Gold (counter cyclical) is subject to the discrete supply/demand fundamentals of the two assets, it has worked to signal up and down economic phases, with the most recent shown in Q1 2013 (green arrow).  This indicator has been whipsawing since topping out a year ago and the moving averages are near a trigger point.

pall.gold

A related indicator is Gold vs. Commodities.  Gold-CRB made an impulsive rise in late 2014 as the global deflationary phase topped out.  As policy makers (ECB, BoJ, China Central Planning and US with ongoing ZIRP) continue to promote inflation 24/7, 365 Gold-CRB has dropped as it should when inflation is starting to ‘work’ and inflation expectations start to take hold.  But a problem for hopeful inflationists is that so far at least, counter-cyclical Gold-CRB appears to be in a bullish consolidation.

gold.crb

If cyclical PALL-Gold were to break down and counter-cyclical Gold-CRB to hold support and resume its uptrend the indication for the global economy would be negative.

Another chart worth considering is Gold vs. Copper, the traditionally cyclical red industrial metal.  A series of higher highs and higher lows began in late 2013 and is still in play.

gold.copper

To put perspective on this, behold how bearish nominal Copper is and has been by viewing this monthly chart similar to those we have reviewed in NFTRH for years now to maintain a big picture bearish outlook on this metal.  We have allowed for the current bounce/rally/bear flag, but until $3/lb. is exceeded and held, this is a very bearish picture.

copper

Finally, let’s review Gold vs. its primary running mate, Silver.  Actually, flipping Gold vs. Silver over to the Silver-Gold ratio works best visually at this time.

We are allowing for a bounce in Silver vs. Gold.  This could come about if the Fed rolls over again today and plays nice with its language.  Or it could just come about simply because it is due.  This would go hand in hand with a resumption of the mini inflation bounce implied in TIPs vs. regular Treasury bonds and in nominal Treasury bond yields.  The message of Silver-Gold however, is similar to the charts above on the bigger picture because it is locked below very strong resistance.

sgr.wk

Bottom Line

I consider Gold vs. Palladium and Gold vs. Copper to be indicators on the global economy whereas Silver vs. Gold is more an early indicator on inflationary pressure.

The conclusion is that the economy is in danger of decelerating (Pd-Au, Au-CRB, Au-Cu) amidst a dis-inflationary environment (Ag-Au).  The timing could be by this fall.  First, a resumed bounce in the ‘inflation trade’ has a chance to get reanimated.  But that is not the dominant longer-term trend.

Morning Metals Report

By Ino.com

Morning Metals Report

metalsMETALS: August gold futures closed up $5.40 an ounce at $1,194.20 today. Prices closed nearer the session high today on short covering. The key “outside markets” were bullish for gold today as the U.S. dollar index was sharply lower and crude oil prices were higher. Gold bears still have the overall near-term technical advantage.

July silver futures closed up $0.10 at $16.78 today. Prices closed nearer the session high today on short covering. The key “outside markets” were bullish for silver today as the U.S. dollar index was sharply lower and crude oil prices were higher. Silver bears have the near-term technical advantage.

July N.Y. copper closed up 180 points at 273.80 cents today. Prices closed nearer the session high on short covering. Prices hit a five-week low Monday. The key “outside markets” were bullish for copper today as the U.S. dollar index was sharply lower and crude oil prices were higher. Copper bears have the near-term technical advantage.

Sign up for free daily updates of Stock Markets, Commodities, Precious Metals, Interest Rates and more, delivered right to your inbox.

Around the Web

By Biiwii

Market Analysis & News From Around the Web

 

Copper & Copper Miners, S/T Divergence

By Biiwii

A strange situation in Copper sees the metal sagging and the miners popping.  The metal has been on a rally that we have been tracking all year (easy now, there is huge long-term resistance above, not shown on this daily chart) but has sagged for the last month.  The miners on the other hand, have risen over that period.

copper

copx

Conclusion?  I don’t have one.  Just pointing out a weird situation.  Maybe Copper was a barometer to the present USD weakness and now the various touts, pumpers and carnival barkers across the commodity spectrum are doing their thing.  It’s easier to buy the miners after all, than the metal.  That stuff is heavy!  :-)

Expensive Copper

By Steve Saville

Considering the overall commodity backdrop, the recent sharp rebounds in base metal prices and the copper price in particular are both interesting and incongruous.

Under the heading “Copper Bottom” in a TSI commentary a few days ago I discussed last week’s upward reversals in the copper price and the Industrial Metals Index (GYX). I assumed, at the time, that last week’s price gains were partly due to the risk that supply would be disrupted by the blockade of Freeport’s massive Grasberg copper mine in Indonesia, and therefore that the removal of this risk at the end of last week would result in some of the price gains being given back this week. Strangely, however, the copper price spiked higher at the beginning of this week and briefly challenged the bottom of the major $2.90-$3.00 resistance range before pulling back to the high-$2.70s (a few cents above last week’s closing level). It seems that games are being played by large-scale participants in this market.

I plan to write some more about copper later this week at TSI, but at this time I wanted to point out that the bearish participants in the copper market have relative valuation on their side. As illustrated by the following charts, the copper price is presently at a multi-decade high relative to the CRB Index and at its highest level since 1998 relative to oil.

copper

Doctor Copper

By Biiwii

Wow, look at the big rally in Copper (hourly)…

copper1

Wow, look at the resistance coming up (monthly)…

copper2

It’s all in how you want to cherry pick time frames.

The monthly chart says it’s all just noise until Copper clears 3 bucks a lb.

Key Market Update – Metals

By Ino.com

metalsApril gold was lower overnight as it extends the decline off January’s high. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near-term. If April extends the aforementioned decline, the 62% retracement level of the November-January-rally crossing at 1199.50 is the next downside target. Closes above the 20-day moving average crossing at 1257.00 are needed to confirm that a short-term low has been posted. First resistance is the 10-day moving average crossing at 1231.80. Second resistance is the 20-day moving average crossing at 1257.00. First support is the 62% retracement level of the November-January-rally crossing at 1199.50. Second support is the 75% retracement level of the November-January-rally crossing at 1176.10.

March silver was slightly higher overnight as it consolidates some of Tuesday’s decline. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near-term. If March extends the decline off January’s high, the reaction low crossing at 16.210 is the next downside target. Closes above the 20-day moving average crossing at 17.323 are needed to confirm that a short-term low has been posted. First resistance is the 20-day moving average crossing at 17.323. Second resistance is January’s high crossing at 18.505. First support is the reaction low crossing at 16.210. Second support is the reaction low crossing at 15.510.

March copper was mostly steady in quiet trading overnight. Stochastics and the RSI are neutral to bearish signaling that sideways to lower prices are possible near-term. Closes below the 20-day moving average crossing at 255.05 would temper the near-term friendly outlook. If March extends the rally off January’s low, the reaction high crossing at 279.40 is the next upside target. First resistance is the reaction high crossing at 264.20. Second resistance is the reaction high crossing at 279.40. First support is the 20-day moving average crossing at 255.05. Second support is January’s low crossing at 241.90.

Sign up for your free daily report on Stock Markets, Bonds, Commodities, Precious Metals, Currencies and more, delivered right to your inbox.

Around the Web

[edit]  Might as well add in some of our own $.02 on the yield curve, S&P 500 and gold…  Risk ‘ON’  –NFTRH

 

Doctor Copper Catches Pneumonia

Guest Post by Bill Fleckenstein @ Stealflation

Following its recent decline, at this moment copper is following oil’s path lower, along with many other commodities as well. Whether it turns out copper has been undermined by the same phenomenon as oil — i.e., misallocated capital — we won’t know for a while, but what is clear is that the signals emanating from financial markets are grossly distorted because of the absolutely extraordinary amount of money that’s been printed by the U.S. and other central banks in the last group of years. 

The crosscurrents and potential for whipsaws in many of these markets is absolutely extraordinary, and at times it can be rather confusing as to what, if anything, the markets are trying to tell us. Regretfully, I think much of it is noise caused by all the printed money, but not all of it, and ferreting out the difference between the two is going to be important — and tricky. 

Like a Cartoon Cliffhanger: Just Don’t Look Down

One thing I am absolutely certain of, there is no way the stock market can hold together in the absence of QE and the presence of the weakness in the world economy that we already know about, much less the as-yet-unknown consequences that the break in oil, copper, and credit markets might inspire. 

It is actually remarkable that the stock market has held up as well as it has thus far, and on every day that it looks ugly it seems many people are still eager to buy the dip. Perhaps that isn’t terribly surprising given the fact that the last six years have essentially been straight up, with very little angst (certainly the last couple of years have had very little), so at the moment there doesn’t seem to be much fear among U.S. stock investors, even given the long and mounting list of things that could potentially go wrong. For the time being, the prior price action and momentum seems to carry the day, though that does appear to be changing.

 FX: Like a Beauty Pageant for Warthogs

Parenthetically, I firmly believe that the dollar is on borrowed time. It is where it is simply thanks to the stock market soaring on the back of easy money, which caused people to believe that the economy is stronger than it is and that the Fed will be raising rates. The problem is, other colored pieces of paper all have their own warts. 

However, I think expectations are so high for the dollar, and positions are so huge, that trouble is inevitable. As big a hunk of junk as the euro is, when the ECB starts QE, the euro may (perversely) rally. In any case, I’m not really doing much regarding the dollar because if it does weaken, precious metals will quite likely do very well. 

Yield Sign Translation: Do Not Enter!

With the U.S. 30-year bond making a new low in yield of around 2.40%, the bond markets continue to be the epicenter of distorted prices, thanks to what the central banks have done. But that has been the case for some time and doesn’t mean it will change soon. In the short run, weakness in stocks or bonds will likely cause even more bond buying, but the bond market is going to be the scene of the accident of a lifetime at some point, even if that appears to be several steps ahead of us still.

Around the Web

  • GDX vs. SPY; Different This Time  –NFTRH  [biiwii comment: what is different is that the main gold sector hype has been how deflation is going to destroy gold stocks; Ukraine was so summer of 2014]
  • What, Us Worry?  Economists Stay Upbeat as Markets See Trouble  –Bloomberg  [biiwii comment: look, things may indeed be fine for now; the forward data will tell the story. but how many mainstream economists saw the bubble top in 2000, the credit bubble, housing bubble and the coming liquidations of all manner of leveraged excess in 2008?  answer… see no evil, hear no evil, speak no evil…]