alice

NFTRH; A Counter-intuitive Bearish Message From Copper?

This may be one of the simplest updates ever. As I was looking through some monthly charts for a post on big picture multi-market status I saw something that hit me right in the face. The context is that week after week we’ve been noting the strength in Doctor Copper and the Industrial metals (I am holding RIO per an NFTRH+ update) and noting its outlier status with much of the bearish biased commodity complex as it sports a very bullish weekly chart that is up trending.

Well, say hello to my little friend… the Copper monthly. I’ve personally been a little confused about how I can be getting bullish on the gold sector while gold is declining vs. copper and industrial metals. That is because gold’s ratio to these items is a cyclical signal and right now the signal is positive for the economy and hence not for a counter-cycle.

But now consider that this chart was created and marked up with strong resistance at 3 bucks a lb. months and months ago. Today I’ve only added the Fib retrace level, which has registered a 38% retrace and pinged 3.01 this month, right in the resistance zone.

copper

Now, this is not an update sounding a panic alarm, but it is an update telling you that when I look at this chart I realize that much as how the Dow and S&P 500 have acquired their big picture upside targets, so too has copper acquired a very valid one of its own. Targets are not stop signs, but as with the stock market, this one is no longer hanging out there as a positive-to-be for copper, stocks (the market’s got a copper roof, so goes the saying) and economy bulls.

I add this to the gathering signals that negative changes could be upcoming in September through Q4. That’s some really thick resistance. Could copper do a 50% retrace before all’s said and done? Sure, but the spirit of this chart is to add another piece of the puzzle that says to me… “not so fast, bulls.”

Final (more bullish) note: If you see that as a bullish looking pattern, I agree with you. It is. And it targets 3.60, which would be a 62% Fib retrace! So let’s be prepared for either eventuality. It’s a question of who wins, thick resistance or a pattern’s target?