Copper

July Copper's breach in late May of the 3.65 midpoint Hidden Pivot support shown (see inset) is bearish and hints of a further drop to as low as D=2.95. A corrective rally to the green line (x=4.00) would set up an opportune 'mechanical' short, but failing that, the most promising swing trade we could envision on the middle horizon would be bottom-fishing at p2=3.30. If that were to occur, the energy sector would undoubtedly experience a corresponding drop that in turn would imply an easing of inflationary pressures and a positive impact on mining stocks. Please note that this is 'Doc' Copper's first appearance on the touts list in a very long time, and it is intended to supplement and confirm my analysis of crude, which is also in a secular downtrend.

We looked at Copper during today's tutorial session and came up with a 2.0380 downside target that I'd expected to take weeks to reach.  Instead, the May futures went into a power dive that came within less than two cents of the target in mere hours. I'd suggested bottom-fishing there and rated the trade an 8.8, meaning it's about as juicy as they come. But the steepness of the plunge brought with it a heightened sense of the risk involved, so I will recommend the trade only to those of you who understand why it amounts to nearly $1800 per contract initially, if using a=260.50 (from weekly continuous chart, where a= 260.50 on 12/16/19). The entry trigger would come at 212.53 for a shot at p=219.55._____ UPDATE (Mar 19, 6:42 p.m.):  Off a 197.25 low, the trade triggered at 199.45. Numerous subscribers reported getting aboard for what turned out to be a steep, exhilarating ride. Based on a so-far high at 291.50, this gambit could have produced a profit of as much as $5012 per contract.

I haven't looked at 'doc' copper in a while, but a bullish note posted by Seees37 in the Saloon made me curious about the long-term chart. It is indeed bullish and has been so since 2016, mainly because of the robust impulse legs that have been occurring regularly since. Every major upthrust has exceeded a significant prior peak, and that is usually a good indication that the trend will continue. There have been some minor, bearish impulse legs along the way, but none as strong as the bullish ones. If copper prices are in fact headed higher, that would imply the economies of China and Germany are about to get second wind and that recession talk in the U.S. is premature. This is far from a given, however, since it wouldn't take much weakness to diminish the bullish look of the weekly chart shown. A dip beneath 2017's lows near $2.45/pound would suffice. That would also crystallize the bearish head-and-shoulders pattern that has traced out since late 2016. I usually don't pay much attention to these formations because they are everywhere one wants to see them.  In this case, however, the pattern is such a textbook beauty that we ought not ignore it. For an illuminating discussion of head-and-shoulder patterns, visit the Coffee House and Saloon, where some subscribers have weighed in most insightfully Sunday morning on the topic. _______ UPDATE (Jan 28, 4:28 p.m. ET): The recent thrust pushed above three prior peaks (click here for chart), suggesting that any weakness will be corrective, prelude to another bull leg.

No chart troubles me more than Copper's, since it implies so clearly that the global economy is doing fine and will continue to expand, even if only moderately, for the foreseeable future. That's the kind of bilge we expect to read on the front page of the Wall Street Journal, the most enthusiastic cheerleader for the charlatans and economic dolts who run the Federal Reserve. And yet, it's hard to argue with the bullish look of this chart, or with copper's known prescience in predicting economic strength, particularly in the manufacturing sector. Under the circumstances, I can offer only a forecast of clear sailing to at least 3.6328, a midpoint Hidden Pivot associated with a bull-market target at 5.3300 (!)  If copper prices are indeed on their way to such heights, then forecasts that the Dow will ultimately hit 30,000 are not so farfetched as we permabears might wish t0 imagine.

Doc Copper has swung wildly since November's moon shot and seems likely, on the visual evidence of the charts, to attempt another spectacular leap. Assuming the gyrations of the last three weeks have been a consolidation for a follow-through rally, notice that much of the action has taken place just beneath the November peak. That bulls mean business is further affirmed by the slight penetration of the November peak on the second run-up. However, unless it is the return of severe inflation that copper is predicting, the correction will probably need to take out the key low at  2.4260 (see inset) to give a second-wind rally some running room. Although I doubt that serious inflation is possible in an economic world that has amassed debts aggregating to more than a quadrillion dollars, I will let the chart speak for itself in the weeks and months ahead. In the meantime, for trading purposes, the sale of option straddles targeted on the 2.50 strike seems like a good bet. _______ UPDATE (Dec 5, 8:22 p.m. ET): I've updated the chart to show the March contract, which harbors no evidence of buyer fatigue.  Although Monday's rally failed to breach the 2.6975 midpoint pivot decisively, the shallow correction from the highs implies more upside is coming, and soon -- presumably to the 2.8445 target at least. _______ UPDATE (Dec 8, 9:52 p.m.): The futures are on a 2.6405 buy signal with the potential to reach, most immediately, 2.7245. First, though, they'll need to get past the 2.6685 midpoint Hidden Pivot that contained today's fleeting spike. _______ UPDATE (Dec 12. 9:48 a.m.) Sunday night's bull-trap short--squeeze pushed the futures past p=2.6685 of the pattern noted above, allowing traders to exit half of the position profitably. If you're still aboard, use a stop-loss one tick below

There is as yet insufficient evidence to speculate on whether copper's impressive post-election leap will turn into a belly flop, or instead prove to be the booster stage of a much bigger rally. Whichever is the case -- and I strongly doubt there will be any in-betweens -- it's inconceivable that this legendarily sensitive economic barometer will guess the outcome incorrectly. Inflation, or deflation? Growth or economic stagnation?  Keep your eyes focused on 'doc' copper and you cannot miss an important turn -- assuming one comes, and however unexpected -- toward inflation following 35 years of the opposite. From a technical standpoint, it is necessary to see that, so far at least, copper's steepest rally in a decade is still just a fledgling on the weekly chart. Yes, it has surmounted a daunting multitude of minor peaks. However, these are mere foothills in comparison to the two 'external' peaks that I've labeled. The higher lies at 3.2790, and any rally from these levels that surpasses it without taking much of a breather along the way will be convincing evidence that the rip-roaring inflation of the 1970s is about to return in some shape or form. Anything less than that, however, can only suggest that an economic upswing of indeterminate strength is coming and perhaps no more.

'Doc Copper' is widely viewed as being able to predict upswings and slumps in the economy of manufacturing and real goods, so we should want to get this one in particular right. The post-election rally in Copper futures is on track for putting up one of the strongest months in the past decade. Buyers have retrenched somewhat in the last few days, but are they spent? This is unlikely in my estimation, since the rally has already generated a robust 'impulse leg' on the monthly chart, surpassing the two labeled peaks (see inset) we require. Under the rules of the Hidden Pivot Method, this specifically implies that any pullback short of the 2016 low, 1.9355, is merely corrective and should be viewed as a consolidation for a second, powerful leg up. It would be more bullish still if, before November ends, the already impressive price bar for November extends above 2015's high, 2.9610 (labeled #3 in the chart). It would require less than that, however, to trip a long-term buy signal. A print at the green line (2.7841) would do the trick, while also calling for a more bullish bias on trades in various time frames ranging from intraday to daily, weekly and monthly. A $5.33 target would be theoretically in play at that point, raising at least the possibility that the commodity sector as a whole is in for some very significant inflation.  This goes directly against forecasts that I've stood by for years, including a fall in long-term interest rates to under 1%. As such, I will continue to monitor copper's charts very closely, since, at the end of the day, I will need to trust what they are saying more than I do my gut instincts. This doesn't mean I'm about to recant my deflationist views any

It's been a while since we last looked in on 'Doc Copper', which has continued to grind through a bear market begun early in 2011. The price has dropped 46% over that time, but the move is still corrective relative to the bull-market low of $1.25/pound recorded at the end of 2008. What would it take to turn prices higher?  The question is important, since even the mere prospect of a full recovery from the Great Recession is certain to be telegraphed by rising copper prices. Technically speaking, the high-grade contract would come alive on a rally touching 3.2381. If the move were to go slightly higher, exceeding the 3.2790 peak made a little less than a year ago, that would not only clinch still-higher prices, it would also hint of a strong upswing in the world economy, particularly in an otherwise moribund manufacturing sector. Thereafter, depending on how quickly the futures achieve the next threshold, a 'midpoint Hidden Pivot' at 4.0573, we might infer an upswing strong enough, even, to float Europe's distressed boat. The foregoing is of course speculative, since it's entirely possible copper prices will relapse, giving up the rest of the 54-cent gain it achieved between January and May of this year. Were that to occur, we could probably tune out the blather about the America's nascent growth spurt, as well as the supposed likelihood of explicit tightening by the Fed.

Copper's chart looks almost as ugly as crude's -- no surprise, since both reflect the state of the global economy far better than nutty GDP figures that seem to capture mainly the health of the U.S. car-leasing business.  Notice that March Copper has bounced from a recent low somewhat above a clear Hidden Pivot target at 2.3635. My hunch is that the eventual low will occur even closer to the target, but that the futures are due for a bounce in any event. (This number corresponds to a projected low of 43.58 in March Crude.) If the support fails, however, you should infer that Copper will fall to 2.1665 before it turns around. That, too, is a Hidden Pivot target, and it can be bottom-fished aggressively with as tight a stop-loss as you can abide. _______ UPDATE (Feb 2, 10:17 p.m.): Copper has gotten tugged higher by the rally in crude oil, with the result that this vehicle now looks bound for at least 2.5555. Anything above that Hidden Pivot would be telegraphing more strength. _______ UPDATE (Feb 3, 11:03 p.m.): This short squeeze will reach a new threshold of viciousness if it exceeds the 'look-to-the-left' external peak recorded on January 13 at 2.6590. Based on Hidden Pivot Analysis, I'm looking for at least 2.6435 over the very near term. _______ UPDATE (Feb 5, 11:20 p.m.): Doc Copper now looks poised for a run-up over the near term to 2.6675, a Hidden Pivot resistance of middling importance. _______ UPDATE (Feb 10, 8:18 p.m.): Oh well, Doc Copper has aborted the move. I'm going to archive this tout lest we become bored with it. FWIW, at Wednesday's close, the downtrend pointed to a minor Hidden Pivot support at 2.5208, or 2.5010 if any lower. _______ UPDATE (Feb 12, 11:50 a.m. EST):