-- Posted Tuesday, 7 April 2009 | Digg This Article
| Source: GoldSeek.com
Men never plan to be failures; they simply fail to plan to be successful.
William A. Ward
While the majority were panicking and turning more bearish with the passage of each day, we noted that copper was giving of an early warning signal of impending change.
It is said that the economy usually mimics the copper markets and upon examining the copper charts, it appears that the economy and copper are trending in the same direction. Copper appears now to be closer to a bottom than a top and hence from this, we can infer that the markets are also close to putting in some sort of bottom, if one takes a long term perspective. Copper has a tendency of putting in a bottom well in advance of the markets and the economy, and it provides an early warning signal of a potential change in market direction.
During the last strong correction, which lasted from 2000 until early 2003, copper put in a bottom towards the end of 2002, well in advance of the markets and the general economy. Thus a change in direction here will provide the first signs of a turn around. If the Dow trades down to the 7200 ranges and or puts in a new 52 week low, while copper starts to trend higher, it will be a very strong long term bullish sign. Market Update Dec 23, 2008.
After trading as low as 120, copper has mounted a rather strong come back in a matter of days. After breaking below the very important support zone of 140.50-142.00, it was able to remarkably trade above it with ease. Former strong support zones normally turn into very strong resistance points; its ability to break past it with such ease suggests that copper has or is very close to putting in a long term bottom. Copper is one of the first markets to recover and thus a recovery here would be another positive sign for the equity markets. Market update Jan 6, 2009.
It is now giving the first signs of a long term bottom formation, even though in the short term there is a possibility it could momentarily spike down to the 105-110 ranges. From a long term perspective, the current pattern is indicative of a long term bottom, and traders would be wise to start looking into the possibility of taking small bites in some of the key players in this sector. If, for some reason copper trades down to the 110 ranges, traders should view this as a long term screaming buy. A close above 160 would significantly diminish the chances of copper trading down to the 110 ranges. Published on the 10th of January 2009
The channel formation has moved from the 120-150 ranges to the 140-160 ranges and even though copper has not yet managed to trade above 150 for 12 days in a row, the fact that the channel formation is moving higher is a bullish sign. As a result of the strength in the channel formation copper now would need to trade above 150 for only 7-9 days, to indicate that the next target is 180. Global Pulse March 2, 2009
Copper traded past 150 for 9 days in a row and in the process hit its first upside target of 180 before pulling back. The next objective for copper would be to trade past 180 for 3-5 days in a row and in doing so set up a pattern that would trigger a move up to the 220-240 ranges before a stronger correction takes hold.
The above chart clearly indicates that copper is going to run into rather strong resistance at or around 250; it will take several attempts before copper can break past this zone of resistance, but once it breaks past this zone there is virtually no resistance until about 300.
Copper continues to trade well off its lows and a break past 180 will be a very strong confirmation that the Dow could rally for another 2 months before correcting again. Market update March 10, 2009
As copper is an early predictor of stock market and economic strength, continual strength in the copper markets will indicate that the markets have more upside potential. Copper did trade and close above 180 so the 1st sign of additional upside has been given. The higher copper trades, the stronger the overall market becomes and if Copper can trade to the 220-240 ranges then there is a good chance that the Dow could trade past 9000 before the next correction begins.
The 3 year chart also indicates and further confirms that the 250 price point level is going to provide some rather stiff resistance down the line. On the short term time frames copper is expected to rally and test it’s main down trend line; on both the 1 year and 3 year charts this equates to a price that falls in the 225-250 ranges. Copper appears to have put in a multi month bottom and is on course to eventually take out its old highs and put in a series of new multi decade highs; if by some miracle its recent lows are tested, traders should load the lorry up on copper. Copper stocks have already moved up very nicely and if copper hits its suggested targets, most stocks should easily experience an additional 50% plus in gains.
Conclusion
Copper definitely appears to have put in multi month bottom and is now on its way to test the 225 ranges and possibly higher. If by some miracle it should trade down to the 140 ranges again, long term traders should look at it as an early Christmas gift and load the truck up. There are many good plays in the copper sector, some of the small chaps will obviously lock in higher gains on a percentage basis, but FCX is a good play for those seeking a blue chip stock that is also a Gold and Silver producer.
Taking a long term perspective copper is still a bargain; a day will come when its current all time high will look cheap, so one can imagine how the majority will feel in the years to come when instead of buying aggressively, they sat mopping around waiting for the experts to guide them.
For the 1st time ever we are offering our readers a trial of our Market update service at a significant discount; we have never ever offered such a special before. For more info, please click on the following link. Recession Special
Success is a journey not a destination. The doing is usually more important than the outcome. Not everyone can be Number 1.
Arthur Ashe
1943-1993, African-American Tennis Player
-- Posted Tuesday, 7 April 2009 | Digg This Article | Source: GoldSeek.com
