Copper HG - Is It Finally Time?
מעודכן
I have witnessed much consternation on Twitter over the last months and weeks about how Copper, a critical industrial element, continues to decline in price. All the while, like most other metals, the exchange vaults are being raided of thousands of tons of physical spot, which futures markets need to back short positions.
One would think this would result in a price increase, and yet, metals have remained exceedingly bearish.
Whether Copper can constitute a commodity in a price action cycle that can be considered bullish, rather than bearish, boils down to whether or not you believe that the $5 all time high set during the 2021-2022 bull run is either the ultimate top or the medium and short term top.
Looking at the monthly, the situation is more clear:
This pattern stands in sharp contrast to say, Soybeans, which has a very similar pattern of price action, but is less bearish over the last 3 months and also failed to set a new all time high during the early 2022 supercycle test run.
Soybeans ZS - Lagging the Pack, but Ready to Go
And is somewhat more like Wheat, which did take out the previous long term high, albeit only on a short term sweep.
Wheat Futures - ZW - Like Snakes in a Can
The contrast is that copper ran the old high three times already. So you really have to consider that the ultimate top may be in.
More information on Copper HG can be discerned from the weekly, which shows notable gaps above $4, a healthy V-Bottom following the July dumps, and a close, albeit not-too-close, range bottom to the key Sept' 20 pivot:
Breaking it down into the daily, we can see that July month end and August open plinked out a dump high, followed by August being characterized by a slow grind upwards before finally selling off at the end of the month:
September, thus far, has opened very bearish, taking out the August pivot (twice, now), yet retaining the overall market structure, and showing an indication that it wants to trade higher.
September is not likely to finish in a straight line down.
What I like about this call is that while I have mixed feelings that copper will ever see $5 again, despite all the fundamentals saying it really ought to trade for a lot more, the reality is that I believe if it were to turn around and dump to new lows in the low 3s or mid-high 22S, it certainly does this, more likely than not, after raiding the $4 level first, based on how price action has developed.
Currently, we're still young in the month and copper has so far traded bearishly, although it's showing a lot of promise in its price action that higher prices, rather than lower prices, are sought for now.
The situation in this world is very strange at present. Energy shortages and food shortages are looming, hard, especially if you are in Europe. Recession, aka "Depression" is looming everywhere, and yet the U.S. equities market is still trading pretty high and for a lot of us life is just normal, albeit not as pleasant as before.
The dollar index is mooning and many critical currencies from other countries, including ones as strong and crucial as Japan, are being slaughtered, and yet, no matter how siren-sounding Twitter is, price action does not reflect a degree of panic really anywhere.
Even WTI Crude Oil, which I called would trade towards the $81 mark at the beginning of August, is trading in such a fashion that despite losing 30% of its value, there is still no fear, no shock and awe.
WTI Crude Oil - Running and Gunning
And even so far as Natural Gas NG has already lost more than 10%, somehow despite all the fundamentals saying otherwise, nobody is batting an eyelid.
Natural Gas / NG - What, Truly, Is a Bull?
Right now, everything, everywhere, is just business as usual, and another dip to buy.
But for how much longer?
A 72 VIX print is looming in the cards, and the lack of fear will truly have such a move catch many off guard.
VIX - 9x8 = 72
The hardest thing in trading is not determining the direction or the targets. Instead, the hardest thing is gauging and predicting _when_ the move will happen and how it will unfold, since time is weaponized, and not very many things go up or down in a straight line all that often.
Frankly, reason stands that the reality is that we will see Copper trade for prices like $10 in the relatively close future, and if so, then this price action we're sitting at is truly the place where the abyss will start to rage from.
But to go long for that day... when does it really unfold? More likely than not, if you want to aim for numbers over $5, you're looking at a date in 2023, and it's very hard to trade options and futures that far out.
And never forget, the world's greatest "black swan" looming is the coming collapse of the Chinese Communist Party.
When that day really unfolds, most of the world's population will be bamboozled and caught off guard, which is why I call it a "black swan." But in reality, it is a development that is so, so easy to see.
If you can't see it, maybe renounce your faith in communism, socialism, Marxist-Leninist stuff, and have better thoughts. Position yourself with the mentality that saw the world defeat Hitler in World War 2. The CCP has killed more than 100 million of its own people during its sanguine 100-year reign, including the 23-year-long organ harvesting persecution against Falun Gong meditation.
How much longer can a group of rogues squatting in Shanghai last, soaked in sins like that?
Rationality is simply too critical, and the level of one's rationality is connected directly to the level of their morality.
One would think this would result in a price increase, and yet, metals have remained exceedingly bearish.
Whether Copper can constitute a commodity in a price action cycle that can be considered bullish, rather than bearish, boils down to whether or not you believe that the $5 all time high set during the 2021-2022 bull run is either the ultimate top or the medium and short term top.
Looking at the monthly, the situation is more clear:
This pattern stands in sharp contrast to say, Soybeans, which has a very similar pattern of price action, but is less bearish over the last 3 months and also failed to set a new all time high during the early 2022 supercycle test run.
Soybeans ZS - Lagging the Pack, but Ready to Go
And is somewhat more like Wheat, which did take out the previous long term high, albeit only on a short term sweep.
Wheat Futures - ZW - Like Snakes in a Can
The contrast is that copper ran the old high three times already. So you really have to consider that the ultimate top may be in.
More information on Copper HG can be discerned from the weekly, which shows notable gaps above $4, a healthy V-Bottom following the July dumps, and a close, albeit not-too-close, range bottom to the key Sept' 20 pivot:
Breaking it down into the daily, we can see that July month end and August open plinked out a dump high, followed by August being characterized by a slow grind upwards before finally selling off at the end of the month:
September, thus far, has opened very bearish, taking out the August pivot (twice, now), yet retaining the overall market structure, and showing an indication that it wants to trade higher.
September is not likely to finish in a straight line down.
What I like about this call is that while I have mixed feelings that copper will ever see $5 again, despite all the fundamentals saying it really ought to trade for a lot more, the reality is that I believe if it were to turn around and dump to new lows in the low 3s or mid-high 22S, it certainly does this, more likely than not, after raiding the $4 level first, based on how price action has developed.
Currently, we're still young in the month and copper has so far traded bearishly, although it's showing a lot of promise in its price action that higher prices, rather than lower prices, are sought for now.
The situation in this world is very strange at present. Energy shortages and food shortages are looming, hard, especially if you are in Europe. Recession, aka "Depression" is looming everywhere, and yet the U.S. equities market is still trading pretty high and for a lot of us life is just normal, albeit not as pleasant as before.
The dollar index is mooning and many critical currencies from other countries, including ones as strong and crucial as Japan, are being slaughtered, and yet, no matter how siren-sounding Twitter is, price action does not reflect a degree of panic really anywhere.
Even WTI Crude Oil, which I called would trade towards the $81 mark at the beginning of August, is trading in such a fashion that despite losing 30% of its value, there is still no fear, no shock and awe.
WTI Crude Oil - Running and Gunning
And even so far as Natural Gas NG has already lost more than 10%, somehow despite all the fundamentals saying otherwise, nobody is batting an eyelid.
Natural Gas / NG - What, Truly, Is a Bull?
Right now, everything, everywhere, is just business as usual, and another dip to buy.
But for how much longer?
A 72 VIX print is looming in the cards, and the lack of fear will truly have such a move catch many off guard.
VIX - 9x8 = 72
The hardest thing in trading is not determining the direction or the targets. Instead, the hardest thing is gauging and predicting _when_ the move will happen and how it will unfold, since time is weaponized, and not very many things go up or down in a straight line all that often.
Frankly, reason stands that the reality is that we will see Copper trade for prices like $10 in the relatively close future, and if so, then this price action we're sitting at is truly the place where the abyss will start to rage from.
But to go long for that day... when does it really unfold? More likely than not, if you want to aim for numbers over $5, you're looking at a date in 2023, and it's very hard to trade options and futures that far out.
And never forget, the world's greatest "black swan" looming is the coming collapse of the Chinese Communist Party.
When that day really unfolds, most of the world's population will be bamboozled and caught off guard, which is why I call it a "black swan." But in reality, it is a development that is so, so easy to see.
If you can't see it, maybe renounce your faith in communism, socialism, Marxist-Leninist stuff, and have better thoughts. Position yourself with the mentality that saw the world defeat Hitler in World War 2. The CCP has killed more than 100 million of its own people during its sanguine 100-year reign, including the 23-year-long organ harvesting persecution against Falun Gong meditation.
How much longer can a group of rogues squatting in Shanghai last, soaked in sins like that?
Rationality is simply too critical, and the level of one's rationality is connected directly to the level of their morality.
הערה
Copper traded back to the rational level of the previous August pivot, didn't break market structure, and looks to be going for another leg up. Seems a meaningful target beneath $4 is the August high around $3.7
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