“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)


"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat


Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


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Monday, June 30, 2014

Dr. Copper Threatening an Upside Breakout

One look at the chart says it all - Copper is knocking on the door of overhead chart resistance and is threatening an upside breakout.



The catalyst has been continued improvement in recent Chinese manufacturing economic data. Traders are also optimistic that this evening's upcoming overnight release of China's monthly purchasing managers' index is going to be positive.

Also, today's US pending home sales data was a big mover of the market. Sales rose 6.1% in May compared to the previous month. The estimates were for a very modest 1.1% increase. The red metal leapt higher when the data hit the wires as it was much better than expected. Bears were caught off guard by the surprisingly strong number and wasted no time covering.

Copper bulls are banking on improved numbers coming from the two largest consumers of the red metal ( China and the US).

Also, there is behind the scenes talks occurring among banks and traders caught up in the double and triple counting metal schemes to split losses. That seems to have lessened the impact from any expected forced sales of copper in the event that the Chinese authorities force the loans to be called.

It's funny isn't it how one day the market is terrified of losses and then the next day it could care less. Such are the fleeting vagaries of sentiment. One never knows when it will change or what it will decide to focus on from day to day. Let's just say that for now, looking at the chart, Copper is convinced that economic data is going to be improving as we move forward into the summer months.

Let's keep a very close eye on this chart. It is one of the most accurate indicators of global economic activity that I know of.

6 comments:

  1. All those past, present and future ghost cities in China use up a lot copper.

    So I guess if China keep's on building empty/modern cities (and ALL the accompanying infrastructure that goes with that) then I guess copper will almost always catch a bid one way or another.

    If China gets a lousy growth/inflation number or some other slowing economic indicator or data they can just build another city....or fudge the next round of data that comes out.
    It's hard to know what to believe about China at times.
    People in the US or elsewhere might regard or worry about their own countries state of affairs as a house of cards or ponzi.
    But generally looking at China it seems like their grand expansion plan could be almost too huge or aggressive and enormously leveraged to boot.
    With Japan teetering and the US just entering our own stagflationary scenario the thought of the worlds supposed new growth engine/China hitting a brick wall (or noticeably slowing down) would be a huge blow to the entire planets economy.

    Fwiw and off-topic, I think it'll be some type of Japanese economic collapse (bonds) or a conflict that'll be responsible for an eventual global market contagion that ripples deep within the system.
    Fukishima might've been the nudge that eventually prevented Japan from escaping their stagflationary period.





    ReplyDelete
    Replies
    1. People in the West just LOVE to believe that China is a house of cards ponzi shadow this that and everything

      The truth is frequently different, despite sustained attempts to distort it : http://www.vagabondjourney.com/zhengzhou-zhengdong-china-largest-ghost-city/

      Delete
  2. Hello,
    For the record, I'm long gold with a stop loss near 1315 because of the 1h time unit (marubozu up). On this time unit, both ma20 and bollingers are currently going up, which should provide some support on the short term.
    RIP Bo Polny's june top forecast which was not 26, not 27, but 30th june already, too bad for his brilliant cycle forecast which are supposed to give you the tops and bottoms of each market with a one day precision. What a joke.
    Analysis of gold later today but with yesterday's close prices :)

    ReplyDelete
  3. Bo polny is mailing out trx charts too. So now we know why sinclair promotes him. Its a case of one fraud helping out the other.

    Three months till first poor for the 2014 agm "trx will be producing" promotion. I cant wait jim.

    ReplyDelete
  4. Yes, copper is indeed breaking the downwards resistance on my chart, though the week is not over.
    On the 2day timescale, I was mentioning that I was not shorting this time as I was lacking signal from my previous indicators. In particular, Stochastic Momentum Index didn't reach its peak from where prices started correcting down the last 3 times. So, I passed...still passing, but watching very carefully as well.

    ReplyDelete