Copper

Copper (the metal)

Hamilton

copper kitco 5 copper kitco 1y

Copper has the reputation of being well correlated with what is happening in the economy and has been given a honorary PHD for that. I doubt that it is that smart, after all it fell from roughly $4000 to $1000 during the great recession, or 3/4, more than most other things. Also, China did not miss a beat and that is where supposedly so much of the demand is coming from. Anyway, looking at the 5 year chart (Kitco’s the best I could find), the metal is NOT in a bull market as, to date at least, the up move since the lows is too bullish to be a bull market and furthermore it does not have any of the required subdivisions. It is instead most certainly a B-wave, one that is complete already or one that is presently completing a triangle (4th wave, always). Cannot be certain at this point but once the triangle and the thrust from it are complete this metal should drop at least by half if not a lot more.

Here is the triangle in more detail:

$copper

C could already be over but as this is usually the most complex leg in the triangle may still need another leg. Then d and e to follow. The thrust should be good for about $50.

Copper and FCX , Freeport

Hamilton

To test,so to speak, the plausibility of TCK.B being close to an exit point, looking at Copper (the stuff) and FCX (presently the largest copper miner operating from Indonesia). Here are the charts;

copper 2011 fcx 2011

Copper and TCK.B are pretty well identical, suggesting that it is still possible for TCK.B to go a little higher, perhaps 10% or so. FCX is clearly the winner in this competition. The C=A and the stock is double topping having clearly risen in a 3-wave fashion, that is, corrective. Also the RSI and MACD are turning over so this one suggest we are well done right now.

Copper, FCX and China. Feb 2010.

Hamilton

Lately it would seem that China is the source of all growth in the World, and consequently I was a little surprised that it was not Jim Rogers or some other guru to which this growth could be attributed. After all China has been around for a few thousand years whereas Jim Rogers only recently moved there. Also it was interesting to note that not everyone seems to agree, in particular a fellow by the name of David Threkeld who runs his own metals trading firm (see   http://www.cnbc.com/id/35313321  ) and believes that copper, the metal, will be the next bubble, or is the next bubble. His view appears to be based on the simple fact that the marginal cost of producing the stuff is $1 and we all know that miners are undisciplined and will , at some point, produce to their hearts content. Also , I might add, the Ivanhoe mine in Mongolia ,IVN, is so large that it will have a distorting impact once it does start producing. In the meantime their is the riddle of what happened to 2 mln tons of the stuff.

More interestingly, in a  report entitled “Technical Outlook – Commodity Calamity” that  came out Feb 1 , 2010 by no one less than RBC Capital Markets’  excellent commodity group, the suggestion is made that looking at copper the trend reversal may now dent the growth outlook. Very interesting as these guys are no slouches. Here is the copper chart, not as traded on the LME London Metals Exchange, but by way of the front futures contract.

COPPER Feb 15 FCX Feb 2010

Also , for comparison, we show FCX, the largest producer operating in Indonesia (Greenberg). Notice that both display distinct corrective up moves from the March low. Copper itself seems even to say that nothing had happened. In the meantime ALL technical indicators are terrible and perhaps the guys at RBC are right, and perhaps even David Threkeld. If nothing else get defensive with virtually all commodities!. The arrow down in the copper chart is merely a possibility, it does not have to go that far to cause a lot of damage.

PCU Southern Copper Corporation , April 14

Hamilton

PCU April14

As a stock Southern Copper has one of the emotionally  highest intensity displays of what otherwise should be a very sobering Phd. in economics. This one is particularly interesting to E-wavers simple because of the present CRITICAL position the stock has. Clearly we have waves 1 through 4 done, except that 4 is probably NOT complete. Though only a guideline (all this is empirical ,of course) wave 4 should not overlap wave 1 which would occur if the stock were to trade above $22.50 (about $1.25 away from where we are!).Moreover it is highly unusual that waves 2 ( a zig-zag) should be followed in wave by wave 4 (also a zig-zag, so far!). This is unusual as more often than not the two alternate. ergo I believe wave 4 may just develop into a triangle and what we see so far is only wave a of the triangle. Wave b should drop at least to $12.50 so there are $7 to the downside and $1 to the upside. 7 to 1 is a tradable proposition provided your broker knows how to use stop-loss orders. Options are an alternative. Think of all copper stocks, like TCK.B etc.etc.

By the way, copper , the stuff with the Phd. more or less confirms this view, see below.

Copper