Thursday 4 July 2013

Copper floored?

Copper remains on the edge of putting in a monthly close under the hugely important $3 threshold. June saw further weakness, with a brief hit of 2.98. If the main US market follows the lead of other world markets, then Copper could be trading in the low $2s within a few months.

Copper, monthly


Copper is always an important commodity to follow, and as many recognise, it can often be a leading indicator of underlying economic weakness...or strength.

Since the main commodity index/basket peaked in early 2011, Copper has similarly struggled, falling from 4.65 (Feb' 2011) to 2.98 (June 2013).

*many of the price charts for the mining stocks look just like the Copper chart. This includes the bigger, and more stable companies, such as FCX, and SCCO.

So, where next for Copper?

If the main US markets do see a few months of weakness into the autumn, then Copper will probably put in a monthly close <3, and I'd have to expect a swift..and sustained drop down to the low $2s.

I certainly don't expect <2, that would be a real surprise.

For the commodity bulls, only if Copper can break back into the $4s, can the inflationists out there start to get confident.

more later in the evening, looking ahead to tomorrows jobs data

Oil on the edge of a multi-year breakout

Even without the ongoing Egyptian revolution, Oil prices have been generally rising since summer 2012. We've seen WTIC rise from $77 to $102 across a full year. There is multiple strong resistance from the big $100 to $115. Is an Oil price shock going to upset the global economy?

WTIC, weekly

WTIC, monthly2, rainbow


All things considered, I'm actually kinda surprised Oil hasn't exploded far higher in the past few days.  After all, Oil is still relatively low in price - when you consider the Dow is at 15k, and a typical national 'event' of this type can often spike prices $15/20 at least.

Perhaps by this Friday we'll be looking at a test of the upper monthly bollinger band, currently in the $106s. Without question, the really big level is the May'2011 high of $114.83. Interestingly, that is when equities peaked in that cycle, and a few months after the main commodity index peaked.

Long term?

There seems little doubt that long term Oil prices will broadly rise. After all, Oil is a finite resource, and almost all of the cheap recoverable oil has already been sourced.

Across the last few years I've seen some very well balanced outlooks - I'd refer anyone to Chris Martenson , there are some good youtube videos out there, if you take a look.

As for an oil price shock in the immediate term? No, this Egyptian event doesn't seem to be that serious... yet.

Stuck between support and resistance

The US market managed a relatively incredible minor gain, on a day when most world markets were significantly lower. No doubt the QE is continuing to prop up the market, and until it ends, equity bears face a relentless uphill battle. Weekly trend is still 'moderately bearish'.



I think the above chart will suffice to end today.

Any move above the 10MA - currently sp'1628, and we'll likely proceed to 1650/60s.

A break <1600, and the market will proceed lower in another wave to the 1530s.

*I may post a few things tomorrow, not least with the rest of the world markets all trading as normal.

Goodnight from London