Copper Commentary 2OCT11

8/4/2019 Copper Commentary 2OCT11

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Andys Technical Commentary__________________________________________________________________________________________________

Copper - Monthly (Log) - The 8/16 Year Cycle

Fall/2001 Fall/2009Fall/1985 Fall/1993Fall/1977

One of the interesting things about commodities is their adherence to time cycles, meaning they tend to cyclically bottomin a periodic way. The most common cycles are 8 or 9 year cycles which are evident in several different commodities.Indeed, theres good analysis that suggests a 16-18 year cycle for Real Estate. So, its worth noting that Copper alsoexhibits some cyclicality. Notice the way it tends reach cyclical lows every 8 years. It also appears that there is a morepronounced 16 year cycle. Time Cycle analysis does NOTcall the tops of cycles--its only good for giving ideas about

bottoming periods. It looks like we wont get our next major bottom (buying opportunity) until Late 2017. Both the smallerand larger degree cycles will be pointing downward after 2013, so expect hard deflationary forces on Copper from 2013to 2017. Between now and 2013, though, copper is in a bit of a no mans land in terms of cycle analysis.

REPRINTED from 5/8/2011


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Copper - Weekly (Non-Log)

One of the things about longer term Commodities Charts is that theyre a series of corrections, or ABC patterns. It makes themmuch different than the Stock Market, which can grow. Commodities tend to just correct from one emotional extreme to another.Copper has taken some body blows recently and is now slipping below psychological support at $4.00. One of the reasons itsdifficult for me to get bearish, though, is the look of the move up from 2008/9 lows. I can only see three waves up.So, my bias to label this current decline as part of a Wave 4 which must hold above $3.47.

The bad news for Copper bulls is that the Wave 1 was extended, which means that theWave 5 will be the smallest leg, so only a marginally higher high Copper.

( A )

c

( B )

c

a

bc

a

b

a

b

1

2

3

4

( C )5



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Copper - Weekly (Non-Log)

In technical wave parlance, this pattern is a TERMINAL Wave (C) with a First Wave Extension. In a terminal pattern, the wavesare all corrections and it will share similar characteristics to a Triangle. A first wave extension is the most common form of aTerminal (Elliott called them Diagonal Triangles). In a first wave extension, the wave 2 typically retraces 38%. The Wave 3 isnormally 62% of wave 1 and the final fifth wave is typically 38% of the third. That describes this progression quite well. From a waveperspective, the bulls are hoping that were still in Wave 4, and that Copper will witness one more corrective wave higher. From aduration perspective, the Wave (C) should last a little longer. So,this outcome of one more wave higher before (C) completion makes some sense.

( A )

c

( B )

a

b

1

2

3

e

4

a

b d

c

4

( C )5

( C )5


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Copper - Weekly (Non-Log) - LONG TERM Support and Resistance

The Bottom Line is that severe technical damage has been done to Copper. The $3.85 area will be strong resistance for any deadcat bounce that might occur after this current bloodshed is over. $4.54 should serve as an important market top for Copperfor thenext several years. The $2.92 level appears to be decent technical support on the first go -- its the 50% retrace of the entireadvance and aligns well with a previous chart support. Bears should, at a minimum, consider closing out short positions in that area.

There are no ultimate downside targets for this next phase. Given the wave structure and time cycles, copper is in the

beginning of stages of five year cyclical bear market..


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S&P 500 ~ Weekly

LeftShoulder Right

Shoulder

Head

H&S withinthe largerH&S setup



7/8Andys Technical Commentary__________________________________________________________________________________________________

Copper Weekly

Remember how weve been highlighting the insipient Head and Shoulder pattern on the S&P 500 (previous slide)? Copper, as abarometer of economic health, is sporting a similar look. Interestingly, the neckline support of the S&P 500 comes it at the 50%retracement of the entire advance, the same level as with Copper.

LeftShoulder

Head

RightShoulder


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DISCLAIMER WARNING DISCLAIMER WARNING DISCLAIMER

This report should not be interpreted as investment advice of any kind. Thisreport is technical commentary only. The author is NOT representing himselfas a CTA or CFA or Investment/Trading Advisor of any kind. This merelyreflects the authors interpretation of technical analysis. The author may ormay not trade in the markets discussed. The author may hold positionsopposite of what may by inferred by this report. The information contained inthis commentary is taken from sources the author believes to be reliable, but

it is not guaranteed by the author as to the accuracy or completeness thereofand is sent to you for information purposes only. Commodity trading involvesrisk and is not for everyone.

Here is what the Commodity Futures Trading Commission (CFTC) has saidabout futures trading: Trading commodity futures and options is not foreveryone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Beforeyou invest any money in futures or options contracts, you should consideryour financial experience, goals and financial resources, and know how muchyou can afford to lose above and beyond your initial payment to a broker. Youshould understand commodity futures and options contracts and yourobligations in entering into those contracts. You should understand yourexposure to risk and other aspects of trading by thoroughly reviewing the riskdisclosure documents your broker is required to give you.

Wave Symbology

"I" or "A" = Grand SupercycleI or A = Supercycleor = Cycle-I- or -A- = Primary(I) or (A) = Intermediate"1 or "a" = Minor1 or a = Minute-1- or -a- = Minuette

(1) or (a) = Sub-minuette[1] or [a] = Micro[.1] or [.a] = Sub-Micro

PLEASE NOTE THAT THERE IS ADDITIONAL INTRA-WEEK AND INTRA-DAY DISCUSSION ON TECHNICAL ANALYSIS AND TRADING ATTRADERS-ANONYMOUS.BLOGSPOT.COM

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Copper Commentary 2OCT11