Copper: A Revision in Thinking

• Posted by Greg Harmon
• on April 6th, 2011

I wrote about Copper as a tell for the market on March 23rd (link below) noting an interesting divergence between what the Copper ETF,$JJC, was telling compared to the futures on the commodity itself,$HG_F. Turns out perhaps they were both right and telling the same story, but that I misread the Futures.

The JJC above was always telling a clear story about the future of copper. It has completed Super Cycle Wave (III) of the Impulse Wave higher and is now in a Corrective Wave. Expect this wave lower to stop before 48.25, the top of Wave (I). It could finish well before that as there is support at 52.50 ad then 49.91. The Futures, below, can tell a similar story when viewing the detail. Focusing in a little closer reveals that the Super Cycle Wave (III) has completed and a pullback has begun. it is too soon to determine if the first corrective wave (A) has completed or is still building. But looking at the previous support and resistance levels at 400 and the 50 week Simple Moving Average at 373 suggests a couple of potential reversal areas. What is clear from both charts outside of the Elliott Wave analysis is that the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicator are both suggesting lower prices to come. But remember, that Elliott Waves run in 5’s. After this Corrective Wave has completed then the 5th Impulse Wave higher can run. More on what that target might be at a later date. If you believe that Copper is a tell for the S&P 500 then prepare for for a potential further pullback. But be mindful, as discussed in the post below, that the S&P 500 and Copper do not always trade together.

One final note, when writing the original post the Point and Figure (PnF) Chart was confusing but confirming what I had originally seen in the Copper Futures chart, another wave higher. Below is the PnF chart today with a target now of 360.0. The High pole warning turned into a reversal.

If Copper is the Tell What is it Telling Us? Ummm, IDK?

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