Before we get into discussing copper, I want to talk a bit about yesterday’s price action in equities….
We saw the big momentum names see some weakness, as well as small caps while the S&P ($SPX ) held on and closed pretty much flat. But what’s interesting is when we look under the hood we can see some internal damage that flipped some of the mean-reversion metrics to be short-term bullish. I bring this up because we can’t assume that since the market closed flat that nothing else changed. We are seeing some of the reaction to this today with, at the time of this writing, the e-minis ($ES_F) up over a 1%. Yesterday’s low also happened to be at the 50% Fibonacci Retracement level off the August low. So while equities were flat, we still got a great deal amount of information from the market internals.
Okay, back to copper.
While all the action seems to be happening in the equity market, copper ($HG_F) has been consolidating as it creates a triangle pattern. This has occurred just under the resistances that’s stopped copper’s attempts at advance in May and August. I last talked about this level in late-August when I wrote about this resistance that copper hit and was unable to break though.
Yesterday we had a break of support as price heads lower and approaches the previous low of $3.20. During periods of consolidation like copper has been it, we typically see continuation of the longer-term trend – which in this case would be down. We’ll see if copper bears take us to the June low near $3.00 and if it is able to hold up as support. On the upside we could see the previous support trend line that has just been broken become resistance. It appears we are getting some confirmation in the break today, as copper heads lower. I’ll be watching to see where this one ends up at the close.
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