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

One of the interesting things about commodities is their adherence to “time cycles,” meaning they tend to cyclically bottom in a periodic way. The most common cycles are 8 or 9 year cycles which are evident in several different commodities. Indeed, there’s good analysis that suggests a 16-18 year cycle for Real Estate. So, it’s worth noting that Copper also exhibits some cyclicality. Notice the way it tends reach cyclical lows every 8 years. It also appears that there is a more pronounced 16 year cycle. Time Cycle analysis does NOT call the “tops” of cycles--it’s only good for giving ideas about bottoming periods. It looks like we won’t get our next major bottom (buying opportunity) until Late 2017. Both the smaller and larger degree cycles will be pointing “downward” after 2013, so expect hard deflationary forces on Copper from 2013 to 2017. Between now and 2013, though, copper is in a bit of a “no man’s land” in terms of cycle analysis.

REPRINTED from 5/8/2011

Fall/1977

Fall/1985

Fall/1993

Fall/2001

Fall/2009

Andy’s Technical Commentary__________________________________________________________________________________________________

Copper - Weekly (Non-Log)

REPRINTED from 10/2/2011

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

“3”
b

(C)
“5”
d

(A)

“b”
a c

(C)
“5” “1”

“4”

e

“2” “a”

“4”

“c”

(B)

Andy’s Technical Commentary__________________________________________________________________________________________________

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 “dead cat” bounce that might occur after this current bloodshed is over. $4.54 should serve as an important market top for Copper for the next several years. The $2.92 level appears to be decent technical support on the “first go” -- it’s the 50% retrace of the entire advance 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..

REPRINTED from 10/2/2011

Andy’s Technical Commentary__________________________________________________________________________________________________

Copper - Weekly (Non-Log)
Our last Copper commentary was two months ago. At that time we highlighted the bearish nature of the wave count and the time cycles while also noting important support at $2.92. Since then, Copper bottomed at $2.92 and has been chopping violently in a sideways/higher fashion. The price action is consistent with a “corrective” (C) rebound. Our longer term resistance of $3.85 has yet to be bested “3” and still looks like an attractive SELL zone. One of the targets “5” b $4.54 = Important Market Top d for the Terminal Wave “5” was 38.2% of “3.” That level was already achieved at $3.75. The 50% objective would be $3.96. So, there is a THICK band of resistance between $3.75 and $3.96.
a $3.85
$3.75

(C)
“5”

“1”

c

“4”

“2”

$2.99 e

“4”

(B)
Andy’s Technical Commentary__________________________________________________________________________________________________

Copper - Daily (Non-Log)
The other possibility is that the (C) wave concluded at $4.54 and we could be at the tail end of a bona fide impulse lower. This is the wave count that could cause A LOT of problems for bulls and bears alike because it will create a “bear trap” on the new low. The ensuing corrective rally will give Copper bulls plenty of false hope that will end in despair. (C) “3” I’m rooting for this outcome as it’s “5” been a long time since we’ve witnessed a large scale “impulsion” and it would set up easier trading opportunities.
2

“4”

1

4

The Bottom Line is that the Copper picture is not telling a good tale. There’s room for Copper to grind a little higher, but this market is a sale into the $3.75-4.00 zone and should not be even considered a buy until it sets a new low sub-$2.99.

3 5 “1” or “a”

“2”

Andy’s Technical Commentary__________________________________________________________________________________________________

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Wave Symbology "I" or "A" I or A <I>or <A> -I- or -A(I) or (A) "1“ or "a" 1 or a -1- or -a(1) or (a) [1] or [a] [.1] or [.a] = Grand Supercycle = Supercycle = Cycle = Primary = Intermediate = Minor = Minute = Minuette = Sub-minuette = Micro = Sub-Micro

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This report should not be interpreted as investment advice of any kind. This report is technical commentary only. The author is NOT representing himself as a CTA or CFA or Investment/Trading Advisor of any kind. This merely reflects the author’s interpretation of technical analysis. The author may or may not trade in the markets discussed. The author may hold positions opposite of what may by inferred by this report. The information contained in this 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 thereof and is sent to you for information purposes only. Commodity trading involves risk and is not for everyone. Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading: Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.