Friday, April 10, 2009

Copper hits target

Back on January 4, in NFTRH14, I set a target for copper of 204.50 based on the Fib retrace shown here, as well as sentiment and a close above the EMA 20 for the first time. Now, a target is simply that, a target, not a prediction. I leave the predictions to the swamis.

From NFTRH14: "Every bull market has a copper roof, isn't that the old line? Well, if indeed we have the rally I think we have, so too will this bear market rally have a red roof. The utter destruction suffered by this previously over-hyped sector (China anyone?) has resulted in the predictable swing to the opposite pole. Again, looking at this as a trade in human hope only, the close above the [EMA] 20 is notable and we look ahead to an eventual and potential upside target of the 38% bear market retrace level with the idea that turbulence is likely at resistance near the SMA 50."

Well, the SMA 50 did indeed introduce turbulence as copper ground out a 'bottoming stance' for the next two months, which was tracked in NFTRH. Now, it has hit target. It may and probably will go higher because you know the class of investors that are now getting their hands on the story. They are the hopers, momo's and capitulators with seller's remorse. This phase requires patience. We were early to the party and made some profits with the likes of TGB shown here on the blog and other Hope '09 trade positions, only a few of which remain.

I would venture a guess that a lot of the people piling in now were sitting there making in their pants when they should have been buying. Well, now I am fearful of these momo's. The target level can be blown away here in Hope '09, but for my purposes, the target is in and I am getting more defensive yet in preparation for opportunities in the real bull market. You know the one.

I am usually early and the 204.50 may become history, but when it was set no doubt many people would have thought it lunacy. It is time to look ahead once again.

Edit (7:32) You want a bearish signal? Here's one... Howe Street has an author on talking about 'HOPE' and iron clad banks. This is rationalization and trend following that is just one brick in the wall of hope that we have been expecting. He then goes on with some kind of 'we're too dependent on the government, we're too dependent on being wired...' kind of thing at which point I shut it off. The main nut was in the first few minutes. The stock and commodity rally will not end until the hopers believe it. This is a brick in the wall.