Thank you very much;
you're only a step away from
downloading your reports.
Jason Haver: Copper, USDJPY, and SPX -- An Overview of Three Important Markets
Copper has broken down from key support; does this have implications for US equities?
Jason Haver    

Lately, more and more signals have been nudging their way into "sell" territory, while the market has continued to grind sideways/down. Last update I mentioned that a break of 1870 would suggest a first target of 1865, and that target was captured on Tuesday. The second target of 1860-62 now appears probable -- and I'll discuss another short-term inflection point when we get to the S&P 500 (INDEXSP:.INX) chart. Let's look at two other charts first, though.

One has to dig pretty deep into the archives, but it's a matter of public record that I've been bearish on copper since November 2011. Copper has been hit hard recently as concerns continue to mount over China's troubles, and prices have now hit multi-year lows. Copper is generally correlated with economic growth since it's used in construction and for electrical and communications wiring, but, historically, copper prices haven't always correlated terribly well with US equities. In fact, copper fell steadily from 1995 through 1999, losing more than half its value during one of the greatest bull runs in equities history.

There are numerous reasons why copper may be getting hit hard at the moment, and China seems to be at the core of several of them. China accounts for about 40% of the world's copper consumption, and last week China reported the biggest drop in exports in four and a half years. So, fundamentally, there are continuing signs of economic slowdown from the world's largest copper consumer. Some of the price drop in copper also appears related to the weaker yuan (China's currency), which makes purchasing copper more expensive for China. And some of the price drop seems due to the fact that copper is used as collateral for loans in China: The recent weakness in copper hit at the same moment as China's first domestic bond default (Chaori Solar).

Copper now appears to be breaking down from key price support. Looking at copper's price chart, we can see that potential exists for (ultimately) a trip back toward the 2008 lows:


Click to enlarge

Let's take a look at a market I continue to feel is important as a correlated market for US equities: the US dollar/Japanese yen currency pair. Equities bulls would like to see strength in this market, but so far, USDJPY has only formed a good-looking ABC corrective rally to the last large decline. While I haven't annotated a wave count on this chart, I have highlighted the zones which appear to be key support. My instinct is that bulls probably don't want to see USDJPY sustain trade below 102.600ish -- though, technically there are a couple last-ditch support areas below that price zone (shown as the yellow and white trend lines).


Click to enlarge

Finally, SPX has been grinding sideways/down for the past several sessions, and while it took the long way around, it nonetheless captured Monday's downside target on Tuesday. The second target of 1857-62 appears probable, and Tuesday's wave structure has also given rise to a new near-term inflection zone at 1854-56.


Click to enlarge

If you're a new reader, you might need to read all the boxed annotations on the above chart to make sense of it. In conclusion, the super-short version is that the market reached an inflection zone last week, and the outlook maintains a slight bearish bias as long as price remains below 1895. In the event SPX sustains trade north of 1895, then the outlook shifts 180 degrees the other direction, with 100+ points of upside possible.
As yet there have still been no significant breaks in either direction. However, in the event of a sustained breakdown, there is now some coiled bearish potential energy in the charts. Bulls will need to recover any lost key zones quickly if they wish to create a springboard, or risk an accelerating decline. Trade safe.

Follow me on Twitter while I try to figure out exactly how to make practical use of Twitter: @PretzelLogic.

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Jason Haver: Copper, USDJPY, and SPX -- An Overview of Three Important Markets
Copper has broken down from key support; does this have implications for US equities?
Jason Haver    

Lately, more and more signals have been nudging their way into "sell" territory, while the market has continued to grind sideways/down. Last update I mentioned that a break of 1870 would suggest a first target of 1865, and that target was captured on Tuesday. The second target of 1860-62 now appears probable -- and I'll discuss another short-term inflection point when we get to the S&P 500 (INDEXSP:.INX) chart. Let's look at two other charts first, though.

One has to dig pretty deep into the archives, but it's a matter of public record that I've been bearish on copper since November 2011. Copper has been hit hard recently as concerns continue to mount over China's troubles, and prices have now hit multi-year lows. Copper is generally correlated with economic growth since it's used in construction and for electrical and communications wiring, but, historically, copper prices haven't always correlated terribly well with US equities. In fact, copper fell steadily from 1995 through 1999, losing more than half its value during one of the greatest bull runs in equities history.

There are numerous reasons why copper may be getting hit hard at the moment, and China seems to be at the core of several of them. China accounts for about 40% of the world's copper consumption, and last week China reported the biggest drop in exports in four and a half years. So, fundamentally, there are continuing signs of economic slowdown from the world's largest copper consumer. Some of the price drop in copper also appears related to the weaker yuan (China's currency), which makes purchasing copper more expensive for China. And some of the price drop seems due to the fact that copper is used as collateral for loans in China: The recent weakness in copper hit at the same moment as China's first domestic bond default (Chaori Solar).

Copper now appears to be breaking down from key price support. Looking at copper's price chart, we can see that potential exists for (ultimately) a trip back toward the 2008 lows:


Click to enlarge

Let's take a look at a market I continue to feel is important as a correlated market for US equities: the US dollar/Japanese yen currency pair. Equities bulls would like to see strength in this market, but so far, USDJPY has only formed a good-looking ABC corrective rally to the last large decline. While I haven't annotated a wave count on this chart, I have highlighted the zones which appear to be key support. My instinct is that bulls probably don't want to see USDJPY sustain trade below 102.600ish -- though, technically there are a couple last-ditch support areas below that price zone (shown as the yellow and white trend lines).


Click to enlarge

Finally, SPX has been grinding sideways/down for the past several sessions, and while it took the long way around, it nonetheless captured Monday's downside target on Tuesday. The second target of 1857-62 appears probable, and Tuesday's wave structure has also given rise to a new near-term inflection zone at 1854-56.


Click to enlarge

If you're a new reader, you might need to read all the boxed annotations on the above chart to make sense of it. In conclusion, the super-short version is that the market reached an inflection zone last week, and the outlook maintains a slight bearish bias as long as price remains below 1895. In the event SPX sustains trade north of 1895, then the outlook shifts 180 degrees the other direction, with 100+ points of upside possible.
As yet there have still been no significant breaks in either direction. However, in the event of a sustained breakdown, there is now some coiled bearish potential energy in the charts. Bulls will need to recover any lost key zones quickly if they wish to create a springboard, or risk an accelerating decline. Trade safe.

Follow me on Twitter while I try to figure out exactly how to make practical use of Twitter: @PretzelLogic.

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap
Jason Haver: Copper, USDJPY, and SPX -- An Overview of Three Important Markets
Copper has broken down from key support; does this have implications for US equities?
Jason Haver    

Lately, more and more signals have been nudging their way into "sell" territory, while the market has continued to grind sideways/down. Last update I mentioned that a break of 1870 would suggest a first target of 1865, and that target was captured on Tuesday. The second target of 1860-62 now appears probable -- and I'll discuss another short-term inflection point when we get to the S&P 500 (INDEXSP:.INX) chart. Let's look at two other charts first, though.

One has to dig pretty deep into the archives, but it's a matter of public record that I've been bearish on copper since November 2011. Copper has been hit hard recently as concerns continue to mount over China's troubles, and prices have now hit multi-year lows. Copper is generally correlated with economic growth since it's used in construction and for electrical and communications wiring, but, historically, copper prices haven't always correlated terribly well with US equities. In fact, copper fell steadily from 1995 through 1999, losing more than half its value during one of the greatest bull runs in equities history.

There are numerous reasons why copper may be getting hit hard at the moment, and China seems to be at the core of several of them. China accounts for about 40% of the world's copper consumption, and last week China reported the biggest drop in exports in four and a half years. So, fundamentally, there are continuing signs of economic slowdown from the world's largest copper consumer. Some of the price drop in copper also appears related to the weaker yuan (China's currency), which makes purchasing copper more expensive for China. And some of the price drop seems due to the fact that copper is used as collateral for loans in China: The recent weakness in copper hit at the same moment as China's first domestic bond default (Chaori Solar).

Copper now appears to be breaking down from key price support. Looking at copper's price chart, we can see that potential exists for (ultimately) a trip back toward the 2008 lows:


Click to enlarge

Let's take a look at a market I continue to feel is important as a correlated market for US equities: the US dollar/Japanese yen currency pair. Equities bulls would like to see strength in this market, but so far, USDJPY has only formed a good-looking ABC corrective rally to the last large decline. While I haven't annotated a wave count on this chart, I have highlighted the zones which appear to be key support. My instinct is that bulls probably don't want to see USDJPY sustain trade below 102.600ish -- though, technically there are a couple last-ditch support areas below that price zone (shown as the yellow and white trend lines).


Click to enlarge

Finally, SPX has been grinding sideways/down for the past several sessions, and while it took the long way around, it nonetheless captured Monday's downside target on Tuesday. The second target of 1857-62 appears probable, and Tuesday's wave structure has also given rise to a new near-term inflection zone at 1854-56.


Click to enlarge

If you're a new reader, you might need to read all the boxed annotations on the above chart to make sense of it. In conclusion, the super-short version is that the market reached an inflection zone last week, and the outlook maintains a slight bearish bias as long as price remains below 1895. In the event SPX sustains trade north of 1895, then the outlook shifts 180 degrees the other direction, with 100+ points of upside possible.
As yet there have still been no significant breaks in either direction. However, in the event of a sustained breakdown, there is now some coiled bearish potential energy in the charts. Bulls will need to recover any lost key zones quickly if they wish to create a springboard, or risk an accelerating decline. Trade safe.

Follow me on Twitter while I try to figure out exactly how to make practical use of Twitter: @PretzelLogic.

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
EDITOR'S PICKS
 
WHAT'S POPULAR