Copper Bubble Update
This is more of a psychology lesson but backed by a slowing economic backdrop.
If it looks like a bubble, and it smells like a bubble, is parabolic like a bubble, then it most likely is a...bubble! And we know how they complete the pattern - they break! Ka-boom!
Again, I am NOT a copper expert, but rather a broad market expert (I use that phrase lightly, mind you). So I looked at the Fibonacci weekly pattern for copper, shown below. Presumably, a global economic pattern of weakness highlighted by weakness in housing backs this view along with the break in the CRB, as previously highlighted by Toddo, myself and others.
So where could it go if it breaks? Take your pick. 238, 194, or even 144. That would be my best guess as bubbles often retrace all of the moves to the multi-year breakout and this would be a 76% retracement of the entire move, not unlike the break in the NDX which was in the 80-85% retracement area - see that NASTY chart below. Sorry to remind you all of that one if you suffered from it.
This is more of a psychology lesson but backed by a slowing economic backdrop. While not a prediction, stocks like Phelps Dodge (PD) and Freeport-McMoRan Copper & Gold (FCX) could be ripe for a downside whack, and I defer to Prof. Succo if the puts look appropriately priced. One thing's for sure. I am staying as far away from this group as possible! Just my take.
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 Newsletter