Hmmm. Well...here's a couple of different takes:
Chan says:
"The big story belongs to copper. It broke down this week from the seven month consolidation which many thought would break to the upside. Next stop is the 200ema."
Coxe says:
"Now on the other hand, we had a breakdown this week in the price of copper. And as you know, copper has long been said to be the Dr. Copper, the metal with a PhD because of its ability to forecast economic developments. Well, I think that if you actually look at the charts over the years you’d find that copper’s PhD is like so many PhD’s that have been granted in the last twenty-five years, which is, for pretty shoddy work. So I don’t think that that still stands.
But what happened to copper was basically, hah, the Codelco strike got settled. So you’ve got the company that mines one third of Chile’s copper, which means one eighth of the copper in the world, the government owned mine there, they settled their strike. And that removed the possibility of a shortage problem developing in the new year. And since inventories have been rising steadily on the LME and the other exchanges, what that did was produce a sharp sell-off in copper and what we’ve done is we’ve broken on the charts at 288, it’s a pretty clear breakdown for copper."
What I find somewhat unsatisfying about Chan's work is that there is no reference to fundamentals, it's all in the chart. Chan would probably argue that there's no point in referring to fundamentals...because they are all reflected in the chart. So who cares what is driving the price action, all that matters can be determined from price. However, Chan will turn on a dime if subsequent developments indicate that this was a false break. So he may do the hokey-pokey more than many of us are inclined to do, but he won't miss a long leg up, either. They don't call it a "bull market" for nothing, if you don't stay on then you better get clear, lessen you wanna git stomped or gored. |
