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Copper And Chilean Peso
Submitted by Nic Lenoir of ICAP
The earthquake in Chile last night caused a spike in Copper, as the country is one of the top producers of the metal. As more information is released about the conditions in Chile, the market corrected and posted a quite bearish candle on the day (see dail copper chart). If we gapped down below 331 tomorrow we would basically have an island reversal on the recent highs and on the back of a failed retest so far of the support of the former bullish channel now resistance. We think this presents technically a possibly very good shorting opportunity.
In parallell to this observation we take a look at USDCLP. As you know I remain a USD bull. While the USD has appreciated greatly against European currencies (rightfully so I might add), progress has been fairly muted against some of the commodity currencies. Looking at USDCLP we see that the sell-off since last March has retraced just about exactly 76.4% of the rally of 2007/2008. Looking at it a bit closer, we see that wehave broken out of the downtrend channel, and zooming even more we see that we have posted a double bottom on the recent lows. Ideally we would like to see a retest of 511/510 which is both the resistance of the former bearish channel now support, and also the neckline of the double bottom and 61.8% of the initial bounce since the lows. There is an intermediary support here around 522/523. The other option is to buy on a break-out above 536. This trade would fit both the view of a stronger USD and a overbought copper.
Good luck trading,
Nic
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Time to start scaling into equity shorts.
Really? How so?
short-term overbought per market internals. Key words "Scale in". I don't do one shot pops.
this why SPX can't go down.. all smart guys are short, and dumb guys are flat. So, who will sell it?
I looked at this trade this morning when Anglo reported that they were restarting power in the four operations that had been shut down. The roads seem to be in good condition to. It's just that copper had a big run up on Fri. before the Quake and I'm not sure where the top if this run is.
3.485 your top. but i would stop 3.40. you had massive short cover on Monday
I found Denninger's comments today on copper spike http://market-ticker.org/ (scroll down to second post), and his recent comments on other matters, interesting...
But he forgot the biggest absolutely most fundamental-missing, mega bubble of all times: fiat "paper" currencies, like the USD, EUR et.c. (most of them isn't even paper, just a number in a database). But I guess there is always a bigger fool, as he writes...
"These conditions, historically, always produce crashes. Each and every time. Go ahead and look back through history with a dispassionate eye. Find me a market that displayed a complete disconnect with fundamentals such as this and did not crash."
He is absolutely right here: I can't find one fiat currency that hasn't crashed.
Just need some high profile news to bang a commodity sector with bullshit and jump in front.
All through the 08 runup in oil, the boyz were busy whacking a hole in a refinery pipe , announce the refinery shut down and getting out front. Did it over and over. And hurricane projections were REAL MONEY !!
Natural disaster is a big moneymaker...except with Haiti. Make a shortage prediction and pick a trade.
Interesting developments among the copper juniors- of note Chariot Resources scooped up the Chinese. Recommend giving a look at a great resource on LatAm mining stocks, etc at IncaKolaNews. Author is an LA equities analyst who does great FA work on juniors with a strong focus on LatAm, he is currently tracking/etc what he calls a copper basket.
http://www.incakolanews.blogspot.com
thats confusing... i am sorry but it doesn't make any sense. Bubble is in Copper, just sell Copper. Why express such a simple view with such a complex trade. Sell HGK0 3.35 target 3.20 stop 3.40... and be happy
Dr. Copper is the harbinger of all global markets...
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