Tighten S-T Copper Bull Risk to $3.1380

October 24, 2017 8:28AM CDT

Although the market has yet to break 16-Oct's 3.2595 high that prohibits us from concluding that 19-Oct's 3.1380 low COMPLETED yet another correction within the secular bull trend, both short- and longer-term traders are advised to trail protective sell-stops on still-advised bullish exposure to levels just below 3.1380 as a result of today's rebound.  A relapse below 3.1380 would render that low an initial counter-trend low, the break of which would confirm at least the intermediate-term trend as down.  And given the prospect of completing 5-wave Elliott sequences on a number of scales amidst historically extreme bullish sentiment not seen in over 11 years, even an admittedly short-term momentum failure below a level like 3.1380 could be enough to expose a peak/reversal threat that could be significant in scope.

Copper 240 min Chart

Copper Daily Chart

The magnitude of the secular bull trend from Jan'16's 1.9355 low is clear in the weekly log active-continuation chart below.  It's been a majestic ride with weakness below last week's 3.1380 low required to even defer it, let alone threaten it.  Might the portion of the rally from 22-Sep's 2.8940 low in the daily chart above be the completing 5th-Wave of a broader sequence up from 08-May's 2.4725 low?

Yes.

And might that rally from May's 2.4725 low be the completing 5th-Wave of a massive 5-wave sequence up from Jan'16's 1.9355 low?

Yes.

And would some of the highest, most frothy sentiment levels in over 11 years be consistent with such a major peak/reversal condition?

Yes.

The only thing that's missing regarding these obvious threats to the bull are LOWER PRICES.  The uptrend remains arguably intact on almost all scales with today's rebound and a prospective poke above mid-Oct's 3.2595 high reaffirming this fact.  To defer or threaten this massive bull the market must at least fail below 3.1380.  And even then, such a mo failure would be of an insufficient scale to conclude anything more than an interim correction of "just" the rally from 22-Sep's 2.8940 larger-degree corrective low and key long-term risk parameter.  To truly break the secular uptrend commensurately larger-degree weakness below 2.8940 remains required.

Copper Weekly Chart

The scope of the past 21 months' rally relative to the prior 10-year history of copper prices is best seen in the monthly log chart below.  The extent and impulsiveness of the rally from Jan'16's 1.9355 low is impressive as is the market's gross failure to sustain 2015 losses below former 3.000-area support-turned-resistance that exposes the entire 2011 - 2016 dell-off attempt as a 3-wave and thus corrective affair.  We're not going to conclude a theoretical resumption of 2008-2011's uptrend that preceded this correction, but until and unless this market confirms a bearish divergence in momentum on a scale sufficient to truly threaten it, it would be premature to conclude the 21-month uptrend is near its end.

These issues considered, a bullish policy and longs from 2.9500 OB recommended in 29-Sep's Trading Strategies Blog remain advised with a failure below 3.1380 required for shorter-term traders to step aside and longer-term players to pare bullish exposure to more conservative levels.  Ultimately a failure below 2.8940 is required for even long-term players to move to the sidelines ahead of a subsequent switch to a bearish policy.  In lieu of such weakness further and possibly accelerated gains should not surprise.

Copper Monthly Chart

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