Short-term strength in copper?

Nothing to do with the earthquake of course — by late Monday, Sunday night’s spike was retraced to where copper closed on Friday, once traders calmed down and actually read the news reports that copper production and transport facilities were fine.

In the 3.29 – 3.35 range this morning, it was trading about where I’d expect given the action in stocks, oil and other metals. There ended the rational for my short from 3.45 Sunday evening, and I closed the trade at 3.34, noting the neutral trend of RSI and a bullish MACD cross on the hourly bar:

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I’ll now be looking to re-enter for a longer-term short, since I think the pending implosion of Chinese, Australian and Canadian real estate and the general resumption of the deflation trade will not be kind to industrial commodities.

Pre-open Dow futures

It would be very predictable if stocks just rolled back over and had a very bad day:

Interactive Brokers

The caveat of course is that yesterday was a powerful move up, hinting that there could be more to come. That’s what stops are for, and we’ve got plenty of clear ones here.

The Russell looks about done

As an index of 2000 stocks, as goes the Russell, so goes the whole market:

Prophet.net

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Allow for a few days of chop up here and slight new highs, but it would be very pretty if the Russell never saw 630 again after this week. If you want a strong sell signal, wait for a twice or thrice tested top to form, for daily RSI to turn down, and for daily MACD to cross the zero line (red arrow).

Platinum update

The MACD on platinum’s daily bar chart is giving a sell signal:

Source: futures.tradingcharts.com

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Platinum prices and sentiment charged ahead and made a new high a week ago as gold tried to get its mojo back and failed. When the metals complex turned lower, platinum fell hardest, a cool 100 bucks in two days. All of this talk about cars in China is swell, except that they are the only growing auto market these days and even their debt bubble is bursting. And besides, that stuff isn’t tradable information anyway. The fact is, platinum may as well be gold most of the time, since the precious metals move together with a very high degree of correlation.

Phew, the storm has passed…

5-year view of positive-only maximum values for the NYSE TRIN* here:

Interactive Brokers

Boy, that squall just came out of nowhere, didn’t it? Thank god it’s behind us… looks like smooth sailing from here on.

I thought it was kind of neat to see this faulty, positive-only TRIN chart, since it highlights the really bad days. Here’s the complete picture of daily TRIN readings (3 years):

Stockcharts.com

Notice the symetry that forms over time: action and reaction. This picture is looking pretty lopsided at the moment, reflecting a very highly overbought market.

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*TRIN is a measure of breadth, useful for gauging the intensity of advances and declines.

Formula: (Advancing Issues / Declining Issues) / (Advancing Volume / Declining Volume)

When lots of stocks move together and volume picks up in the direction of the movement, you get a strong TRIN reading and you know that the movement could be more than just noise. Moving averages help you to identify overbought and oversold conditions.

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TICK

TICK* is usually considered a day-trader’s tool, but its longer-term moving averages are very information rich. It is a tool that would have helped keep you on the right side of the market for the last 24 months:

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Look at how useful the MACD has been. Very nice pattern here since the start of the bear market. From an overbought condition it gives a sell signal on a downward cross of the zero line. Once that is followed by a countervailing move large enough to reset momentum, the return to the zero line gives the signal to tighten up stops and a cross with gusto gives a buy signal.

Right now we’re at the zero and pointed down.

*TICK: Downticking stocks (hitting bid) minus upticking stocks (hitting ask) on the exchange at a given moment.