The following report was published for our subscribers September 9, 2011
Copper ended August with a bearish outside reversal bar (a higher high, lower low and a close below the previous month's low). This also completed the anticipated bearish setup in the RSI(14) by having August take out the May low after July put in a lower high than February.
The rollover of the 20-week average and the MACD crossing its average confirmed the sale. Look for this top process to be followed by a cascading waterfall. A minimum drop of 30% (targeting $3.20) can be anticipated, however something closer to 40% ($2.70) would be normal.
Major base metal producers (BHP, RIO, FCX & TCK) continue act poorly with the 50-day and 50-week averages capping the last four week's highs. It is now time to lower our sights and monitor the 20-day averages as the new resistance.
The last five sell signals in copper saw BHP decline by 74%, 27%, 24%, 29% and 12% from the high.
Various related bearish ETFs and options are available; BOS, BOM, JJC, HKD.TO and HMD.TO.
Weekly and daily charts
Weekly charts from failed monthly RSI tops.
Arrows identify the bearish rollover in the 20-week ema or crossover of MACD
Seasonality favored a topping process with a failed high in September and a hard decline to follow.
BHP Billiton, Rio Tinto, Freeport McMoran and Teck Resources
Larger Image
Technical observations of RossClark@shaw.ca
Link to September 16th 'Bob and Phil Show' on Howestreet.com: http://talkdigitalnetwork.com/2011/09/shooting-rapids/
