Hope everyone is having a good weekend. Decided to take a quick look at Dr. Copper ...
The Bottom Line: This is not a good looking market at all. There's certainly some room for it to grind higher but there is a thick level of resistance just above ($3.75-4.00). I would be a seller into this zone if it gets there. In terms of the more macro implications, the picture with Copper is a harbinger of "rougher times" for China.
"China's going to survive all this. This is not the end of the next Middle Kingdom," he said in a live interview. "They have a real estate bubble on their hands and they're going to have to get through this. "We're not saying China is going to completely melt down as a society or country. But they are going to have a real credit problem and they are going to have problems in the sector that is the largest part of their economy, and that is going to be a pretty big speedbump."
20 comments:
Anecdotal stuff from Houston....
Had the chance to go to various holiday lunches and dinners last week. Every restaurant I've been in has been packed to extremis. Pretty crazy....
This place is bustling right now...
Weekly 3LB Update 12/9/11
It's going to be tough to beat the Broncos when Jesus Christ is clearly on their side.
How 'bout them Texans?
Playoffs....
T.J. Yates was a "gamer" today. Never seen so much excitement in a sportsbar....the place was going crazy.
Thanks AT for the copper
and
AR for the 3 pound update.
""This place is bustling right now...""
Same here in Kona, Hertz Rep told me all of the rental car company's are just about sold out until Jan/Feb. Outback steak house had a 1 hr wait last night.
Andy - As Always, good stuff, thanks.
The Broncos are going to need more then prayer if the Seahawks make it to the play off :p
Mangy Mutt
Mangy Mutt.
Seattle?
Playoffs?!?
C'mon Man....
ha. good luck on that one...i'm a Pete Carroll fan and used to live in Seattle....so, I've got a soft spot for the Seahawks...but they may be a better story 'next year.'
Andy - I have a good buddy of mine who has been a die hard 49er fan for as long as I can remember, well the past 2 or 3 years he had been lamenting about how much they sucked.
I assured him, that they had the players and personnel in place to be a really good team and although Mike Singletary is a great man, he was not a good head coach, well they let Singletary go and this year the 9ers are on fire.
I think Seattle has most of the pieces in place, Marshon Lynch is doing great, the offensive line is starting to gel and Tevarius Jackson is looking like he may be a good quarterback, but I do not believe Pete Carroll is equipped to be a head coach on the pro level.
Plus they have to travel farther then any other team, which is one of the reasons Seattle is so good at home, but also why they do so poorly especially when they travel back east.
It is doubtful they are going to make another Superbowl run anytime soon, but it is always nice to dream, kinda like buying a lotto ticket, you know you are not going to win, but when it gets up to $100,000,000 it is a cheap fantasy.
Seahawks are a cheap fantasy :)
Mangy Mutt
Gold is getting a UFC beatdown. Is it true that EU banks are selling or lending gold to raise short term cash as postulated on ZH?
Today is looking a lot like Thursday except there is now no hope of ECB printing and the EU Summit was a failure.
Is it true that EU banks are selling or lending gold to raise short term cash as postulated
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I seriously doubt it matters in the REAL scheme of things...
I mean... What? You're talking about a PAPER DERIVATIVE of a market that either has no underlying collateral, OR, the collateral has been rehypothecated more times than a liar loan for a mortgage that was robosigned in 2005...
Now lever that up 100x (and rehypothecate the fractions thereof) & you may start to get a glimpse of the tip of the iceberg...
Oh but wait... Let me see what Ritholtz has to say about it before I make any moves...
We only engage in rehypothecation of clients funds when 'momentum opportunities' present themselves in the highly predictable world of which crow is going to fly off the fence next...
& we only do it during bathroom breaks at 'State Treasurer' convention keynote addresses...
nice charts AT, thanks.
Anyone get the feeling that the "HFT off" switch is going to get pressed?
@Andy
I like your charts... But what I feel obliged to offer up here is that what I REALLY like about them is what I'll call the 'geometry' of chart patterns...
I've discussed this many times before on this blog that the main thing I like with TA are the aspects that happen to intertwine with things like fibonacci sequences and golden ratios...
I probably believe in those things as much as any die hard on this blog... The 3lbs are fascinating as well (& I'll throw in the "18's" too just because of the 'MATH' which is, in general what I'm referring to as being relevant)...
- HOWEVER -
Me, (CV), being the rogue comet of this planetary conclave, I feel it's important to offer up a few sidenotes on "Dr. Copper"...
It's one thing to look at the geometry of charts... And to be sure, the potential diagrams that you represent seem to me to be as good as any that anyone could construct (whether coming from a 'Louise Yamada' type analysis, or some marginal flow FUNNYMENTAL chief)... But it's another thing to extract KNOWLEDGE from those price movements... I'll give you an example...
Let's say that your charts prove to be EXACTLY accurate (with regards to both price and time)... My question is... With the foreknowledge of that (& ONLY that)... What determination might one make with regards to the WORLD ECONOMY?... I realize that you were not stretching as far as to imply anything, but OTOH when someone used the expression "Dr. Copper", the implication usually seems to point to the larger picture (or otherwise, something MACRO by nature)...
I suppose a normal... LINEAR THINKING person... Would immediately presume to suppose 'CONTRACTION'... (Which usually implies, less demand, supply glut, price collapse, etc.)... That scenario, may in fact play out and turn out to be the case, but I'm not a normal thinking person...
-end 1-
I'll just share a few thoughts that have crossed my mind that could wreak havoc with that assumption...
- There could be a FIAT money collapse... (I'm not making any assumptions, I'm just saying it's not out of the realm of possibility)...
- A fiat money collapse IS NOT TEOTWAWKI... Well, yes it is, but not really... Basically, it's TEOTWAWKI, but 'not' TEOTW... Clear?
- It's basically a reset... It's a simple 'accounting trick' (which has been used many times before), whereby 'zeroes' are added or subtracted... I know I'm not a first grade teacher here so I won't talk to you all like you're first graders but it's not even unlike STOCK SPLITS (regular or reverse)... Amusingly, many of the CHARTS that people use on MSFT (or any stock for that matter) don't actually adjust for the stock splits that have occurred in the publicly traded company history... Therefore - THEY DON'T ACCOUNT FOR DILUTION (and end up in essence, as a linear price point 'smoothing mechanism)...
- That (or something similar)... to me... could be something that may happen across the commodity space in the event of a DOLLAR reset...
- The variables on what may happen are something that NO MIND can comprehend at the moment... I'm just speculating here... But let me try and play out some possible scenarios...
- I believe that... IN THE good 'ol HYPERINFLATION vs. DEFLATION argument, that we've already seen the bulk of the hyperinflation (maybe one more drink at the punchbowl and it will all be over, but we're basically there)... I don't think that people truly understand the phenomenon yet, though, because this is the first time it's happened in a world of electronic ledgers...
'Hyperinflation' has ALREADY OCCURRED in what are commonly known as 'assets'... 401k's, pension fund balances, home prices, the price of a cup of coffee, military budgets, expense accounts, the price of a service for getting your nails done, ANY EQUITY of a dot com that never manufactured anything more than an idea or vapor, etc... There is (arguably) NO REASON ON GOD'S GREEN EARTH that the 'cost' for these produced goods should have ever reached the levels that they reached over the past 30-40 years... But they DID... Accounting tricks were invented to keep it all propped up, & everyone danced...
OTOH - prices for many important materials (such as crude oil, industrial metals [the extraction & refining of such is largely crude oil intensive], and other fabricated elements has been artificially suppressed)...
So basically, in a DEFLATIONARY environment that we are now facing (assuming the levered debt in the system is even payable AT ALL in any reasonable time period)... What's DEFLATING IS NOT the goods necessary for survival (& I'm making the leap to 'assume' that survival means to continue to perpetuate the growth path of a planet which has reached 7 billion human inhabitants - & further assuming that, ACCORDING TO THE MASTER PLANNERS, that path MUST be sustained to justify the continued HEAPING ON of debt levels - which is 'money' in the system)...
- end 2 -
I'm supposing that in a monetary RESET, that CASH is going to deflate as much as any 'asset' you own (in which the VALUE is denominated &/or redeemable in a paper note)... CASH deflating 'seems' like inflation to the bearers of the paper notes... It's actually deflation of the value of the notes themselves...
I'm somewhat DUMBSTRUCK when I listen to 'hoarders' of paper notes in this scenario... The thesis being... "Oh well - in a deflationary collapse, I'll be able to buy EVERYTHING IN SIGHT at a fraction of what it costs today... If that's the case, then just about every pensioner & social security recipient out there (who gets their monthly check, takes it to the bank, and redeems it for cash, is ABOUT TO BECOME rich with all the things they'll be able to buy!
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So now I come, in this roundabout way, back to "Dr. Copper"...
I stated before that everything I'm saying here is hypothetical... I don't know what's going to happen, I'm just inventing scenarios based on what I see & feel in the real world...
But let's look at it from TWO DIFFERENT ANGLES...
1. We muddle along... Which basically means that a process of 'debt destruction' occurs... Frankly - I don't see how that will end up being the path (as EVERY action by bankers around the world thus far in response to the crisis has been to heap on more debt and attempt to 'socialize' it by ways of eventual taxation)... It's still a game in progress...
Part of that game will inevitably require a continued 'growth trajectory' (which is probably unsustainable from a logistical standpoint - not that that won't stop TPTB from trying)...
(understand that 'muddling along' in this scenario means that the finger must be held on the PRINT button - PRINTING anything means 'more of it' (which means its value is progressively WORTH LESS than a more fixed supply of something else or other unobtanium)
2. We collapse... There is TOO MUCH DEBT in the system (which, furthermore, is too tightly interwound with everything else) to allow for any organized 'landing' of such an event... I don't care what you're holding as means of exchange here, but I'd be willing to say that if it's a PAPER NOTE (which implies a a claim on some intangible hypothecation)... It ain't worth much...
Let me put it to you another way... I seriously DOUBT that the FED, or Goldman Sachs, or a desert bedouin, in this moment, is stacking dollar bills on pallettes in some vault somewhere to be prepared for the day when the price of a Ferrari, or a mansion in "Emerald Cliffs, California" drops to a buck...
I'm guessing... along the same lines... That they MIGHT, just MIGHT, stand a chance if the value was stored as pure gold...
- end 3 -
So under that scenario, you have to look at the Dr. Copper chart and imagine it 'smoothed out' along those potential scenarios... I'd be willing to toss out a 10-1 "stock split" for starters (meaning: your NEW DOLLARS only buy 'one-tenth' of what they used to)... Everything is RESET accordingly (except, it ISN'T)...
It means that the prices for new things will end up being adjusted (based on the new input costs - which, in turn, will be based on the reset value of industrial commodities)... Basically, if the cost of a gallon of gas WAS $3.50... and now it drops to .35 cents, that's fine, but if your income dropped from $100 grand a year to $10 grand a year (commensurate with that), then, the price of gas went to 70 cents, then you're a little screwed...
Y'all think this is a load of crap? Ha!
I lived in Europe (in Italy) during the time when the EURO replaced the LIRA... IT HAPPENS EXACTLY THAT WAY... I paid over $450 MILLION for my house in the country... Zeroes (& ratios) changed over time in the new denomination but it was interesting to watch the prices of other things rise & fall in the same process...
Anyway...
What I'm saying is that I have little doubt that a person will look at the copper charts after a decade & see that they are FAR OFF from what you drew up here... But I almost gaurantee you, that the 'happenings' that occur along the way aren't anything like what one might predict in a linear way using these models today...
- end part 4/last part -
&FWIW
If you check my blog...
I "hit" not only a 5 unit play on the Cardinals yesterday... I also predicted them to win SU vs. the 49ers...
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Tonight - I like the Seahawks for the win... But I gotta take the points with the Rams...
@Mutt
& Mutt... Well... "kinda" on the Seahawks observations (my 2 cents)... But I'll add...
- Some of the nucleus is there (esp. on defense)
- But the O Line still has major problems
- Marshawn Lynch isn't someone to pin your hopes on (even if he does make the highlight reels every now & again)
- Tavaris Jackson is just a glorified Kordell Stewart...
I'll be back AFTER I've gone over to check the NFL history books on how many "titles" Kordell Stewart & Pete Carroll have won over the years in the NFL...
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