|
On February 28 I
penned an article entitled "Copper - the Phoenix Rising"
http://www.lemetropolecafe.com/pfv.cfm?pfvID=5942
In that article I
declared that the copper bull, despite having suffered a brutal
correction, was set
to continue on a relentless upward march. From a review of
my proprietary
Market Force Analysis I stated “The highly upward sloping market
force and rapid
reversal indicates that copper is likely to establish a new and very
strong up leg”
Copper was at $2.80/lb at the time. Today copper closed at
$3.28/lb…a 17%
rise in just one month. In view of this I decided to write a brief
update on the
outlook for copper and as the title to the article suggests it is
indeed starting to
look like a “juggernaut”. Wikipedia defines “juggernaut”
as
follows: “The
term juggernaut is used to describe any literal or metaphorical
force regarded as
unstoppable that will crush all in its path”. The long term
copper bears will
certainly be able to relate to that!
In figure 1 my
proprietary market force analysis of copper is shown in red and the
copper price in
black from mid 2004 to 2007. The market force continues to
indicate that copper
is only in the beginning of a new powerful upleg
 
Figure 1
The market force has
the advantage of remaining almost linear in character even
when the price
becomes parabolic. The market force was contained within a
trend channel until
March 2006. The market got ahead of itself and the force
exited the top of
the trend channel which indicated that a correction was
imminent. The
correction commenced in May 2006 and continued until January
2007 at which point
the force bottomed on the same support line that has
contained it for
most of the bull market to date. The fact that the market force has
resumed its upward
trend in the same channel gives a high level of confidence
that copper is now
going to power relentlessly higher for many months.
In figure 2 my
proprietary potential energy (blue line) and kinetic energy (green
line) are shown with
the copper price in black from 2006 to the present. The
energies continue to
indicate astonishing strength in copper.
Figure 2
The slopes of the
energy indicators are exhibiting almost the same magnitude as
was seen in the
initial powerful upleg in the copper price (red lines). It should be
noted also that
copper has broken above its long term downtrend line shown in
blue.
Copper is certainly
shaping up to be a juggernaut. This copper bull is
“unstoppable”
in terms of there now being 80% less above ground inventories
than the high of the
last 5 years that can be used to manipulate prices lower.
Copper has
outperformed gold and silver in this commodity bull market to date.
Copper has risen
from a low of $0.6/lb to $3.28/lb which is a 450% gain while
gold has increased
165% and silver 230% from their respective lows.
And the juggernaut
has only just started rolling!
Adrian
Douglas
Marketforceanalys.com
Adrian Douglas writes many articles
on his observations and analysis on financial markets, gold and silver
markets, and some selected company stocks. The articles were all initially
published at www.lemetropolecafe.com.
| 
