TP: Copper Weakness Signals Serious Concerns About the Economic Outlook
Copper, iPath DJ-UBS Copper TR Sub-Index ETN price fell sharply again, breaking down below the lows of the past 10 trading days on 10/20/11 and thereby confirming a bearish trend for the short term. JJC broke down below the lows of the previous 14 months on 10/5/11, confirming a bearish major trend for the long term. Major trend weakness in Copper suggests serious concerns about the economic outlook.
Gold, SPDR Gold Shares ETF price broke down below the lows of the previous 2 weeks, thereby confirming the bearish short-term trend.
The S&P 500 Composite rose 5.51 points or 0.46% on Thursday, October 20, 2011.
SPX appears to have found resistance the top end of its 10-week trading range.
The stock market has been overbought for the short term over the past few days.
Sensitive price momentum indicators have not been confirming price for several days. There remains a bearish price momentum divergence for the very short term. This divergence could lead to a deeper price pullback in days ahead.
On 10/20/11, the Dow-Jones Transportation Average closed above its closing price highs of the previous 11 weeks but the Dow-Jones Industrial Average did not confirm.
The Dow Theory signaled nothing more than an upward Ripple on 10/14/11, when both the Dow-Jones Industrial Average and the Dow-Jones Transportation Average closed above their closing price highs of the previous 10 weeks. Ripples are the very minor day-to-day fluctuations that are of concern only to short-term traders and not at all to Dow Theorists. Ripples can last from a day to several weeks, but most last 2 weeks or less.
Much more significantly, the Dow Theory signaled a Primary Tide Bear Market on 8/2/11, when both Averages closed below their closing price lows of the previous 11 months. This Bear Market was confirmed on 10/3/11 by lower closing price lows for both Averages.
A Dow Theory Primary Tide Bear Market is a powerful beast that must not be underestimated. The median Dow Theory Primary Tide Bear Market in history lasts 16 months and takes stock prices down 34%.
