WAITING IN THE WINGS
We are in an interesting spot right now in many markets. The Copper chart above is one such spot. We have had an incredible run upward in price here as we have in virtually every market. I have talked about the danger of trading against the trend, and this is no different. Oscillators often diverge against trends and give one false signal after another. I try to use the rule of thumb that there has to be "prominent" divergence against the trend, to trade based on that divergence and against the underlying trend. That of course is subjective.
For me it has to be the first thought I have when I pull up a chart, "Wow look at that divergence." This one above qualifies. So the next step is how to go about taking a trade. It is my personal opinion that selling weakness in a spot like this is a mistake. It will work the one time the exact top is formed because the market will just free fall. All the other times, it will result in an immediate trap as the market lures in all the bears, then retests the high. It is my belief that you want to enter these trades on the retest moves, once they show they might have failed. This is still not a perfect way to do this, but at least it gets you better trade location. There was a possible short entry today below Tuesday's low but that is a very aggressive entry against the trend. Had the overall structure of the market been more neutral or towards the downside, that is an entry I probably would have taken.
Since this trend is so strong I am going to wait for something a bit better. The other thing to consider here is that in this complex, Gold is by far the weakest market. As a result if you are bearish on metals which is sacrilege at this point, look for sells in the weakest member of the group, GOLD.
It is obvious how much weaker this market is than Copper so short here if you are looking for sells. I might split my bet since the Copper setup is so strong I will have to wait and see.
Tomorrow we have the DNFP ( Doctored Non Farm Payrolls ) report being released. The one thing we do know for sure is that is will misrepresent what the truth is. How to handicap how or in what way is just impossible. I am sure we would all throw up if we knew the full breadth of the dishonesty coming out of the government nowadays. I would just prefer to be ignorant and let them lie to us. As Jack Nicholson said in a movie once "You can't handle the truth." That is clearly their view and how they operate with all of us.
It is likely we will get sharp moves initially off the report and that is basically gambling so wait for it to settle down if you are not already in something.