Market correction imminent, Gold/Copper correlation and corrections due (update 3) - sell signal on Gold

As discussed in Market correction imminent, Gold/Copper correlation and corrections due (update 2) if gold was to break the low of 1361 it was destine to enter a sell signal thus correction.

This has nothing to do with global economy improving or risk approving meaning shares are attractive, instead what we are entering into is a commodity correction most probably stemming from China i.e fears of hard landing.

Watch all risk crosses for unwinds, continued stock pressures emerging markets.

Panic trades coming up: major oil, copper, gold, stock corrections

Away from any technical or even fundamental cues, rather it's when greed eventually implodes.

This is when the market gets really interesting.

Refer:

• JP Morgan Chase (rumored) holding over 90% copper via the London metal exchange

• Hecto US/UK oil trader buying up huge Brent Crude related contracts, thus driving up the Brent Crude oil price, as discussed in China's support of 'junk' EU bonds will create a further bond bubble as market become even more oversupplied. China/West will get higher oil price (on speculative oil pricing)

From the Telegraph 19/01/2011

"Hetco, which is part-owned by US oil and gas group Hess Corp, was said to have taken control of eight North Sea Forties oil shipments and two Brent cargoes – and it is believed to be in the market for more. The move would give Hetco more influence over the price of oil for immediate delivery. The cargoes are for February delivery.

The reports suggested that Hetco's purchases were the basis of a trading play and the trading house now has 30pc of the Forties oil being loaded next month and 25pc of Brent cargoes. Brent crude's premium over West Texas Intermediate oil has been increasing to abnormal levels since August last year, as US inventories of both oil and gas remain at high levels.

The news propelled Brent crude futures to $98.60 in intra-day trading on Wednesday, but this was still below the 27-month high of $99.20 seen last week. Many analysts expect the oil price to move above $100 a barrel this year.

However, there was also speculation that Hetco had been trying to sell some of its supply of Forties crude, but had failed to find a buyer for a third day in a row.

Brent crude for March delivery closed at $98.08 yesterday, a gain of 28 cents"

• The SPDR Gold Trust (ETF's) as discussed in Market correction imminent, Gold/Copper correlation and corrections due.

Good to watch a panic sell off on the ETF gold market, yearly chart:




If we do see 'fat finger' sells or even rogue trades going haywire, it would be on an inflation panic. With food/energy prices about to spike, a follow on 'sell panic may' occur. As the realization of damaging inflation is to company profits and operational costs, stock indexes may get caught up in any major sell off.

Market correction imminent, Gold/Copper correlation and corrections due (update 1)

Copper heading towards a fat figure sell? A risk aversion panic dump?

Refer to sell Jan 4th 2010:


Compared to the 6mth buy up inspired bubble by one firm/trader:

Market correction imminent, Gold/Copper correlation and corrections due

Thinned out volumes, insider corporate selling (sell to buy ratio), marked up buys on HFT trading with the trademark grinding on a tight bid/offer spread.

Basically a volume on/off (mostly) overbought market, that will need to correct at some-point (using the Dow as an example).

We can see some panic buying on close (3/01/2011) of trading (volume spike).

Mixed with Gold and Copper bubbles, this all may also lead into a major sell on commodities.

The following moving average/s

DMA (black line): Displacement +10, MA -21 (note convergence cross over of the DMA on the 5th May 2010, pre May 6th 2010 Flash Crash. Also, August the 20th 2010 - marked in red horizontal red lines)

Good to watch DMA now pointing upward for any divergence.