Today’s ramp up in the stock indices is an Initiative break from a protracted Balance Area. The benefit of the doubt must be given to continued bullish action unless and until the Initiative move fails. A failure would be closing below Thursday’s session lows by any of the primary trading indices (ES,YM,TF,ENQ). Some retracement into Thursday’s range would not be unusual, but Thursday’s low should not be taken out. A close below 1391 in the ES and the equivalent levels in the other indices is a strong signal a top of significance could be in place. We have more news tomorrow and then even more next week. There will be ample catalysts over the next several trading days to test the sturdiness of the bullish breakout.
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Copper is trading near the upper extreme of a mature Balance Area. It is a bit surprising it has not broken to the upside with the other “risk on” assets. Copper is highly correlated with equities but has increasing displayed relative weakness against stocks when stocks rally. Thursday (Sept. 6) was a striking example, with copper closing down on the day. Many attribute this to the weakness in China, and if that is the case then it is a surprise it is holding up as well as it has….so far. Regardless, structurally Copper is trading near a significant KRA and a sharp move, one way or the other, is likely to soon occur. A close above 35625 targets at least 36000. A close below 34465 targets at least 33000.