Trading and News related to Copper HGXXXX Futures on Comex

Don't believe the hype.

If you read the news released today by bloomberg they would tell you that copper is going up because everyone thinks that Europe is just fine -- steady as she goes (no sarcasm here).

Personally I don't believe one word of it and the simple truth is to take a look at copper trading on the comex at end of day today May 28 2012. The trading day ended with really light volume on the high -- this is no trend - fact is only 19K contracts were traded versus an average of near 50K futures contracts traded.

Last of all what is creeping me out and making me put Copper on my trading daily watchlist is nont just the unusually low volume which is likely attributed to the fact that the US markets were closed today but also the unusually low volatility. Throw a standard deviation on the daily Copper chart and you will see that the we're looking at low volatility not seen since late April. Interestingly when volatility returned Copper took off from 3.705 to 3.837 in 3 days flat. That's why I don't think that we're seeing a trend just yet. I would wait it out one more day and see what happens in tomorrows trading and make a decision from there.

Well today really was an interesting trading day as we saw heavy trading with above average volume on CME's Comex futures exchange. Now with all of that heavy volume the price of Copper went up to 3.5 and then came right back down again almost where it started.

What does that say about the volume? That likely Copper during the day went up on light volume and came down with heavy selling pressure. Let's take a look at the tick volume chart for HG right now. Ah as it turns out HG Copper has sold off quite a bit in the Asian session tonight.

My feelings of a weak upward move were correct -- anytime there's a move with low volume and no followthrough in volatility tells me that it was not a true break out or begining of a trend. At the moment I would be looking to trade short Copper July4 Contract if it breaks below 3.430.

Currently in tonight’s Asian session Copper is now trading at 3.37 which pretty much exactly as planned. Having shorted at 3.43 as posted in the previous post the trade is well profitable now. However its time to take a look at how I'm going to exit this Copper futures contract. Frankly I have no intention of holding this trade for a very long time. Markets are too choppy these days for me to feel comfortable so I'm setting a stoploss loss at 3.39. I want to take some decent profits out of this move without choking it in case it needs room to run.

Tonights Asian session continues to show negative trend in this Copper futures contract but so far there's been very little volume and negative sentiment in the news doesn't seem to be as dire as it was yesterday. I think at this point some bearish exhaustion might be setting in over all the negative economic news. Everyone who wanted to be a bear is now already short. Which makes me think that any positive news will send the price of this future shooting upward only because of the tight short squeeze that will happen.
I suppose that's why I'm being very careful with this short Copper trade. So I’m just going to trail my stop behind the price and wait for the market to turn. So far I don’t have a definite exit point.

My short trade at 3.43 on Copper continues with price still at at around 3.69. I don't plan on closing it until maybe tomorrow morning. Tonights asian session has begun with a fairly positive trend on this commidity so I'm not sure if continueing to trade it short through the weekend is the right idea.

I'm setting a tight stop loss on this Copper futures trade at 3.75 for the asian session. If the short trend doesn't continue then I'm going to cut it pretty quickly and take my profits.

For some reason I continue to fear a short squeeze, the market to me feels well oversold and oversold for some time. Until the whole economic issue with Europe is figured out the shrot term trade is definitely short, but having said that when the direction changes it's going to be stratospheric in how quickly copper increases in price.