On April 1, 2010, we called for short selling copper in an update on ZYX Global Multi-Asset Allocation Model. Avid readers of this blog would remember that at the time of the call, the Wall Street analyst community was uniformally bullish on copper and copper equities. We made the bold contrarian call because the ZYX Change Method’s rigorous facts oriented approach resulted in a conclusion against the arguments of the Wall Street analysts. We even received a few emails pronouncing that we had lost our marbles.
Well, one more time, we were ahead of the Wall Street; just take a look at the chart. Notice the volume on the down move compared to the volume on the up move — it shows there are lots of weak longs in copper. There is more to go on the downside. However, since the price is approaching the first support, we recommend tight trailing stops. Aggressive accounts may want to take off partial position here to lock in the 134.85% annualized gain and then add to the position on any up spikes.
