Copper, Get Short, At Least Marginal New Lows Below 299.40 Ahead

Copper is up from its multi-month low at the 299.40, but the gains are seen as a correction (wave 4 in the fall from the Aug 1st high at 454.00), and with eventual new lows below 299.40 after (within wave 5, see daily chart below).  Note that copper has gotten a lot of attention recently due to its relationship with economic activity in China (and recent concerns about a slowdown).  Also, another downleg in copper fits the view of another potential selloff in "risk" markets, and upleg in the $ (see earlier sent email).  Currently, the market is down from the Oct 17th high at 346.35 (38% retracement of wave 3), potentially completing its multi-week correction, and suggesting new lows ahead.  So for now want to be short copper and would sell here (cur at 320.65).  But there is risk that new lows below 299.40 may be limited (see longer term below), so will use an aggressive stop on a close above the bearish trendline from early Sept (currently at 342.50/343.50).  Note too that even a break above there would not abort the view of new lows, but suggest a more extended period of consolidating first, and would be looking to resell higher if taken out.  Nearby support is seen at 316.50/317.50.

Longer term as mentioned above, new lows below the Oct 3rd low at 299.40 are favored.  However, such a move lower would be seen as the final downleg in the fall from the Aug 1st high at 454.00 (wave 5), longer term support lies just below there at 293/298 (50% retracement from the Dec 2008 low at 125.50, see weekly chart/2nd chart below), and the seasonal chart bottoms near the end of Oct and then firms through the end of the year (see 3rd chart below), with all suggesting that new lows may indeed be limited.  So for now given the somewhat high confidence of at least some new lows ahead, would also switch the longer term bias to the bearish side (currently at 320.65).  But will be watching closely for signs of a more important bottom (5 waves up on shorter term chart, false break of important support, etc.) to switch out.

Current:
Nearer term : short Oct 19th at 320.65, stop on close above bear t-line from early Sept (cur 343.50).

Longer term : bearish bias on Oct 19th at 320.65, but new lows below 299.40 may be limited.