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Gold and Copper top extensions. Seasonal turn analysis

Gold and copper both made daily-scale top extensions in yesterday's thin trading. They have both been rising lately and copper already made a similar signal 4 days ago. This last little upward spurt is presumably because of the latest episode of fist-waving in which North Korea apparently tested a thermo-nuclear device but the reason is immaterial as both signals show that these rallies are in the late stages.

Gold & Copper top exts

We would liquidate any longs you may have and look for places to sell short. As ever, please note that top extensions may mark the end of up-moves but a 'top' may need to form before any weakness can begin.

Yesterday was Labor Day, the end-of-Summer American holiday. There has been a marked tendency for US stock markets to change direction on or about that holiday and we have looked back over the last fourteen years to see what happened next. Subsequent moves were sometimes slight, sometimes serious.

In eleven of those fourteen years there was a prior upward trend or an upmove within a range. In eight cases the market made a high point within two days of the re-opening and on five of those occasions that high was made on the re-opening day itself (i.e. today).

In three of those fourteen years there was a prior downtrend (within a range) and on all occasions the market made a low point either on or one day before the re-opening day.

We do not derive this from the 'turn schedule' that we publish in AlphaMail every month but from observation. The result is significant from a statistical point of view and shows that a change of direction (for at least the near term) is highly likely from hereabouts. The obvious inference is that we should be looking for a chance to sell US stocks short on any approach to the recent highs around 2480 in the S&P or on any apparent failure. We will comment further as events unfold but you may wish to act beforehand if you see either development. Any dip that results may not last long as we detect that the marketplace has a bearish tone right now, so many are already short.

All signals courtesy of software supplied by our friends at Parallax Financial Research www.pfr.com