Red-hot copper hit another new all-time high this week, extending its mighty upleg to a 66.6% gain since June! As always after any strong run, investors and speculators are pretty excited about this essential base metal these days. But this incredible bullishness, along with overbought technical, actually suggests copper is on the verge of a major correction today.
Corrections are perfectly normal, necessary, and unavoidable within even the strongest bull markets. All prices flow and ebb, advancing two steps forward before retreating one step back. These ebbings are critical because they re-balance sentiment, bleeding away excess greed and complacency before it grows to up-leg-ending or even bull-ending extremes. Corrections keep bull markets healthy.
It always amazes me how much traders resist the very idea of corrections when markets near major highs. As investors and speculators, our mission is to buy low and sell high. The best opportunities to buy low within any ongoing bull market only occur after a major correction has run its course. Only then is sentiment poor enough to yield seriously beaten-down prices in the stock markets and commodities.
This innate resistance traders harbor against corrections just before one ignites is often buttressed by fundamental arguments
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