We will see that backwardation will have a positive effect on copper prices and much more. The Chinese have been doing very odd things with their copper warehouse stocks.
To read about this go to: Copper turns to backwardation.
To read about this go to: Copper turns to backwardation.
Isn't it as likely that rising prices predict backwardation as the inverse?
BeantwoordenVerwijderenI doubt that either predicts the other so much as their tendency to rise and fall hand in hand.
I doubt there's any advantage to using the backwardation trend over the price trend.
Maybe you're right, they correlate almost simultaneously, so there is no way to predict things. Because there is no lag. Do you know about any theories about this correlation?
VerwijderenThe only way to play this is, if there were to be any disparity (for example backwardation with price declines like in 2008), then we would know something isn't right. Then you can anticipate that copper prices would go up dramatically, which it did in 2009.
Mark, I have another point.
VerwijderenThe copper price hasn't done anything since January 2012. But we do know that since January 2012 we didn't have backwardation yet. So the fact that backwardation started to happen in end April 2012 means we now have an indication that copper prices will rise. Without this correlation theory, we wouldn't know if copper prices would go up or down, because copper prices have been flat for since the beginning of 2012.
As to your first point: I'm uncertain whether that situation has predictive value; you'd have to find several similar situations (maybe in various kinds of futures) to see if there are consistent tendencies in subsequent price actions in order to know.
BeantwoordenVerwijderenOn your second point: I don't know how to judge backwardation as I see it in some months and contango in others; but taking your word for it, (I guess you need to watch the trend.) I was wondering whether you had any observational/statistical evidence that these divergences between price change and expected contango/backwardization have a predictive value? It would be interesting to know; and if true, it could be a great trading tool - especially if it's unknown to other traders.
I'm now searching a site where I can monitor this daily. Haven't found it yet. Then I'll monitor it every day and post my conclusions in a sort of dissertation.
VerwijderenIf you find that it has real predictive value, then you might want to consider its proprietary value to your ability to profit from it before you give it away on SA, thereby diluting its efficacy. You might want to keep it limited to your blog.
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