Nickel futures (LME.NI) dropped a 'very big'* -5.4% on Thursday, the fourth consecutive loss, to close the day at $23,650 per ton. During the session, Nickel crossed below its 52-week lowest low; sinking to an intra-day low of $23,250. History suggests that more troubles lay ahead?
* One-day percentage loss is more than two standard deviations stronger than the average one-day percentage change measured over the last 30 trading days.
Q: How has LME Nickel performed in the past when it crosses below its 52-week low on a 'very big' decline?
A: According to the 14 previous occurrences of this event, EventEdge indicates that LME nickel has shown a somewhat bearish edge that peaks 10 trading days after the event. Thus, the projected date for the peak of the bearish edge relative to the current event date (Thursday, May 22, 2008) is Friday, June 6, 2008.
Nickel declines in 86% of the cases (12 of 14) by an average of 4.3% relative to the close on the event date. The average of the two rallies is 2.9%. The overall return of the 14 cases is -3.3%, which, based on the close on the event date ($23,650), provides a target price of $22,869.6.
Note that his idea is one of the many that is automatically generated by our Nitro scanner. But, to view this idea in our EventEdge® analysis tool click here.
Ronish Patel is an analyst with MarketHistory.com.
