CHART OF THE DAY: DR. COPPER SAYS THE BULL IS ALIVE
25 January 2010 by TPC
12 Comments
While the major averages break their 50 day moving averages and technical analysts turn bearish, one commodity continues to show strength. Copper, the metal with a PhD due to its ability to accurately portray economic trends, continues to show strength. Copper futures are just a few percentage points from their highs despite the recent global downturn in markets. Of course, this has been a persistent trend throughout the bull market. Domestic and global sell-offs have been largely ignored by copper traders as demand remains strong. Does Dr. Copper know something about global strength that the equity markets are currently overlooking?
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Liquidity is a heck of a thing
http://www.zealllc.com/2010/cucorr.htm
Copper will bubble as long as China does.
TPC, copper is a great setup for a pullback here. jmho.
TPC Reply:
January 25th, 2010 at 2:36 PM
as a short play?
prescient11 Reply:
January 25th, 2010 at 2:53 PM
Yes, one of the mining guys I really like was saying just that. The supply glut in China is fairly staggering — and those are just the official numbers. Wouldn’t be the farm, but dipping the foot (not toe) in the water around these levels may not be a bad idea. Perhaps 15-20% is the pullback I’d look for.
alfie Reply:
January 31st, 2010 at 8:51 AM
Looks like copper is a real short sell now.
Is copper correlated to the market?
http://www.cxoadvisory.com/blog/internal/blog3-14-08/
TPC Reply:
January 25th, 2010 at 2:36 PM
Copper vs the S&P is a bit misleading. You can’t just pull data going back 50 years and extrapolate out to one conclusion because the circumstances might have changed during various periods. This is no different than what the foolish buy and hold crowd does – “well, the long-run says this so that means buy and hold works”. It really depends on the time period.
In the last 10 years Copper has been highly correlated to China and emerging market demand. China, over this period, has actually served as a relatively good leading indicator of economic demand during this period. In fact, if you look at the Asian equity markets they have generally led the U.S. markets over the last 10 years – particularly during the recent sharp downturn.
Of course, with any indicator, it’s silly to rely solely on that single indicator. This is just a piece of the puzzle.
murphy654321 Reply:
January 25th, 2010 at 6:42 PM
Good insight. Thanks!
Geoff Reply:
February 8th, 2010 at 10:13 AM
The Housing Bubble Burst was in the USA not Asia. How does the Asian markets lead the USA this recession and prior to this? So far it’s always been the USA leading the Global markets and up till now the USD is still the leading currency. Day to day, Dow and S&P movement will usually effect the Asian markets that follow. Seldom does it play the other way. Also USA demand is still by a big gap the largest in the world. In the decade or more long run things will change but not right now yet.
How can one short copper other than futures? There are no options on the JJC copper etf.
Seems Dr.Copper has caught a cold.
The individual stock charts suggest more than a minor cold.
Although not ready to diagnose pneumonia !
Dr.Copper condition is on 24hr surveillance.
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