Do Markets Care About Copper Anymore?

Today, copper prices are plunging lower by more than 3.0 percent. Yet, the financial news media barely talks about it. Years ago copper prices were followed closely by all stock market participants. In fact, the legendary trader Jesse Livermore used to say that copper prices were one of the most important commodities that anyone could follow. He would follow copper prices in order to predict future stock market direction.
Traders can now track the action in copper by following the iPath Bloomberg Copper Subindex Total Return Sub-Index ETN (NYSEARCA:JJC). This morning, the JJC is trading lower by 0.87 cents (-3.59 percent). The current pattern on the daily and weekly charts looks very poor technically. The JJC is trading below its daily chart 50 and 200-day moving averages. The JJC peaked out in February 2011 at $61.69 a share. The next major support level on the JJC chart is the December 2008 low which was $17.97.

It appears that the major stock market institutions no longer care about the price of copper. This former leading indicator remains extremely weak at this time and could be signaling further economic problems in China and other emerging markets. Until the copper price can form a definitive bottoming pattern it is best to steer clear of this commodity. We can only wonder if copper will ever matter again when it comes to predicting stock market direction?

Nicholas Santiago

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: