Collapse Of Global Copper Miners: Capitulation Or Sign Of Worse To Come?
Michael A. Gayed | Jun 05, 2012 01:14AM ET
“I keep following this sort of hidden river of my life, you know, whatever the topic or impulse which comes, I follow it along trustingly.” – William Stafford
On April 15th in an article titled I noted during a CNBC interview. Below is an updated chart of the one I used on the April 15th writing, which is a price ratio of the Global X Copper Miners ETF (COPX) relative to the S&P 500 (IVV). As a reminder, a rising price ratio means the numerator/COPX is outperforming (up more/down less) the denominator/IVV. A falling ratio means the opposite.
Notice that the “bottom” I believed was forming in mid-April was cracked badly in May as concerns grew once again over Greece leaving the euro (FXE), Spain’s (EWP) weak banks, and slowing growth in China (FXI). The decline was rather sharp, and seems to undo the argument of it being a reason for the correction being a minor one. However, the longer and deeper the underperformance, the more likely a snap-back occurs.
The question now is simple. Was the collapse in Global Copper Miners a sign of capitulation after which a “V” occurs, or a sign of worse things to come for equities? I maintain my stance that we are now likely nearing the crescendo to this environment, after which a big move up in equities can occur. Until clarity comes though, a further period of deterioration likely continues.
Disclosure: This writing is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction, or as an offer to provide advisory or other services by Pension Partners, LLC in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Pension Partners, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.