Copper Points To Big S&P 500 Fall
Chris Kimble | Dec 01, 2014 12:47PM ET
Over the years Copper has been viewed as a leading global indicator for economic conditions and often stock-market performance. The chart below takes a peek at year-to-date performance of Copper ETF (NYSE:JJC), Freeport-McMoran (NYSE:FCX) and the S&P 500, showing weak performance in the Copper sector, with the opposite happening in the S&P 500.
So far in 2014, ole Doc Copper IS NOT a very good leading indicator for the S&P 500.
The top chart reflects that Copper looks to have formed a "Bearish Descending Triangle." Two-thirds of the time, such patterns suggest a decline in prices will take place, with the decline (B) being the height of the pattern (A). If that happens, the pattern suggests Copper will fall at least to the $2 zone -- about 30% below current prices.
In my humble opinion, the most important issue at hand is that Copper is testing long-term support at (1) and support is support until broken. Line (1) is based upon the lows in 2002 and 2009. Keep in mind, these dates represent times when the S&P was also at/near lows.
What Copper does at (1) should have a large impact on the future prices of Copper and if it does break support, it could impact the S&P 500 too.
Stay tuned, what Copper does here could have a big impact on the broad markets and portfolio construction.
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.