6/25/13 Nurse Copper - Checking the Global Economies Temperature
Media pundits typically refer to copper as "Dr. Copper" as its price action is used to deduce the overall health of the economy. But in the age of equality ... it is 2013 ... today let's refer to copper as "Nurse Copper." Prices are down 10% from levels seen 6/5 when we started to roll over but two key developments happened overnight - trade under $3 was rejected (I think we bounce from here) and in China its stock exchange rallied from being down 5% to close flat as a "V" shaped recovery may be upon us. It is too early to tell if these two markets will recover in the coming weeks but as I gaze into my crystal ball those are my two prognostications. As for copper at a minimum I expect to see a trade back to the 38.2% Fibonacci level as seen on chart below, back to $3.29.
This is not meant to be construed as a buy recommendation on Chinese securities or to pile into Phelps Dodge (PD) or longs in copper futures but more so to paint a picture that it is not the end of the world. Yes even if central banks take their foot of the gas pedal global economies will be all right. I expect a rebound in a number of risk assets in the immediate future.
As always when I write about copper and the US dollar it is more so as a guide to help navigate trade with other commodity markets that exhibit a relationship. As long as copper holds the recent lows and starts tracking higher I would expect there to be an appetite for risk to return to the market. That being said:
· Domestic stock indices appear to be finding support at their 100 day MA.
· Crude oil and the products are a buy in my eyes.
· The commodity currencies (Kiwi, Aussie, and Loonie) are beaten down too much.
· Select softs and ags are a buy ahead of Friday's USDA report.
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.