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David Fry writes a subscription newsletter focused on technical analysis of exchange-traded funds, called ETF Digest (www.etfdigest.com). Dave founded the ETF Digest in 2001 and was among the very first to see the need for a publication that provided individual investors with information and... More
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  • Dr. Copper Sending Sell Signal 0 comments
    Mar 27, 2012 1:06 PM | about stocks: JJC, DBB

    Copper has often been regarded as a measure of economic growth. It is also the driving force of the Base Metals sector.

    In the 2nd half of 2010, copper had a significant run up on the Dollar decline from QE2 and China stockpiling copper for anticipated future grown. However, in the August selloff last year, copper was hit much harder than the overall market with questions of a decline in China's growth and potential double dip into recession. Despite the market's historic run up the 1st quarter of 2012, copper has not kept pace with the overall market. In fact, copper has lagged the rally ever since it began in October last year.

    Copper's biggest market is wiring and plumbing in construction. Although we've seen a run up in the homebuilder stocks, we haven't seen the construction and sales data to support it. This morning's Case-Schiller report will get a media story of "met expectations" but the expectation was a drop of 3.8% which is down from the previous report of a drop of 4.1%. This not encouraging data as the post-WWII U.S. economy has largely been dependent of construction.

    A new flush of QE as signaled by the Fed yesterday may give copper prices a lift on a Dollar decline, but has little effect on the demand for copper. Higher prices and lower demand is a formula for disaster in copper.


    Stocks: JJC, DBB
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