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Copper has just met the lower resistance line of its descending triangle pattern and should it break through
that resistance the price for copper could fall like a stone. That, in turn, would have a MAJOR “watch out below” impact on the future level of the S&P 500. Let me explain.
By Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money) and the FREE bi-weekly Market Intelligence Report newsletter (see sample here).
Historically, copper has been a barometer of economic growth exhibiting a high positive correlation with the performance of the S&P 500. 6 months ago (the end of August, 2013) the two categories began diverging from each other – not just a little bit – but dramatically – and continue to do so (the S&P 500 is UP 13%; copper is DOWN 11%). That suggests that there is less demand and that growth is slowing down.
When copper performs well it indicates increases in cyclical growth or, at the very least, expectations for growth. The 36% decline in the price of copper since July 2011 suggests there is an ongoing demand for less copper and that, as such, growth has been, and continues, to slow down. This, in and of itself, strongly suggests coming lower levels in the value of the S&P 500.
The decline in the price of copper has taken the form of a descending triangle and as of yesterday it was at a crucial point within said triangle, right at the lower line of resistance. Triangles predict that once support is taken out (in the current instance once the price drops below resistance at $2.95) the extent of the future decline is determined by the extent of the initial decline which was 33% (between July 2011 & October 2011). That would suggest a further decline of 33% in the price of copper! That’s bad enough – terrible actually – but the implications for the future level of the S&P are alarming to say the least.
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Perhaps, after all, there is something valid in all the negative prognostications for the future of the S&P 500 that we have been reading about lately. (See the following links for details.)
- Warning! Really! There IS Danger Ahead for the Markets! Here’s Why
- We’re on the Precipice of a 50% Drop in the U. S. Stock Market! Here’s Why
- Stock Market Will Collapse In May Followed By Major Spike in Gold & Silver Prices! Here’s Why
- Dr. Nu Yu: “Stock Market Alert! S&P 500 Could Correct to 1640! Here’s Why”
- 4 Clues That a Stock Market Collapse Is Coming
- End of “Wall Street Party” Will Be a Catastrophe! Here’s Why
- Stock Market Bubble Going to Burst & Unleash Destructive Forces on Global Economy
- These Indicators Suggest Stock Market Returns Are “Too Good To Be True”
- Bookmark This Article: The Stock Market Will Crash Within 6 Months!
- These 2 Stock Market Metrics Make Me Feel Uneasy – What About You?
- 4 Clues That a Stock Market Collapse Is Coming
Furthermore, it might just substantiate that all the rose-coloured forecasts for the markets (see the following links for details) are nothing more than hype and cheerleading by those in the business of keeping us in the game and separating us from our recent gains.
- This Chart of the Dow Suggests “Bring on 2014 – We Ain’t Seen Nothin’ Yet!”
- Relax! Take Stock Market Bubble Warnings With a Grain of Salt – Here’s Why
- Stock Market Bubble & Coming Recession? These Charts Say Otherwise
- The Stock Market: There’s NOTHING to Be Bearish About – Take a Look
- Pop a Pill & Relax ! There’s NO Immediate Danger Threatening Stocks
- Latest Action Suggests Stock Market Beginning a New Long-term Bull Market – Here’s Why
- Sorry Bears – The Facts Show That the U.S. Recovery Is Legit – Here’s Why
- Correlation of Margin Debt to GDP Suggests Stock Market Has More Room to Run
- Stocks Should Have a Record-Breaking Year According to These 7 Bullish Fundamentals
- Don’t Be Scared “Stockless”! There’s No Fear Anymore – Anywhere!
So far (check out the price in the table in the right hand column) support is still in place – just barely. I will watch the situation closely and send out an “ALERT” or “ALL CLEAR” as things unfold.
Related Articles:
1. Copper: The Nervous System of Our Society – Here’s Why
Copper is one of the most widely used metals on the planet, and has been for more than 10,000 years. Today, it’s the nervous system of our society – of our cities, homes, tools and toys. The simple truth is that the western lifestyle is completely dependent on copper. Here’s why as depicted in the infographic below.
2. Warning! Really! There IS Danger Ahead for the Markets! Here’s Why
We fail to pay attention to the warnings signs as long as we see no immediate danger and keep our foot pressed to the accelerator believing that since it hasn’t happened yet, it won’t. This time is only “different” from the perspective of the “why” and “when” the next major event occurs. Below are analyses and exhibits to support that contention. Read More »
3. Stock Market Will Collapse In May Followed By Major Spike in Gold & Silver Prices! Here’s Why
The unintended consequences of five years of QE are coming home to roost! In May or early June the stock market parabola will collapse…followed by a massive inflationary spike in commodity prices – particularly gold & silver – that will collapse the global economy. Read More »
4. Dr. Nu Yu: “Stock Market Alert! S&P 500 Could Correct to 1640! Here’s Why”
Today, the S&P 500 index decisively broke below the lower boundary of the 3-month ascending broadening triangle pattern. We should now watch for a full range decline down to 1640. Read More »]
5. This Chart of the Dow Suggests “Bring on 2014 – We Ain’t Seen Nothin’ Yet!”
The Dow is up almost 28% but the chart below showing how it’s 12% annualized gain over the past 5-years compares with past bull markets suggest we are probably not at a top – that “We ain’t seen nothin’ yet!” Take a look. Read More »
6. Relax! Take Stock Market Bubble Warnings With a Grain of Salt – Here’s Why
Bubble predictions are headline-grabbing claims that are sure to attract reader/viewership and more than a few worried individuals who will be pushed to act but, like all forecasts, these bubble warnings should be taken with a grain of salt. Read More »
7. Stock Market Bubble & Coming Recession? These Charts Say Otherwise
The real value of the stock market is positively correlated, over time, with the amount of freight hauled by the nation’s trucks (in other words, the physical size of the economy has a lot to do with the real, inflation-adjusted value of the economy) and the latest numbers (see chart) strongly suggest that we are not in a stock market bubble. Read More »
8. The Stock Market: There’s NOTHING to Be Bearish About – Take a Look
There’s nothing to be bearish about regarding the stock market these days. I’ve reviewed my 9 point “Bear Market Checklist” of indicators and it is a perfect 0-for-9. Not even one indicator on the list is even close to flashing a warning sign so pop a pill and relax. There’s no immediate danger threatening stocks. Read More »
9. Pop a Pill & Relax ! There’s NO Immediate Danger Threatening Stocks
Right now there’s nothing to be bearish about. I say that with conviction, because my “Bear Market Checklist” is a perfect 0-for-9. Heck, not a single indicator on the list is even close to flashing a warning sign. We’ve got nothing but big whiffers! Take a look. Pop a pill and relax. There’s no immediate danger threatening stocks. Read More »
10. Latest Action Suggests Stock Market Beginning a New Long-term Bull Market – Here’s Why
There are several fundamental reasons to believe that this week’s stock market activity, where the S&P 500 has moved more than 4% above the 13-year trading range defined by the 2000 and 2007 highs, could mark the beginning of a long-term bull market and the end of the range-bound trading that has lasted for 13 years. Read More »
11. Sorry Bears – The Facts Show That the U.S. Recovery Is Legit – Here’s Why
Today, I’m dishing on the unbelievable rebound in residential real estate, pesky rumors about the dollar’s demise and a resurgent U.S. stock market. So let’s get to it. Read More »
12. Correlation of Margin Debt to GDP Suggests Stock Market Has More Room to Run
Are stocks in a bubble? While leverage has returned to the stock market driving up stock prices and aggregate demand in the process, margin debt is still shy of its all-time high as a percentage of GDP, so there is certainly some headroom for further rises. A look at the following 5 charts illustrate that contention quite clearly. Read More »
13. Stocks Should Have a Record-Breaking Year According to These 7 Bullish Fundamentals
“A sluggish economy, political gridlock, tepid earnings, the European debt crisis, high gasoline prices…” I can’t really argue with Barron’s depiction of the current market environment yet, against all these seemingly negative conditions, the stock market keeps surging higher. Can it possibly continue, though? Read More »
14. End of “Wall Street Party” Will Be a Catastrophe! Here’s Why
The markets are considerably, fantastically overbought and that whatever happens after this “Wall Street Party” is going to be a sort of catastrophe. Here’s why. Read More »
15. Stock Market Bubble Going to Burst & Unleash Destructive Forces on Global Economy
The Fed has manufactured a parabolic move in the stock market…which is much more aggressive (and thus even more unsustainable) than witnessed at either the 2000 or 2007 stock market tops. Parabolas always collapse – there are never any exceptions – so when the pin finds this bubble it’s going to take down not only our stock market, but unleash a destructive force on the global economy. Read More »
16. Warren Buffett’s Favorite Valuation Metric Suggests Stock Market Is OVERvalued by 15%
Here’s some perspective on the potential value of the U.S. equity market using Warren Buffett’s favorite valuation metric – total stock market capitalization relative to GDP. Read More »
17. These Indicators Suggest Stock Market Returns Are “Too Good To Be True”
Current macro conditions indicate that we are in a sweet spot for equity returns…that global growth is continuing and there is little or no tail risk in the immediate future. It’s time to get long equities…but I have this nagging feeling that these market conditions are too good to be true. If you look, there are a number of technical and fundamental clouds on the horizon. Read More »
18. Bookmark This Article: The Stock Market Will Crash Within 6 Months!
Until recently, I have not used the term “stock market crash”. I do not take using this term lightly. It brings with it major repercussions. I am now breaking out this phrase because of the current state of the stock market. This stock market crash will occur within the next six months from today… The markets will fall within a combined day/few days a total of at least 20%. Bookmark this article. Read More »
19. These 2 Stock Market Metrics Make Me Feel Uneasy – What About You?
It’s been an amazing run in the stock market but…I start to feel a bit uneasy about things when I see all news reported as good news, because it either means the economy is getting better or more QE is coming. The fact, though, is that the market is just driving higher on what looks like sheer optimism of continued QE and little else. You can see this optimism in two indicators you’ll recognize. Read More »
20. 4 Clues That a Stock Market Collapse Is Coming
You might be well advised to keep your powder dry and your portfolio small – or even be tempted to sell everything and wait for the storm to blow over [given the 4 clues put forth in this article]. Read More »
21. We’re on the Precipice of a 50% Drop in the U. S. Stock Market! Here’s Why
Warren Buffett’s favorite indicator – the ratio of the value of U.S. stocks to GDP – is seen by him as a reliable gauge of where the market stands and these days it suggests that all the main indexes are pointing to an imminent 50% crash. Read More »
22. Don’t Be Scared “Stockless”! There’s No Fear Anymore – Anywhere!
There’s no fear anymore – anywhere – and I’m talking about the type of fear that overwhelms investors – and, in turn, the market. The surest indication of this can be found in the following chart. Read More »
Because Copper is used in industry, I see its decline as an indication that Countries like China have slowed their growth which in turn will have a huge effect on both their economy and the rest of the World’s economy!
I really like to learn more about what readers think is the best way to “hold” Copper since doing so would require much more physical space than holding Silver which takes more space than Gold which takes more space than Diamonds.
I’ve also noticed that some “preppers” on Twitter are selling 100% Cooper rounds in ounces, so those that are thinking about bartering should give owning Cooper some serious consideration!