Dr. Copper, as it is said on Wall Street, earned his PhD predicting economic cycles. Consulting the good doctor these days, we discover a few interesting facts.
First of all, it is obvious from looking at the charts below that during the meat of this bull market for stocks, copper lead the major market indexes (the S&P 500 is our proxy).
It is also fairly obvious that during this last leg up in the stock market, copper failed to confirm the new highs in the stock market. The price of the metal actually fell off a cliff during this time. These are the types of divergences that earned Dr. Copper his degree.
Today, with the metal looking up at stiff resistance (the blue lines on the chart), it looks like there’s a very good chance our resident economist is writing a prescription for a renewal of economic weakness. And a new leg down for the metal would probably mean a renewal of its leadership role as well.