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Copper has fallen 17 percent in 2014 while stocks in the two largest copper-buying countries, the U.S. and China, are up. The S&P 500 has gained 13 percent this year while ETF tracking Chinese stocks (trading under the symbol FXI) is up almost 9 percent.
Investors often look to copper prices as an indicator of future economic growth. More demand for the metal is believed to indicate industrial and construction projects are in the works. Falling copper prices often signal slowing economic activity. During the financial crisis in 2008, copper tumbled 54 percent from the beginning of 2008 to the end of the year. Now, despite a robust stock market, copper is falling again.
So who’s got the global growth story right, copper or stocks?
“China may or may not be doing well, Europe is doing terribly, and the rest of emerging markets are slowing down,” said Gina Sanchez, founder of Chantico Global, a CNBC contributor. “That’s a lot of weakness around the one bright story, which is the U.S.”
Meanwhile, added supplies by the mining companies such as BHP Billiton and Rio Tinto are also putting pressure on copper prices, Sanchez said. However, she sees some negative indications in other falling commodity prices such as crude oil as confirmation of a global slowdown.
“We have to question whether or not the growth assumptions that are baked into both Chinese and U.S. stocks are the right assumptions,” she said.
He sees the metal as now having retraced 61.8 percent of its 2009 to 2011 rally. “That is a key technical level we like to look at,” Gordon explained. Technical analysts see a 61.8 percent retracement as an important Fibonacci support level. Indeed, copper has successfully held support at the $2.80-per-pound price twice in the past month.
“Maybe we have something here in terms of technical support,” he said, “trade above that most recent high at about 2.95 to trigger a push higher.”
有色金属展-铜材展-铝材展-钛材展-2015年广州国际有色金属工业展览会-效果最好的有色金属展会-2015Guangzhou
int’l non-ferrous metals exhibition
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