While the U.S. economy continues to hold up relatively well, investors remain fearful about China and other international economies. So, one of the markets they’re watching for clues as to what might be ahead is copper futures. 🕵️♂️
We spoke about copper in May when investors viewed its selloff as a bearish economic diagnosis. And now, it’s back in the news for a similar reason. 📰
The chart below shows copper futures testing its one-year lows near 3.55 for the fourth time, coming within the context of lower highs in price each time it attempts to rally. Technical analysts say this is a sign that sellers are becoming more aggressive in the market and that a breakdown is likely ahead, targeting at least its July lows near ~3.14. 📉
As for what it could mean for the economy, that remains to be seen. But the general theory is that if the global economy is doing well and/or improving, then demand (and prices) of base metals like copper should trend higher, not lower. Since base metals as a group have lagged behind the broader commodity complex, fears are it’s a signal of further economic weakness ahead.
Combine this with stocks and bonds also falling, and you’ve got a lot of investor anxiety. 😬
Here’s a refresh of the S&P 500 roadmap we’ve been referencing over the last three months or so. As we’ve outlined since August, technical analysts are eying a confluence of potential “support” levels between 410 and 420 in $SPY. With the index closing below its 200-day moving average today for the first time since March, all eyes will be on its ability to stabilize at current levels. 👀
