Copper & the Coronavirus — How Far Will the Market Fall?

Danielle Shay talks about Copper, one of the markets leading indicators. Click the image above to watch the full video.

Watching leading indicators in the market is a great way to get a feel on overall direction. One of those leading indicators is copper, or Dr. Copper. Price fluctuations in copper are reflective of economic growth (or weakness) because copper is a widespread element found throughout a variety of products in various industries and sector groups. It can be found in new homes, construction, electrical components, with particular emphasis on the electrical group. When the price of copper is rising, this is reflective of rising demand for the alloy across sectors of the market but when demand is falling, this can be a leading indicator for economic weakness.

During this segment, I discuss how Dr. Copper has been falling for the last two years, which I view as a reaction to the slowing of the Chinese economy, particularly due to the trade war. When coronavirus news hit, it was almost like the final blow to the Chinese economy, and this coincided with a further hit in copper. On the 31st, I noted that I was looking for an oversold bounce in copper, which has come through. At this point, copper looks like it will fall even further, and with the current economic uncertainties and leading indicators like copper and transports getting hit, it is likely the market will fall even lower.

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