Cracks in Copper

Many of my commodity trading colleagues (and those who trade them via share-market proxies) are relentlessly bullish on base and precious metals. The secular trend in these metals makes it difficult to argue with them without appearing to be a total neg-head.

They will point to the fundamentals of ever increasing demand and dwindling supply. The opinions of one Jim Rodgers gives them great heart and courage of their convictions.

They could be right, but I'm not a believer on two fronts. 1/I think we are headed for a recession (I will leave the argument on that front to more formally educated pundits) and 2/ Psychologically I don't want to be a believer in anything. I just want to trade what I see, without bias.

Which brings me to the point of this post - Copper.

Many view copper as a barometer for the global economy and particularly, a barometer for the health of the China economy. I don't necessarily agree with that, but it has to be a barometer for something. As such Fridays price action must surely be viewed as a shot across the bow of whatever copper is a barometer of.

I don't follow the base metals not tradable on the US futures markets, (such as zinc, nickel, lead etc) but apparently they have taken a bit of a hit as well.

Anyway, I think it is technically significant, and copper on the electronic market is down further this morning, the Dec contract trading a short time ago at 302.50. Base metal bears may now have something to put the wind up all those relentless bulls.

Early days yet.