Why copper? As a key industrial metal for technology stocks (semiconductors in particular) it is an important measure for early economic expansion. From October through to early February demand for the metal declined as economic conditions deteriorated. However, February saw the start of a recovery over and above a simple decline in weakness for the dollar.
If the copper:euro ratio can crack past 2.68 I reckon any chance of a recession will go kaput and it will mark a firm bottom for the markets. Markets discount economic conditions by 6-9 months, so Friday's data was priced in long before it was reported. Breadth indicators are in deep oversold territory, and Barry Bears are revelling in the meltdown so one has to ask, who is left to short? Who is left to sell who hasn't sold already?
Now is not the time to be throwing the hands in the air, now is a time to be rotating out of the underperformers into stocks which will lead this market out. Financials and Technology is where the action will be...
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