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Copper - A leading indicator on the economy?

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This chart suggests price is breaking down, I wonder what that means for the world's economies ? 

Capture copper.PNG

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11 hours ago, elle said:

This chart suggests price is breaking down, I wonder what that means for the world's economies ? 

Good piece on copper here from CME focusing on it's strong links with the Chinese economy and the very low current implied volatility.

"Copper closely tracks growth in China, yet copper options prices tend to be closely related to U.S. monetary policy. How will Fed rate cuts impact the metal? "

https://www.cmegroup.com/education/featured-reports/coppers-options-paradox.html?utm_source=twitter&utm_medium=social_post&utm_campaign=economic_research&utm_content=20190618_hp

image.png.155ef9b50bd39d080a8aa6d7253c046d.png

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Certainly looks like it could be coming down to 55 flat. If that does happen then we could be in seriously bearish territory and Dr Copper should start getting some serious attention.

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Guest phil

Not directly correlated but related to the general meta of this thread.

US stock volatility has eased considerably in recent days, leading some derivatives traders to bank on a stable period. Think some form of low vol option trade going on. Whilst some major indexes are in the rebound zone, the Cboe Volatility Index (VIX) has fallen by 20.8% to 15.80 in the past week. Things are mixed though as US equities have seen some positive movement, Asian markets were down on 21 August following recession concerns; Hong Kong’s Hang Seng Index dipped by 0.14%, while Japan’s Nikkei was down -0.28%.

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Guest phil

Copper is flat in this period. 

On 21/08/2019 at 15:45, dmedin said:

Ten point spread?

Looks to be 10 points on a 5720 price, compared to FTSE 1 point on a 7200 price. Not great when you look as it side by side. Assume the copper futures book is no where near as liquid as a leading world index though. 

Can't see bid offer of HG1 or the LME quote either but someone at IG can please? https://www.bloomberg.com/markets/commodities/futures/metals 

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Copper may have completed a wave B relief rally, with a hit on the Fib 50% and a clear A-B-C pattern.  A drop from here continues the deflationary trajectory, would weigh on economic indicators and bring up the crucial test of whether the market situation will resolve with a deflationary recession or an inflationary one.  Falling copper prices will nix any emerging markets stocks rally and likely put a dent in the majors as well.

HG-Weekly_231119.thumb.png.9d58a721d4165cfe4cf3a033b2e0397c.png

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Dr Copper is showing a bearish set up for me.  After the potential wave B top out we now have a 1-2 with the turn on Wednesday, similarly to stock indices and a fall way, more bearish than on stocks, which may well prove to be an indicator for where stocks will go next.  Certainly falling copper (and other hard commodity prices) is bearish for emerging markets and China... 

HG-Daily_301119.thumb.png.66f456c971f33b982de8bdf13e40b970.png

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Dr Copper is showing a bearish set up for me.  After the potential wave B top out we now have a 1-2 with the turn on Wednesday, similarly to stock indices and a fall way, more bearish than on stocks, which may well prove to be an indicator for where stocks will go next.  Certainly falling copper (and other hard commodity prices) is bearish for emerging markets and China... 

HG-Daily_301119.thumb.png.66f456c971f33b982de8bdf13e40b970.png

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On 01/12/2019 at 16:19, Mercury said:

Dr Copper is showing a bearish set up for me.  After the potential wave B top out we now have a 1-2 with the turn on Wednesday, similarly to stock indices and a fall way, more bearish than on stocks, which may well prove to be an indicator for where stocks will go next.  Certainly falling copper (and other hard commodity prices) is bearish for emerging markets and China... 

HG-Daily_301119.thumb.png.66f456c971f33b982de8bdf13e40b970.png

@Mercury - up slightly on Monday but down yesterday and today. Good spot! 

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4 minutes ago, dmedin said:

Big specs increasing their shorts.

I have net COT positions for non commercials around -33k, this is not significant in the current scenario.  The last significant up turn occurred in Aug/Sep on net -60k, which produced the current rally and has been unwinding ever since.  Early Nov produced the lowers net COT non commercial read (-21k) and coincided with the turn back down.  You would expect the net reading to be heading more negative as the market moves south.  The contrarian reading of this is that the non commercials are max net short when the market turns bullish and the reverse when the market turns bearish (at major turns).  Anything in between is trending.  We are missing last weeks data due to Thanksgiving so the picture is currently out of date.

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