Why the drop in copper prices is a good sign

Author: Adam Button | Category: Education

Metals in focus today

Industrial metals are badly misunderstood. For years, they were held up as the paragon of global economic indicators. Then everyone in world opened a mine and flooded the world with supply and the entire story fell apart. Nothing's changed since then.

Metals still indicator some of the global growth story, particularly what's happening in China, but it's more-clouded than the Florida weather forecast because of supply and inventory skews.

In any case, metals are still tradable and maybe the technicals are the only way to view the market.

Take copper, it's down more than 3% today. It would be tempting to view that as a sign of trouble.

The chart offers some perspective:

That's a classic bullish trend.

A great axiom is that bull markets climb like an escalator and drop like an elevator. This is pretty much a textbook example and the trendline since June is easily intact.