Here’s an interesting article about the plunge in copper, and how it might be signaling future economic weakness.
Those of you familiar with our simple three factor system know that one of the factors is commodity prices. When commodity prices fall sharply – not just fall, but plunge – it’s reason to be nervous because it signals that demand is weak.
Well, that’s exactly what may be happening now. The decline in commodoties is not enough to turn our system bearish on the US stock market. But if it keeps up, things could get dicey.
The chart above shows copper, which is one component of an index that I look at every day: the CRB Equal-Weight Index.