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By HaleStewart October 27, 2014 8:38 am
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Doctor Copper Is Signaling A Weak International Environment

     Because copper is used in so many goods, it is often referred to as "Dr. Copper," meaning its price provides a strong indication about the direction of the global economy.  Keeping in mind this is only one indicator, take a look at the yearly chart for the metal:

 

Starting in April, we see a general rally that lasts until the beginning of July, when prices broke through the 200 day EMA.  But the rally was short-lived, as prices then moved below the 200 day EMA and continued trading lower in a downward sloping channel.

And for the last two years, prices have been consolidating lower, indicating weak overall demand.  Also remember this weakness did coincide with an overall weaker international environment.

This is only one indicator, so take the above with a grain of salt.  But copper is also a very important commodity, used in a host of goods, meaning its demand is at minimum a good coincident/leading indicator.

Hale Stewart is a former bond broker who has been writing about economics and financial markets since 2006 on the Bonddad Blog.  He is also a tax attorney with a domestic and international practice while also forming and managing captive insurance companies for US companies.   You can follow him on twitter at:@captivelawyer

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