A Check-Up With Dr. Copper

With the big bust in commodity prices that has been in the headlines the last few days, it is important to see what the stock market is telling us.  For instance, take a look at the dichotomy of the S&P 500 and the message from Dr. Copper.

As you take a look at the chart above of the price of copper - a traditionally good economic proxy, you can see that the price of copper - compared with the S&P 500 - lost its advantage starting at that juncture in May 2011.  But even so, every time the S&P 500 moved up, so did the price of copper...until this year.  To be more precise, the obvious dichotomy started as our indicators told us in February of this year that we should begin to be a little more cautious about the short-term prospects of the stock market.  The big disconnect has been pronounced since then and is continuing to widen.

Don Hays

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