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The copper kettle

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Last week we noted that the March Copper futures (hg02h) had just pierced its longer-term 200-day moving average to the upside and that this commodity may help traders and investors get a feel for future economic growth. As we mentioned, many market mavens have pointed to the price of copper being directly correlated to the economy. If that's the case, then the bull is growing some horns with today's bullish move.

March Copper futures (hg02h) - Daily Interval

For those that think an economic recovery is only a dream, then perhaps today's action in the Copper market is sign that there are others that believe in an economic recovery. One by one, we're seeing subtle hints from various economically sensitive components and sectors breaking above downward trends and longer- term moving averages. Just as there were bulls that grasped onto fewer and fewer straws of economic strength back in the late 90's, there will be bears that try and convince themselves and ignore the signs that economic recovery is presenting itself.

"Just you wait and see!" says the angry bear. As they get hit over the head with the copper kettle.

Other signs...

Some other signs we've seen is the Dow Transportation Average (TRAN) recently breaking above its now rounding 200-day moving average and recent pullback to that 200-day MA at $2,654 did find buyers. At $2,784, it's way to soon for bulls to be wheeling "copper kettles" at angry bears, but there are signs from some of the more economically sensitive sectors that an economic recovery is upon us.

The S&P Retail Index (RLX.X) did trade the $940 level today. This is more "consumer" related, but the $940 level had not been traded since July of 2000.

Jeff Bailey
Senior Market Technician
Option Investor

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