Tuesday, August 23, 2011

Wednesday Commodity Round-Up

One of the reasons copper is such an important commodity is its correlation to the overall growth cycle. As the economy starts to heat up copper rises, largely because copper is used in practically everything. The above chart is the JJC copper ETF compared to the SPY. Notice the high degree of correlation.

On the multi-year chart, copper is hanging on by a thread to a two year trend line. In addition, note the gradual increase in volume, possibly indicating buying climax.

The above chart shows in more detail the current price action. Prices are consolidating right around the long-term trend line. All the shorter EMAs are moving lower, and the 10 and 20 day EMA have moved through the 200 day EMA. Right now, the 10 day EMA is providing upside resistance for prices, which is standard in a market environment like the one we're in now.