
With emerging economies exploding as the global credit crisis abates, demand for commodities is likewise rising aggressively. This demand has pushed prices back to all-time highs seen in 2006 and re-challenged in mid-2007. The $4.00 level in high grade copper looks likely to be broken in the near future as copper prices charge higher.
I have found Doctor Copper to be a quality leading indicator for stock prices and see it as unquestioningly bullish at the present time. A quick use of Nexalogic's handy correlation tool shows the correlation between the S&P 500 (SPY) and copper (JJC) at a whopping 0.73 for the year 2010. Compare this to the oft-cited explanatory power of the US dollar (UUP) at a -0.36 correlation. In sum, copper continues to lead the way challenging all-time highs; should previous correlations hold up, the stock market is likely to follow it higher.
Previous posts on copper:
Trust this Rally ~ September 1, 2010
Thoughts on the "Bond Bubble", Equity Sentiment & Doctor Copper ~ August 28, 2010
Brandon R. Rowley
"Chance favors the prepared mind."
*DISCLOSURE: Nothing relevant.