Dr. Copper is starting to look a little sick.
Copper Futures ($HG1!) just logged their worst one-day return since last October, falling ~4% in the session on substantial volume. The daily chart below shows the damage with the futures losing their rising trendline that has held up nicely from the COVID-19 low.
Zooming out on the monthly chart, the picture becomes more clear. Copper running into overhead supply at the old all-time highs in 2011 around $4.65 (our target from prior posts). Losing an important trendline and failing to breakout doesn’t mean copper has to crash from here, but given its significance as a barometer of the global economy, we should take note.
Gold Futures ($GC1!) had a similar reaction to supply at prior highs last summer and is still grinding below them today. Our thoughts on gold are available in the prior post here.
Dr. Copper is generally a great tool for intermarket analysis. We will review the copper and the entire commodity complex in more detail later this week to help us get a read on the inflation narrative and other asset allocation decisions.