It's Time to Sell Copper

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The Rude Awakening Tuesday, March 19, 2013 | 0930 Hours It’s Time to Sell Copper Copper crushed--get out of its way Huge surpluses shove "Doc Cop" lower Plus: Cyprus vs. the S&P, day two... Greg Guenthner coming to you from Baltimore, MD... Greg Guenthner Dr. Copper is crumbling. The versatile industrial metal best known as a bellwether for worldwide economic growth has finally hit the skids... I warned you last month that copper was fast approaching an important inflection point. Now, the Cyprus crisis was kind enough to tip copper over the edge. It fell hard in late Sunday trading from $3.50 to $3.44. The massacre continued into Monday. When the dust settled, copper found itself nearly a dime below critical support... Yet while the world economy appears poised for a slowdown, U.S. stocks continue to fight off lower copper prices for the past 15 months. The S&P has defied copper's weakness since the metal peaked in 2011... The price of copper had been dangerously close to crashing since the beginning of March. Now that its multiyear uptrend is in the rearview, we're in store for lower prices. Huge inventory surpluses have helped push copper lower. In London, copper stockpiles rose to 543,925 tons yesterday, the highest level in 3 years. In Shanghai, stockpiles climbed to 231,872 tons, the highest level recorded since 2003, according to Bloomberg. If you haven't sold copper yet, this key turning point is your cue. $3.30 is my initial downside target. If weakness persists, we could see copper test its 2011 lows near $3. Rude Numbers Targets, Predictions and Wild Guesses 2 Important recovery data points--housing starts and building permits--hit the wires before the market opened this morning. 917,000 is the seasonally adjusted housing starts number today, easily beating the 911,000 estimate. Meanwhile... 946,000 seasonally adjusted building permits rounded out the housing data. That's a 4.6% rise since January. $1,602 buys an ounce of gold this morning. The yellow metal is holding firm above $1,600 for the second straight day... 63% of stocks trading on U.S. exchanges remain above their 50-day moving average as of yesterday... Rude Trends When to Buy... When to Sell The picture in Cyprus remains unclear today. Yet U.S. stocks remain resilient in the face of the uncertainties in Europe. The major indexes staged a massive comeback yesterday, putting to rest any hopes of a significant pullback for any sold-out bulls roaming Wall Street... For now, it appears that all-time highs are a magnet for the S&P 500. This morning, both housing starts and permits beat expectations, helping to vault futures back above 1,550. The week so far has been a perfect example of the slipperiness of short-term expectations. Anticipating a pullback on negative eurozone news turned out to be just too damn simple. After all, it felt like the most likely outcome over the weekend as the news was developing. The market doesn't like it when the consensus has overwhelmingly shifted to one side or the other. I'll stay on top of the situation and the best ways to play the drama... [Ed. Note: Send your feedback here: rude@agorafinancial.com... and don't forget to follow me on Twitter: @GregGuenthner] Ignore At Your Own Peril Today's Must-Read Links Live 20 Years Longer & Live 20 Times Richer! Do this before gas hits $8 a gallon The One Retirement Plan Obama Can't Touch Additional articles and commentary from The Daily Reckoning on: DR iPhone APP To end The Daily Reckoning’s Rude Awakening e-mail subscription and associated external offers sent from The Daily Reckoning and The Rude Awakening, cancel your free subscription here. Please Note: If you unsubscribe from The Rude Awakening, you will also be unsubscribed from The Daily Reckoning. 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