Copper at Critical Levels

It is said that Copper has been used to improve society since 8000 BC. At about 5500 BC copper tools helped civilization emerge from the stone age. More recently copper is used in construction of buildings, power generation, and the production of industrial machinery and transportation vehicles.

Copper is therefore an important industrial metal that we watch as a heads up for a pickup or slowdown in "global growth". If there is demand for infrastructure worldwide, you're going to need copper. If there is less growth out there, then there is less demand and less need for Copper. Very simple.

Here is a chart of Copper alongside the S&P500 so you can see how the behave together:

A longer term look shows Copper breaking out above 5-year old resistance levels. This $4.00 level proved to be too much trouble in 2006 and then again in 2007 and 2008. After breaking down hard with the rest of the industrial commodity space, Copper quickly rebounded and broke through that key level late last year.

Polarity principles teach us that prior resistance should become support. This is the key for the industrial metal here. As long as Copper can maintain these levels, the trend is still higher. A failure up here would be costly for the metal. The chart below gives us a closer look at how critical it is to hold on to the current levels.

You can read more about Copper and some of the uses and facts here.