Copper to see where we stand

Click chart to enlarge

Chart courtesy of http://stockcharts.com

Are subprime problems over? I don´t think so. It is likely that in the near future we may see more rate cuts in order to restore faith on growth capabilities.

I think we have an important commodity like copper that emulates nicely the strength of the world economy. So, unless extreme circumstances arise, copper prices will reflect market demand letting us know if we are on an expansion environment or not.

Looking at the chart we see that a remarkable correction took place which ended in last February. Since then copper have climbed dramatically from 238 to 380 in May. From there we have witnessed a strong consolidation and if the USD remains around 78 or less we should expect to see a breakout to meet and leave behind the 395 of May 2006.

So, the big picture seems solid even if a correction may be on the cards in the short term.

Let´s keep an eye on this development.