The largest exchange traded product following copper futures is down 14% the past month in yet another sign of slowdown and deflation worries in the global economy.
The industrial metal has “a decent track record when it comes to reflecting global strength or weakness,” says Chris Kimble at Kimble Charting Solutions. “Once copper broke a multi-year support line back in 2008, copper fell hard and the global economy became very soft.”
Copper is often seen as a leading indicator for the global economy because of its wide use in industry and manufacturing.
The recent pullback in copper prices has resulted in prices again breaking a three-year support line, the technical analyst noted.
However, the steep sell-off in commodities and stocks recently “has been sizable and in the short-term might be a bit oversold.”
The $116 million iPath DJ-UBS Copper ETN (NYSEArca: JJC) is down 4% year to date, according to Morningstar.