Why 'Doc' Copper Is Never Wrong

November 18, 2016

There is as yet insufficient evidence to speculate on whether copper’s impressive post-election leap will turn into a belly flop, or instead prove to be the booster stage of a much bigger rally. Whichever is the case — and I strongly doubt there will be any in-betweens — it’s inconceivable that this legendarily sensitive economic barometer will guess the outcome incorrectly. Inflation, or deflation? Growth or economic stagnation?  Keep your eyes focused on ‘doc’ copper and you cannot miss an important turn — assuming one comes, and however unexpected — toward inflation following 35 years of the opposite.

From a technical standpoint, it is necessary to see that, so far at least, copper’s steepest rally in a decade is still just a fledgling on the weekly chart. Yes, it has surmounted a daunting multitude of minor peaks. However, these are mere foothills in comparison to the two ‘external’ peaks that I’ve labeled. The higher lies at 3.2790, and any rally from these levels that surpasses it without taking much of a breather along the way will be convincing evidence that the rip-roaring inflation of the 1970s is about to return in some shape or form. Anything less than that, however, can only suggest that an economic upswing of indeterminate strength is coming and perhaps no more.

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