Fear Sees Only The Obvious In Copper

Screaming sell when prices are falling is comparable to yelling fire in a crowded movie theater. This technique is effective in the trading world because the flight or fight response is difficult to suppress. Discipline supported by knowledge is critical to acting without emotion. The following chart illustrates a classic weak to strong hand transfer into weakness in copper.

Copper (JJC) And Copper Diffusion Index (DI)


Headline: Low China Imports, Strong Dollar Pressure Copper

Copper futures fell nearly 4% as another sharp decline in China's copper imports and a stronger dollar pressured prices.

In recent months Beijing's tighter monetary policy has forced many factory managers to use up inventories without replenishing them. Companies that use copper to make electrical wiring and other products—the main source of copper demand in China—are struggling to get credit, and many are relying on "hand-to-mouth" purchases to feed production lines.

China is the world's top copper consumer, accounting for 30% of demand, but imports have been on a steep decline in recent months. On Monday, China reported its imports of the metal in the first four months of this year were 756,199 metric tons, 29% less than the same period last year. April refined copper imports fell 48% from a year earlier and down 17% from last month to 160,236 metric tons.