With copper giving up some of last week’s gains, are the metal—and by proxy the market—headed for trouble?
Strategic investor Dennis Gartman thinks if copper closes down sharply on Monday the market could be looking at trouble.
Gartman is watching the technicals and says copper is currently flirting with some key levels. “You start to break some very important short-term technical uptrend lines,” he said.
And as goes copper, so goes the market, he said. In fact, Gartman pointed out that the recent correlation between copper prices, crude oil prices and stock prices has been “unbelievable.”
“It’s almost tick for tick, minute by minute,” he said. “The correlation is very strong. And one should watch what’s going on in those three markets to figure out what the other ones are going to do."
While copper fell off a cliff for one day after reports that China was stockpiling the metal, it rallied back. Gartman thinks Monday’s downward slide is doing a lot more technical damage.
And while we need to pay attention to China, it’s difficult to really know what the country’s numbers are because they are so skewed.
“It is very disturbing” that copper’s turning back lower, Gartman said, particularly because the other base metals are doing exactly the same thing.
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Trader disclosure: On Oct 17, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; P. Najarian is long AAPL; P. Najarian is long C; P. Najarian is long MS; P. Najarian is long YHOO; P. Najarian is long WFT calls; P. Najarian is long WFC calls; P. Najarian is long HPQ; Weiss is short CAT; Weiss is long EUO; Weiss is long QCOM; Weiss is long HPQ; Weiss is long RIMM; Weiss is long NS; Weiss is long NIHD; Grasso owns AA; Grasso owns AKS; Grasso owns BA; Grasso owns BAC; Grasso owns D; Grasso owns KEG; Grasso owns LIT; Grasso owns MHY; Grasso owns PFE; Grasso owns PRST; Grasso owns S; Grasso owns XLU; J. Najarian owns WYNN call spreads; J. Najarian owns AAPL call spreads; J. Najarian owns LVS call spreads; J. Najarian owns WFT call spreads; J. Najarian owns SWN call spreads; J. Najarian owns EUO call spreads; J. Najarian is long CIGX; J. Najarian long CBOE; J. Najarian long CME; Edwards is long XLK; Edwards is long TQNT
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