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What Copper Is Saying About The Economy: Gartman

With copper considered a leading indicator by many pros, what should you make of Wednesday’s bounce? Find out from Dennis Gartman!

Copper is sometimes called Doctor Copper by pros because the price action of the red metal often correctly forecasts the price action in the stock market – in days and weeks to come.

Strategic investor Dennis Gartman, however, isn’t so sure that copper deserves a Doctorate.

“I like to say it has a Master’s degree but if you’re looking for a Ph.D you’ve got to take the price action in aggregate with other metals – especially tin, zinc and aluminum.”

And looking at the price action of all those industrial metals in concert, Gartman says it would be a mistake to take the bounce in copper as a sign the global economy is turning a corner.

He says Wednesday's gains were triggered by new data which showed the number of home buyers signing contracts to buy existing homes jumped nearly six percent in May to the highest level since April of 2010.

In other words, the turn higher is nothing more than an oversold bounce.

But don't take that to mean copper isn’t generating insights. It is. Gartman says pros will use the bounce as a meaningful ‘tell’ to gauge just how bad things are going to get.

“Don’t look for copper to march higher but do watch to see if copper can hold its low,” says Gartman. “If copper can’t hold its lows, I would take it to mean the global economy is even uglier than we know.”

Posted by CNBC's Lee Brodie

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Trader disclosure: On June 27, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Stephen Weiss is long QCOM; Stephen Weiss is long AMLP; Stephen Weiss is long AMTG; Stephen Weiss is long VZ; Stephen Weiss is long T; Stephen Weiss is long VOD; Stephen Weiss is short X; Stephen Weiss is short MT; Stephen Weiss is short JCP; Stephen Weiss is short JEC; Simon Baker is long AAPL; Simon Baker is long NVDA; Simon Baker is short AMZN; Simon Baker is long HES; Mike Murphy is short WMT; Mike Murphy is long TGT; Mike Murphy is long SBUX; Mike Murphy is long LEN; Mike Murphy is long TOL

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CNBC.com with wires.

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