The U.S. stock market is essentially at a historic high. To keep advancing, markets will need:
Traders are waiting for U.S. March economic news, and they are expecting it to be better. They are clinging to ANY shred of evidence that this is the case.
For example, Wal-Mart's (WMT) CFO said the company has seen very good sales since mid-February as the weather has improved. The stock jumped just before 1:00 p.m. ET as news crossed.
So far, the jury is still out. Holding pattern.
Regardless: There is already a cynical school that insists the markets will have a tough time advancing in April, even if the economic data improves.
It goes like this: If the news is disappointing, markets will react negatively. If we do get an improvement in the economic data, stocks will still struggle, because the market has already priced in the idea that the data will be better.
Under this scenario, it would take blowout economic numbers..well beyond expectations...and assurances by the Fed that they will not be raising rates any time soon...for there to be another breakout.
I don't buy this. The pattern for the last four years has been that the market haters have been wrong.
Traders are having a tough time reading the tea leaves on this one...is it due to a drop in demand in China, or some other factor?
First: Much of this is due to the weak yuan, the Chinese currency, which makes purchasing copper suddenly more expensive. Since China accounts for roughly 40 percent of world copper consumption, a weaker currency is a major part of the problem.
Why are the Chinese authorities allowing the yuan to weaken? Most likely, they are seeking to curb hot money flows and slow speculation. And if that means less construction and less copper consumption, so be it.
Second: The recent three-day weakness in copper has occurred exactly in line with China's first default on a domestic bond (Chaori Solar). Today there are reports that another Chinese company electrical equipment maker and solar panel manufacturer, Baoding Tianwei Baobian Electric, saw its bonds and stocks suspended from trading after reporting losses for a second year running.
Some of this is likely a knee-jerk risk-off reaction. But copper is used as collateral for loans in China; as prices dropped, borrowers could be under pressure to post more collateral, just as investors trading on margin might be required to do.
This may be good for China long-term, but it's a problem for stock investors. There has been a loose correlation between the movement in copper and the Chinese Shangahi Index for the past few years, largely because China has been so associated with commodity consumption.
Ending that relationship may be a bit traumatic.
Bottom line: Authorities are trying to lower risk in the financial system, and this may be affecting copper.
Third: What about fundamentals? Is China starting to come apart?
The shockingly poor trade numbers China posted last week (the biggest drop in Chinese exports in 4.5 years...the biggest trade deficit in 2 years) were a real wake-up call. There are already whispers that China's GDP in 2014 would not come in at the 7.5 percent level, but could slip into the 6 percent range.
That seems unlikely, but almost certainly, China will have to engage a significant stimulus program to stay in the 7 percent zone.
But officials are already concerned about debt levels: That's what all the issues I discussed above are about.
See the quandary?
The country is still heavily dependent on debt to keep going.
—By CNBC's Bob Pisani