According to investopedia.com, a lagging indicator is a measurable economic factor that changes only after the economy has begun to follow a particular pattern or trend. It is often a technical indicator that trails the price action of an underlying asset, and traders use it to generate transaction signals or confirm the strength of a given trend. Since these indicators lag the price of the asset, a significant move in the market generally occurs before the indicator can provide a signal.
There was a article that CNBC posted on Thursday that stated,
Copper — a metal with a history of predicting economic trouble — hits 1-year low, nears bear market.
Analysts at Citi, however, think that copper is setting up to be a buy for investors. "The ongoing major sell-off, driven by escalating trade frictions between the US and China, is setting up a longer term buying opportunity. Here we look beyond the potential trade war to longer term copper market fundamentals and we find that current prices ... are nowhere near high enough to enable the market to clear," they said.
However, this news is too late and is a lagging indicator of price. The best leading indicator of price is following Smart Money. Smart money is defined as the institutional investors, hedge funds, etc. who have the capital and access to market information not afforded to the retail investor.
Two weeks ago, I posted what Smart Money was doing and about to do with copper.
Is Dr. Copper Telling Us Something About The Global Economy???
The weekly chart below shows price breaking the range to the downside.
I mentioned shorting copper on the pull back to the daily supply zone at $3.05, but the Smart Money aggressively sold copper.
Now the analysts at Citi said copper is setting up to be a buy for investors. "The ongoing major sell-off, driven by escalating trade frictions between the US and China, is setting up a longer term buying opportunity." However, depending on when you got the news, you might be too late to buy as price came into my weekly demand and bounced up.
If price is going to move higher from here, the first test is going to be closing above the 2.8000 level on a daily chart.
But one must watch out for the sellers at the 2.8400 level as well.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
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by rollandthomas