Before the market closed down last week, the ratings showed that, metal has sledged down to a four and a half year lower sides, but at the beginning of this week, copper is giving a bit of hope in the market. But for now the value of copper as one of the important industrial metal, has plunged down by 9 percent, and this is where a situation comes that, the ‘Dr Copper Theory” becomes a warning, for some of the investors, regarding where the stock is going.
According to this honored theory present in the market, the metal; copper has an ability to sense the economic turning point on the globe, and hence could also measure the health of the stock market rally. This is because copper is a boundless metal, which is being used in homes, power industries, and many other forms of industries. So when the price of copper is falling down, then it means that the whole financial assets are being affected.
George Gero, based on RBC Capital Markets commented that, as the metal has limitless uses in the industry, it can be said to be an indicator of the economy. And therefore the decline in the value of copper, will in turn raises concerns regarding the whole financial sector.
Even when saying so, Chris Kimble based on Kimple Charting Solutions, stated that, the copper price has been slowing down for the last few years but the equities have been climbing up swiftly. Then, as usual the question arises, is the ‘Dr Copper theory’ effective?