Can Copper Predict Short term Movements?

etfarb · Mar 25, 2013

i've ran a few regressions with copper and have gotten some extremely interesting numbers.

I want to make a model with copper being the lead. My biggest question though is can copper actually be useful in day to day or week to week trades?

OddTrader · Mar 25, 2013

http://www.zerohedge.com/news/2013-03-20/dr-coppers-deja-vu

http://www.zerohedge.com/news/guest-post-how-dr-copper-feeling

bone · Mar 25, 2013

Copper used to be highly correlated with alot more commodities and equity stocks than it is at present. If you run a 2 year correlation looking at daily closes, there isn't much above 90 % positive correlation to speak of really. Again, that used to not be the case - but it is reality at present.

Maverick74 · Mar 25, 2013

Quote from bone:

Copper used to be highly correlated with alot more commodities and equity stocks than it is at present. If you run a 2 year correlation looking at daily closes, there isn't much above 90 % positive correlation to speak of really. Again, that used to not be the case - but it is reality at present.

You can thank China for that. I suspect that correlation between copper and FXI is higher.

etfarb · Mar 25, 2013

Quote from Maverick74:

You can thank China for that. I suspect that correlation between copper and FXI is higher.

It is. Infact the hang seng moves in relation to copper

The question is, can the movement of the hangseng help a speculator make a trade on American Indices?

Maverick74 · Mar 25, 2013

Quote from etfarb:

It is. Infact the hang seng moves in relation to copper

The question is, can the movement of the hangseng help a speculator make a trade on American Indices?

I suspect not. Very DIFFERENT markets. Honestly China and the US have nothing in common. Not to mention China is the most corrupt country on earth.

etfarb · Mar 25, 2013

Quote from Maverick74:

I suspect not. Very DIFFERENT markets. Honestly China and the US have nothing in common. Not to mention China is the most corrupt country on earth.

Find it hard to hear you say that considering China buys up all of Americas debt, making there a direct relation

Regardless

if you were to make a predictive model of the S&P500, what variables would you include/test?

syswizard · Mar 25, 2013

Guys - this is THE authoritative thread on the subject of Copper:
http://www.elitetrader.com/vb/showthread.php?threadid=249889

Copper's been acting very weak as of late.

Maverick74 · Mar 25, 2013

Quote from etfarb:

Find it hard to hear you say that considering China buys up all of Americas debt, making there a direct relation

Regardless

if you were to make a predictive model of the S&P500, what variables would you include/test?

China does not buy up all our debt. They own 10% of it. About 1.1 trillion. You know who else does? Japan! They both own about 1.1 trillion. And I don't think Japan has been very correlated to our markets in over two decades.

China is a commodity country. The US is not. They just aren't comparable. In fact, China has been one of the biggest manipulators in the copper market being they own about 40% of the world supply of Copper. So if China slows down, and they have slowed down, copper prices will be weak and they have been weak.

There are way too many variables that can be predictive models for the s&p. But to play along I would say two of the better ones are the Libor-OIS spread and the yield curve both 2/10 and 10/30.