Since the February 5th pivot, the stock market has rallied higher. The S&P 500 is now approaching its January 2010 high at 1150.00. This recent rally has been lead by the small capitalization stocks in the Russell 2000 index and also the technology heavy NASDAQ Composite. These two indexes have made new highs for 2010.
The laggard in the market has really been last years leaders such as copper, gold, and silver. While these stocks have bounced from the February 5th correction low, they have not come close to reaching the January highs. Leaders in the copper stocks such as Freeport McMoRan Copper and Gold Inc. (NYSE:FCX), and Southern Copper Corp (NYSE:SCCO) are higher, however, they are not leading the markets as they did back in January.
The legendary trader Jesse Livermore used to say that the markets could be followed by watching copper. If copper headed the markets, then the rally was strong. If copper lags the markets than something was wrong. At this time copper stocks are holding up well, however, they are not leading this rally since February 5th, 2010.
Could this be signaling trouble for the major stock indexes in the near future? It is certainly possible. Therefore, copper stocks should be watched closely at all times.
Nicholas Santiago
Chief Market Strategist
InTheMoneyStocks.com
