I found the Copper to Gold ratio to be a pretty good tool to confirm and/or anticipate turns in the SPX. Back in October 2007, this ratio was making already lower highs while the SPX was still making a higher high, non confirming the rally and signaling a reversal. In March 2008, the ratio was putting a higher low, while SPX was making a lower low, a signal that a bottom was near.
Fast forward to 2009. The Copper to Gold ratio anticipated the bottom in March by putting a higher low while the SPX was bottoming with a lower low at 666. Also, during the July correction the ratio made higher lows hinting us that it was just a correction and not the start of a more serious decline.
After this week's decline, is the ratio giving us any clues about the current decline in the SPX ?. Are we in a correction similar to July or are we at the start of a significant downturn ?. I will let you be the judge. In my opinion, the ratio is confirming that the market is turning and that lower prices are ahead for the SPX.
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