Copper Continues to Drop

Finance Portfolio Research & Analysis for Sept. 8-12, 2008

From our foundational USA research division and the subsequent USA strategy analysts, the following financial analysis excerpts are from revisions recently completed on USA based investment portfolios:

SCR Step 1 – Analysis: From No. D3 (USA) Financial Portfolio Research Revision

[iPath ETN] AIG Copper Total Return (JJC) vs. [PowerShares (Wgt: MC)] Commodity Index (DBC):        

(1) Observation – Relative Strength: Results in the relative strength analysis of AIG Copper Total Return (JJC) versus Commodity Index (DBC) indicate that JJC is neutral to DBC on a relative basis.

(2) Observation – Regression: Comparison of the linear regression to the time-series that has a 3-period forward shift finds the following formation: The linear regression is below the time-series and the price path is below both. Since the linear regression provides the “best fit” to the price path, this has negative implications for JJC.

(3) Observation – Price Performance: AIG Copper Total Return (JJC) shows a continuation of a negative price path (downward slope), but on weak indicators. [Reference Charts: D3-4 (relative strength); AD3A-4a (regression); AD3B-4b (price)]

SCR Step 2 – Implication & Strategy:

(1) Possible Implication: The summary of the stated observations for JJC is Neutral / Negative, and has Bearish implications. Copper, as an industrial metal, has important economic implications.

Additional considerations:

First, for most investors, a diversified investment portfolio approach combining stocks, bonds, money market securities, etc., is optimal. While financial diversification cannot protect against a loss from a declining market, it can reduce the volatility of the overall portfolio.

Second, with the ongoing shift of pension responsibilities from employer to employee, personal investment success will need to supplement most benefit packages. Thus, a goal of successful investing in a variety of assets becomes crucial in providing a comfortable retirement for yourself and your spouse. In consideration of that goal, studying the information available on this site, which has been kind enough to host our research in this article, will help. At www.StrategicCapitalResearch.com, we provide additional finance educational materials to what you find here in both investment books and videos. Between the two sites, you should be able to find enough information to get started toward achieving your pension investment goals.

Third, to the above analysis excerpt, the usual disclaimers apply. Since all Strategic Capital Research publications provide research that is conducted using historical data, a reminder needs to be made that the analysis of past market reactions cannot predict future market actions. In particular, no amount of historical data can predict the sudden changes that occasionally occur in financial markets. Finally, the reference chart numbers refer to both the portfolios and their completed auxiliary analyses that are located at www.strategiccapitalresearch.com/research.html.