Mad Money
Off the charts
Cramer went to the charts to get a technical view on copper as it determines the health of the overall economy. "Copper's strength is part of the traditional metrics that define economic growth and it can be a part of the rational justification for what so many believe is an irrational rally," he added. He checked the charts with the help of technician Ed Ponsi.
Copper is at a yearly high and the markets are at all-time highs. Ponsi said that history suggests the economy tends to make powerful moves when both stocks and copper move together. "It is not a crystal ball. However, those who ignore history are doomed not to profit from it, so it would be a mistake to ignore copper's latest move," said Cramer.
The market loves increased demand for copper but the rally in copper seems to be supply related. Workers are on strike in the biggest copper mine in the world and many companies have cut production as well. Ponsi noted that China consumes 50% of the world's copper and when its economy is growing, the price of copper rises too.
Weekly charts from 2008 show that Copper bottomed in 2008 and then tripled by 2011 hitting a peak. China's trade balance shows that their economy is on the rise for the first time in years. Ponsi believes that a copper rally could be good news for the global economy and US stocks in general.
"I am still a bit skeptical because if copper is only rallying because of tighter supply, then that is a lot less significant for economies around the globe," said Cramer. However, copper strength could mean strength for the overall market.
