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‘Dr. Copper’ thinks the market is sick

But John Kosar, director of research with Asbury Research in Chicago, said it’s unusual for transportation stocks to outperform during times of economic uncertainty. He noted that the Dow Jones transports and copper actually tend to trade in tandem.

So either copper is oversold, suggesting the market may be due to for a near-term bounce, or transports are ahead of themselves, indicating more volatility for the markets and economy in the coming months. Unfortunately, he thinks the latter case is true.

“The historical correlation between copper and the transports has been pretty tight and stable for the past 20 years,” Kosar said. “So something now looks mispriced and it’s probably the transports. That’s a red flag.”