The Persistent Weakness in Lumber Continues

May 20, 2014
By Knowledge Leaders Team in Uncategorized

We’ve noted several times in the last few weeks the ongoing weakness in lumber prices here, here and here. We watch lumber prices because lumber, being a largely domestically produced and consumed resource, can give a good early indication of changes in domestic economic activity. Lumber prices are also closely correlated to stock prices (the S&P 500 in this case) and so we like to see the two price series following each other.

We note this today because lumber is currently down 1.8% and is clearly breaking through the horizontal support line (1st chart below). There is also a a decently wide divergence opening up between the S&P 500 price and lumber prices that we presume needs to be corrected in one way or another eventually (2nd chart below).



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