Saturday, October 4, 2008

CRB Index -- What Now?

on August 21st Trend & Value pointed out the great big head and shoulders in the making on the CRB Index.

the index is down close to 20% since then.

all the trendlines have been broken, all the moving averages violated. it's all very horrible. who could have dreamed that the prices of commodities would fall all the way back to where they were a whole year ago?! things are tough all over, man.

anyway, this is the time to be looking for a bounce. the CRB has approached the level of some lateral chart support, and more importantly just hit the 50% retracement mark of the entire bull market from 2001. sentiment seems low; after a quick search of the blogs and news over the last 24 hours or so, I couldn't find a single bullish mention for the CRB Index. practically all the articles and posts were about the index being down the most in 50 years. though there is room for improvement, the COT reports for most commodities look bullish to neutral. I didn't notice any screamingly bearish anyway.

what if I'm wrong?

then below 300 should be in the cards, short term. a close next week much below 325 would indicate that I may, in fact, be wrong.

if you are right, how big of a bounce could we get?

at least 30 points sounds reasonable. 50 points sounds generous. but I'd be pretty shocked if it closed above 400 in the near future.

could this be The Bottom?

as in never going lower? uh, maybe. but I'm skeptical. very. and anyways, keep in mind that commodities are in a 'real' bear market, and have been for a few years now, as evidenced by the trend of the CRB/Gold ratio. you ever read that quote above my picture? it's there for a reason.