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hardnox
Advisor

CRB index

http://stockcharts.com/h-sc/ui

 

As I'd mused upon, we might be in a 4th wave correction that will bide some time- it has eaten up a month waiting for the 50 dma to catch up and could probably burn another month, probably remaining under the average. As a 4th a 5 wave triangle is possible and would fit that scenario.

 

That ought to be followed by a fifth and final wave down, prospectively to the 400ish level.

 

At that point I'd turn to look more for the long side of some individual commodities although wouldn't expect a broad based rally to develop without first forming a base.

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hardnox
Advisor

Re: CRB index

http://stockcharts.com/h-sc/ui?s=%24cci

 

Don't know why the link in the post above went goofy, it does that sometimes.

 

Anyway, my previous musings that it might burn some time in a triangle before resuming the downtrend might have proved too bullish, looks like it might be on the verge of doing it now.

 

USD is on a tear and I wouldn't try to pick a top. As they say, currency moves are long in the making and long in the running and if you want to become a millionaire picking tops or bottoms on currency moves you'd better start as a billionaire.

 

That's a substantial headwind to the commodity complex and to a lesser degree stocks as US multinationals lose foreign earnings. That is if anybody really cares about earnings multiples in a ZIRP/NIRP world.

 

The biggest deal of all is that ultra low rates worldwide, initially led by the US, sent $T's of hot money into emerging economies as USD denominated debt. That cheap money gets expensive as the dollar rally continues and just adds fuel to the fire as borrowers are forced to hedge exposure.

 

All in all not a nice environment, sort of the anti-2002-8 when the US pushed the dollar relentlessly lower, setting off vast carrytrades to short the dollar against commodities. Also worth noting that there are still untold hundreds of $B sitting in some of those carry trades- commodity index funds, ETFs etc. and giving a more or less daily blood donation.

 

Anyway, expect most commodities to underperform what appears to be their fundamental potential.

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