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Like losing an old friend

The venerable continuous CRB index has thinned out to nothing and is now archaic. You can't hardly find a nearby chart and the 30 year has now disappeared from the site where I'd find it.


The best substitutre is the GSCI, which I think overstates oil and tends to distort the 30 year cycle, but it is the best I have.


It is all a lot clearer on the CCI but anyway, what you get is the fact that commodities tend to chop around for 20 years or so at the midpoint of the cycle then all the sudden take off and peak at about quadruple from the previous range. Then that blowoff is done and they sag back but generally the new low holds at about double the old low. Then rinse, repeat.


Time, price and pattern are right to think that the winter's 350 low in CCI (chart not present) set that major cycle low. But that doesn't mean we're going to take out the recent highs for a long, long, time, or maybe even go more than about halfway back at mid-cycle highs.

Anyway, short term I'm using the tracking ETF DBC. In that, there is a potentially complete 5-3-5 corrective rally so I'm guessing generally lower for a while. But since I believe this stuff I'm also thinking that the lows will probably hold.


This is stuff that takes months and years to unfold so of limited use in short term trading. And that technical view requires a lot of time to either confirm or not- the low and the recent high are important bounds and taking either one out is significant*.


Caveat- a little early to call the high of the correction.



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4 Replies
Veteran Advisor

Re: Like losing an old friend



I just wanted to say that this is a great post. In fact, it's the kind of stuff that defines why this marketing forum was developed. Great market thoughts, insights, and things to ponder. You are right, there are so many tools out there to gauge short-term and long-term market patterns. And the two can work well together, but it does take time to track the trackers.

Also, I think the 'outside' money has thrown a monkey wrench into tracking the trends. It's of my opinion, the weekly COT Report is almost more telling than anything, right now, of where the markets could be going.



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I didn't link the chart I'd referenced. DBC is a CRB tracking ETF.


Being a speculative vehicle it'll overshoot the actual index a bit.

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Re: Like losing an old friend

My marketing is almost all cash on harvested production and cash forward and futures for hedging.  The information of use to some is not used the same way, if at all, by others.  My impression is many of the tech tools are designed for technical traders, something I don't understand and am no good at.


It seems to me the more the speculators, traders, funds, investors, call them what one will, use sophisticated and powerful equipment and algorythms the better off I am to stick to seasonals, fundamentals and conservative hedging.  No way I can compete with them, nor should I nor do I want to.  I'm a producer tyring to optimize the return on my grain, not a trader trying to make money from the market.


Now, rereading this it sounds like I'm knocking the CBI and similar tools.  I'm not.  I'm onlyl saying I don't understand them, don't use them, and don't feel the apply to me as a producer-hedger.  Smarter operators than I probably do get a lot of value from them.

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Re: Like losing an old friend

CRB isn't much of a trading/timing tool, more a matter of setting some philosophical tone.


I've told the story of the guy who, back in the 80s, would always be showing me his data and charts on why the corn/soy markets were going to take out the '73-'74 highs. My take, further supported by a couple more decades' experience, is that those major long cycle blowoffs are rare, take decades to build a base for and are best put in deep storage memory because they're not coming again for a long time*.


I'm not likely to be around or active in markets when the next one comes but I do think it is a perspective that might serve younger people well. The younger the better- as the old Pennsylvaia Dutch saying goes, "ve get too soon old and too late smart."


*Still, never say a market can't do something because it can do anything. A confluence of global weather events etc., sure, but there's little history suggest it is worth betting on. Just don't bet the ranch that it can't.

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