CRB Commodities Weekly Chart; Sideways Symmetrical Triangle; Textbook Bull Flag; Trend Line Fan; Under 300 Indicates Disinflation

CRB is a useful gauge for inflation versus deflation.  Keystone thought Chairman Bernanke would hold off with QE3 since there was no need for it, the markets and economy is no longer in disinflation or deflation, but the Fed head decided to debase the dollar and hurt saver's anyway.  The neon circles show the quantitative easing efforst, QE1 in 2009 and QE2 in 2010, both severe deflationary events that required sudden action by the Fed, which placed an immediate floor in markets, catapulting commodities, gold, copper and equities all higher once the printing press was turned on.  In 2011, that was a disinflationary event starting to move into deflation when Operation Twist and the ECB's LTRO1 and 2 were announced to save the day.  This year, we fell into deflation again in the early summer, April-May, remember how Keystone's Inflation-Deflation Indicator signaled these events? You can type that into the search box above to review all that prior drama. As a rule of thumb, the country is falling into disinflation when the CRB falls under 300, under 275 and lower and deflation is occurring taking us near the dreaded deflatinary spiral of no return which occurred for the Great Depression, and Japan's now two-decade funk.  Keystone thought that Bernanke would hold off with QE3 since deflation was no longer a threat. Once Bernanke and Draghi starteed jawboning stimulus this past summer, the June low was created. It is interesting to look back and in actuality, the deflation in the early summer did actually trigger the Fed to act but it was more nuanced this time. The first three circles received stimulus when the markets were crumbling apart, but QE3 was announced after the markets already recovered due to jawboning.

The bull flag in 2009 and 2010 is text book, about 100 points for the first leg, then consolidation, then from 250 to 350+.  The chart is very much in a sideways profile, note how the moving averages are even flattening out now. There will be a major decision occurring for the CRB in the weeks ahead and the move will effect all our lives for the next few years.  Price should move thru the pink channel until the decision comes. The move up, or down, out of the pink channel is important as well as the move from the black sideways triangle.  Watch the thin black upper trend lines of the triangle which serve as resistance.  The bulls will be happy if they see 330 and higher. Bears simply need to see weakness filter in to the CRB and can throw confetti when it drops under 300 since this will signal the country falling back into disinflation. The red fan lines provide further support targets moving forward.  Projection is sideways to sideways down for the weeks and months ahead as the economy continues along in a low and slow growth environment. A drop thru 300 will signal trouble. A drop thru 275 is uber trouble since the Fed shot the bazooka a week ago and there are no more shells available to help. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.