CRB Commodities Daily Chart Horizontal and Downward-Sloping Channels Descending Triangle Deflation Targets

Lots going on for commodities these days and this chart reveals many interesting developments. Traders should be monitoring the CRB non-stop every day. The green circle shows when Chairman Bernanke announced QE2 at Jackson Hole, WY. Look at the catapult in commodities directly thereafter, same for gold, silver and other commodities while the dollar was taken out back behind the shed for a serious beating; the dollar falls as Benanke runs the printing presses full out while dropping money from helicopters. This chart shows you how the markets simply trade off stimulus, if traders receive crack cocaine, the markets go up, if not, or if the Fed shys away from mentioning the word 'accomodation' markets fall. The casino simply trades that way ever since 2009. Note the bounce from the lower rail of the blue channel at 295-ish, that is LTRO1 with LTRO2 announced at the same time and the wine flowed like water again, that pump moved the CRB from 295 to 325, over 10% gain.

The teal boxes show deflation. When the CRB falls under 300, Bernanke will experience many sleepless nights since this signals the economy slipping into disinflation. Monitor 'Keystone's Inflation-Deflation Indicator' (type into the search box above) to note the progress. Once the CRB drops under 290, then 280, the country is falling into deflation, the exact thing that worries Bernanke most of all. He concluded from his extensive studies of the Great Depression that the mistake the U.S. made back then was not being 'accomodative' enough.  There's that accomodative word again. In short, QE3 will be announced if/when the CRB prints inside the teal box.

Note the downward-sloping blue channel and the horizontal channel thru the 295-325 range.  Price punched down thru the top rail of the blue channel to regain the channel and on Friday came up for a back kiss to bump its head on the top rail.  This week you see if price can move back up and out of the channel again, or, it fails and starts moving down thru the blue channel once again. Price also moves thru the sideways channel and is making its way down to test the bottom rail at 295. The red lines show weaker indicators with weaker price which forecasts a test of the 295 very likely. The blue channel shows the conistent lower lows and lower highs which verifies continued bearishness but the short pink bars show how price did not make a lower low in December.  This favored a bounce and bullish positive divergence reinforced this projection, and then when LTRO1/2 was announced, there was nothing but upside.  However, price did not make a higher high, so now price travels sideways and will decide to either make a lower low under 295 (bears win) or a higher high over 325 (bulls win). Note how the indicators are mixed as well for the late 2011 time frame which opened the door to this sideways channel range of 295-325.

The gray lines show two descending triangles, both with a base line across 295. The small one has a vertical side from 295 to 345 which is a 50 difference and sets up a 245 target should the 295 base line fail, which would be in the deflationary teal box and match the lows from 2010.  The larger gray channel targets even lower numbers down towards 220 which would represent the Great Depression era type life for all of us, "Hey brotha, can you spare a dime?"

The 20-day MA under the 50-day MA is bearish; price under both MA's is bearish.  Indicators are under their 50% levels which is bearish. The stochastics, however, are oversold, and would be agreeable to a bounce for the CRB as it comes down to test the 295 support. Projection is sideways to sideways down moving forward with eventual failure of 300 sending the economy into disinflation, then an eventual move lower as the lower lows and lower highs resestablish the downward pattern. This projection then targets failure at 280 which can occur anytime from now into summer, and this will signal that QE3 is imminent.  Once QE3 is announced, commodities and equities will rally strongly just like the move from the green circle in August 2010.  These markets are purely stimulus-driven these days. Now you know what to study as you monitor the CRB every day here on out; if you could only watch one chart to show the path of markets and economic policy moving forward, you just found it.  This information is for educational and entertainment purposes only.  Do not invest based on anyting you read or view here. Consult your financial advisor before making any investment decision.