CRB Commodities Daily Chart; Fed Will Not Act with QE3 Until CRB is Under 270

The CRB is a great signal for when Chairman Bernanke will step up with QE3.  Bernanke fears deflation and the deflationary panic will not occur until the CRB drops under 270. This will cause Bernanke many sleepless nights and then he will act with the QE3 money pumping to save the day in the CRB 250-270 range. Right now, at over 300, Bernanke is sleeping without worry or concern, chuckling at the media's preoccupation with QE3.  As far as Bernanke is concerned, if the CRB can muddle along above 290 indefinitely, then QE3 will not occur indefinitely. Analysts, however, appear in near universal agreement that September will bring the Fed to action. Keystone thinks they all will be very disappointed. If the CRB drops under 270 by then, sure, then that will work, but if the CRB remains elevated above 270, QE3 will be on a milk carton for the forseeable future.

The CRB bottomed with a W pattern in June.  A W under both the 50 and 200-day MA's is a powerful force; the target at a minimum would be twice the distance which was 305. The neon green lines show the positive divergence launch off the bottom.  Price appears open to rolling over now, a print at 305 again would seal the deal with negative divergence.  Note how price is bracketed by the 200-day MA above and the 20-day MA below; the price move out of this bracket will tell you the winner and direction ahead.

The light blue circles show how the chart favors island reversal patterns. The current island forming over the last month would print an island reversal if price dropped from 288 to 284 in the days ahead, falling back thru the gap.  Projection is for a roll over from 301-306 to occur with the 200-day MA holding as resistance. If the 200-day does give way to the upside, the bulls will target 308 and higher. 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.