CRB Commodities Weekly Chart Sideways Triangle Descending Triangle

Here is a long term chart for commodities placing the recent mini crash in perspective. CRB has dropped over -15% in less than six months; call it a slow-motion crash. The Wall Street consensus is quick to tell you that the drop in oil and commodities is a supply issue and not a demand issue. That is doubtful. Oil is both a robust supply and weaker demand issue providing a double whammy of downside. During summer time, it was in vogue to complain about food prices but that talk has great diminished with the collapse in grain prices and the drop in the CRB, GTX, DBA and other commodity indexes. The metals fund, DBB, has held up better during this six-month drubbing.

The blue sideways triangle is targeting a very low 145 level which means worldwide deflation would be on tap and an outcome similar to the Great Depression. Obviously, the Fed and other central banker's obscene money printing would be proven a failure. If price can stabilize sideways and return to 280 and higher, the 400 upside target could come back in play and the inflation talk will ramp up again.

The more important pattern is the red descending wedge. The PBOC just fired the money bazooka by lowering rates with more rate cuts likely so the stimulus is sending Aussie dollar and commodities higher. The chart was ready for a bounce with the positive divergence (green lines) although price may need 2 or 3 weeks to base. A realistic  target considering the PBOC pumping would be the top rail of the red descending triangle at 290-300. The chart is multi-year so the red triangle may take a year or more to play out. A failure from the red triangle at 265-270 would place 165-170 in play another dire deflationary, 'hey buddy can you spare a dime', outcome.

With the PBOC pumping, oil should rise as well as other commodities so food and gasoline prices will creep higher again. The improved consumer sentiment in recent weeks is due in large part to the lower gasoline prices so a move back up in gasoline prices will create a dark cloud above the picnic of joy. Keystone expects the disinflationary and deflationary theme to gain traction going forward which would portend sideways to sideways lower oil, copper, metals and commodity prices for the next couple years iwht weak stock markets. 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.