Coomidities strenght continuesAnother week of strenght after key level has been broken for commodities.
ATH resistance near by.
TRJEFFCRB trade ideas
Bullish Flag breakout on the Commodity IndexCommodity Index Monthly chart ... this looks very much like a breakout from a half-way-up the flagpole pattern.
The dotted line shows the resultant projection & suggests commodities to remain in a bullish uptrend thru to circa Nov/Dec 2026.
Chart clearly shows we've been at that sort of price level once before (2008) & what happened next.
Commodties vs. Bonds -> BullMarket StartsThe CRB vs. the IEF is showing rotational pattern into IEF and out of CRB.
This can give early entry signals. The market is kind of with a low liquidity. But you can see a zone were liquidity has to reenter, because there are big positions. All in all it looks bearish for the CRB and bullish for the IEF, what is good for bonds and thereafter for stocks as well.
It looks so because it cutted so mush resistance lines. It is the longest travel ever in the chart and it startet to suck up the last bullish area downward.
CRB Index: Impact on Commodities, Inflation, and the DollarIt’s been some time since we last looked at the Thomson Reuters CRB Index, a key indicator for tracking commodity performance and gauging inflation. With inflation softening recently, it’s not surprising that the CRB Index is also reversing. The chart shows a three-wave rally from the 2023 lows, which suggests a corrective movement in an ABC formation, as identified in Elliott Wave theory.
When a correction like this concludes, the next move typically retraces the previous rally. Looking at the CRB Index, we expect prices to move even lower, possibly down to 241. This decline could be further driven by falling crude oil prices, especially if OPEC increases supply as recently announced.
Some may wonder how this will impact the USD. Currently, the correlation is that lower commodities lead to lower CPI, which in turn suggests a lower USD due to expectations of Fed rate cuts. Until the Fed cuts rates a few times, the correlation between a lower CRB and a lower USD could remain in play due to falling US yields. However, once rate cuts are nearing their end, that’s when the dollar may find a bottom.
For pure charting enthusiasts.
This is a beautiful chart. When we filter time out of the analysis, the price action becomes clearer.
Commodities on the rise, but can they pull back?Commodities have been in a bull run since 2020, within an uptrend that can resume after the pullback observed in 2022. Analyzing the CRB Commodity Index, I believe that the pullback from that recent 2022 high isn’t over yet. There’s potential for a C wave that could retrace to 38.2% of the 2020 bull run. This may suggests that inflation might cool down, but much depends on the Federal Reserve’s rate decisions. Premature rate cuts could spur demand and drive prices higher, complicating the inflation scenario.
Commodity bull runCommodities are awakening from their slumber which is sparking renewed global inflation fears. Due to escalating global tensions, crude oil has surged more than 10% since the start of March which has seen the price per barrel close above $90 per barrel last week. Precious metals along with industrial metals have also benefitted from the rise in oil prices which has seen the Reuters Core Commodity index climb to a 6-month high. As mentioned previously, the Federal Reserve’s (Fed) fight against inflation is essentially its fight against oil and this recent break-out in commodity prices has poured some cold water on the expectations that the Fed will start cutting rates as soon as June this year.
The index will test the resistance level of 300, the 61.8% Fibo retracement, soon and a break above this level will allow the current commodity bull to race towards the 2022 high of 330.
Inflation ratios for spotting fed rate trend .... Inflation ratios for spotting fed interest rate short-term trend ....
CRB index Are commodities bullish, bearish, or going sideways? Big picture, long term still feels bullish...
$spy $tly $dba Commodities are building a baseI dare the fed to start cutting rates. M2 is also turning up. Another sign of economic strength returning. What reason is there for cutting rates other than 34T ind gov't debt
INFLATION IS NOT DEAD YET The chart posted is that of the CRB index The basket of ALL things . Iam looking for the High for the year in the stock market to form this jan 11 to the 18 and the Low for the CRB this should push the 10 yr into the last drop from 3.76 to 3.81 and then the TROUBLE
A bright future ahead for commoditiesFunction: Corrective
Wave Family: Simple Zig-Zag
Macro count: 2 of 5 of 5
Invalidation points: Below 0.79 of Primary 1
Description: TRJEFFCRB is pulling back in three waves to find support at the terminus of primary (2) before taking off in primary (3). Expecting C to be 100% of A at ~230 near the base of the channel.
Bullish pullbackNice bullish pullback on CRB core commodities index after hitting resistance on the 38.2% Fibo retracement level of 283.
Golden cross is also imminent (50-day crossing 200-day MA).
A break below the 23.6% Fibo level of 272 will however invalidate the idea.
Fundamentally however, the weak data and economic growth from China is negative for commodities.
So… how’s that deflation narrative looking?We’ve become so accustomed to headlines of ‘peak inflation’ and falling input prices that some have been throwing the wonderful ‘deflation’ word around. And we think most would enjoy a bit of deflation, as that would result in lower interest rates. However, with commodity prices (particularly oil) being a key driver of inflation, a lot of the softness can be tied back to the underperformance of commodities over the past 12 months. Supply chain disruptions have also been in the rear-view mirror and no longer a concern (or are they?)
Over 30,000 UPS workers are vowing to strike if a new pay deal is not negotiated by 1 August, which should throw a nice spanner in the works of the US (and global) parcel delivery system. Russia has pulled out of a key grain deal and is bombing Ukraine ports to derail trade in the Black Sea. And India has banned rice exports (apart from Basmati) to fight domestic inflation, adding to fears of another round of food inflation.
It is therefore worth noting that the Thomson Reuters CRB commodities index is seemingly breaking out of a 12-month retracement on the monthly chart. Furthermore, the retracement lasted 11 months before June’s small bullish candle, so the broad commodities index may have bottomed in May at -19.8% y/y. And assuming this is the breakout of a falling wedge, it projects a target around the 329.60 high. But if it were deemed a bull flag, the target sits around 365.
And what do we think will happen to consumer prices further down the track? Of course, they will begin to rise again. And the worrying fact is that inflation tends to come and go in waves, so if commodities continue to rally then it looks like the next wave of rising y/y inflation is pending.
CRB Inflation tracker Inflation Y/Y almost seems to track the CRB index to the point of disbelief, especially in terms of putting in highs and lows. And CRB looks to have made a decent X wave pullback to golden fib which marks decent tops. Consequently, it does seem like inflation has topped and the economy can fall into deflation. Also, May prices have fallen further and hence should likely give neutral CPI solidifying the belief that Fed will pause rates in the coming FOMC. If that's the case, then there is a real possibility of an extended rally and maybe even new ATHs.
RIP stagflation narrative.
US Inflation is to fall following the fall of CRB IndexTRJEFFCRB almost confirms the Downtrend which indicates the US Inflation is about to ease down.
Meanwhile, as inflation falls, the rise of Fed Fund Rate should also near its ends.
Inflation has peakedNow that everyone is talking about inflation it’s over! It’s going for be a quite interesting time when everything begins or continues to deflate into the abyss. Watch the federal reserve over compensate for inflation and cause a recession we have not seen the likes of.
The Fed won't be able to get inflation back to 2%The Fed says they are trying hard to get inflation down however the commodities chart is sticking out it's tongue at the Fed.
Everyone on social media is screaming: The Fed is going to cause a major RECESSION; MAJOR RECESSION IS COMING!!!
Yet this chart is not screaming a major recession is coming (nor is it at all scared by the Central Banks "hawkish" talk)?
Let's look at past recessions (notated by the vertical red lines):
July 2008-Notice how commodities plummeted after the high was made...literally just straight down due to the nature of the recession. (During the recession commodities dropped about 57%)
March 2020-Commodities started to plummet in Jan 2020 and then plummeted hard during the short lived recession. (During the recession commodities dropped about 40%)
April 2001-Commodities started to weaken after double topping in 2000 but didn't come down too much during the recession. (During the recession commodities dropped about 27%)
What does this analysis tell me?
1. That we are not on the brink of a severe recession (like 2008). At this point; commodities are just in correction mode.
2. During a recession commodities plummet along with all the Indexes. Therefore, if this chart plummets so will just about every other chart.
4. We have a double breakout in commodities from the LT downtrend line & the LT horizontal trend line...any good pullbacks in commodities will be met with buyers hence inflation is NOT transitory and will remain sticky.
5. The soft landing narrative is a farce because you cannot get commodities to plummet unless you cause some sort of recession.
6. Commodities are saying the FED is actually not being hawkish enough.
7. The reason for inflation is very simple: money flowed into commodities. It all starts with raw materials.
So are the Central Banks around the world really trying to get inflation under control? Or are they just "talking the talk"?
At this point, the only way to get inflation down to 2% would be to cause a major recession but the rate hikes thus far have NOT scared the commodity chart into submission therefore Powell and all the other central bankers around the world are actually not doing enough at this point.
So.....Stagflation continues!
(BTW...the bond market has spoken: Cheap debt won't be making a comeback anytime soon!)
Has Inflation Peaked?An unpopular opinion I have is that inflation has already peaked. Just as the Fed took too long to raise interest rates. They now appear to be raising the Federal Funds rates too high in their attempts to mitigate runaway inflation.
For being such an unpopular opinion - it is oddly evident almost anywhere you care to look:
Freight Rates have dropped 8.2% y/y www.dat.com
The largest drop on the ISM Manufacturing PMI Report is in prices (Aug 52.5 vs Jul 60 -7.5% Change ) www.ismworld.org
Oil - opened the year at $76 Annual % Change currently 4.69%! (USOIL Currently Trading at $79.30)
Gold - Treasuries are an easy swap with these yields... US02Y - 4.212% !
NAHB Housing Index Down Sharply blog.itreconomics.com
Unemployment has been resilient despite the steep drop in growth. However, the Fed plans on mitigating inflation through increasing unemployment. 'Beyond maximum employment' is pinkies up speech for - 'we are coming for your job'. One way to slash demand is for folks to lose their employment eh?
Soft Landing is months old talking points now as Jerome Powell states 'The sacrifice is slower growth in the future' .
For being so powerful & influential it is shocking to realize how poorly the Fed is keeping a pulse on inflation. I suspect the worse of inflation is behind us, and over the next three months we may see inflation back under the 5% level.
When it comes to inflation remember the formula: MV=PQ
M stands for money.
V stands for the velocity of money (or the rate at which people spend money).
P stands for the general price level.
Q stands for the quantity of goods and services produced.
Based on this equation, holding the money velocity constant, if the money supply (M) increases at a faster rate than real economic output (Q), the price level (P) must increase to make up the difference. Velocity has remained constant to now offset the increase in money supply and even lead to deflation instead of inflation.
This is coupled with demand dropping as supply shocks have now been better absorbed.
When the market beings to price in a pause in the Federal Funds Rate - this could be a catalysts for buying the bottom in risk assets such as equites & crypto.
In all this volatility! Trade safe mates!
still no sign of bullish signal on COmmodity and oilit proves the dollar still bullish
maybe we need to wait for the 2 November 2022 FOMC 75 bps rate hike...
CRB Commodity index Elliott wave projectionProjection based on Elliott wave analysis.
This outlook is for the 12-24 months ahead
CRB Index ending Diagonal - is the commodity cycle done ? CRB Index has been trending steadily since the time the logistics issues cropped up along the Covid wave across countries , gaining additional impetus from the crude oil rally - ukraine war. However off late its a bit surprising that so many of the commodity shortage or panic demand factors are so quickly priced in , as the ending diagonal in CRB almost makes it certain by way of wave theory that a significant top is placed. This also shows the tendency to stay out of commodities as the central banks who have suddenly woken up to inflation - rather late are now not leaving any scope to increase rates.
