CRB Total Return Index (CRB)

Reuters/Jefferies CRB Total Return Index Fails To “Breakout”

Posted in CRB Total Return Index (CRB) on September 28th, 2012 by admin – Be the first to comment

By Jim Donnelly, Olson Global Markets

With the Federal Reserve’s latest monetary stimulus plans known for more than a week, the expected effect of Fed Chairman Ben Bernanke’s unprecedented “QE infinity” did help left equity and precious metals prices last week.  Interestingly, however, energy prices failed to “follow through” and declined instead as did the Reuters/Jefferies CRB Total Return Index, which had been on the “verge” of breaking above primary downtrend resistance at 321.26.

Overbought conditions on weekly charts might help explain the failure for a “breakout” to occur at this time. Perhaps a “sell on the news” reaction to the Fed’s plans was a knee-jerk impediment as well. Whatever the reasons were, an extension to last week’s CRB pullback appears likely in the weeks just ahead. Encouraging such an extension lower could be a “wait and see” posture adopted by investors in front of the U.S. presidential election. Increasing concerns over the fiscal cliff, rising tensions in the Middle East and closer scrutiny of Mario Draghi’s conditional bond buying strategy remain unsettling factors as well.

From a technical point-of-view, the CRB index’s decline might soon result in a test key trend line support at the 296 level. If the CRB index holds at 296, and then begins to reverse to the upside, visions of a mid-market “reverse Head & Shoulders” pattern could unfold. In that case, the 321-322 area would be seen as “neckline” resistance with an objective sitting near 375.

On the other hand, if 296 fails to hold as support, a new “leg” lower, perhaps down to a test of key “cross” trend support near 270 could result instead. That, of course, would likely conjure up renewed worries over the prospect of “deflation”.

http://www.ogmarkets.com/

Will Commodity Prices Push Higher?

Posted in CRB Total Return Index (CRB) on August 30th, 2012 by admin – Be the first to comment

By Jim Donnelly, Olson Global Markets

With gold and silver prices apparently breaking out of year-long consolidation patterns, and aided by a surge in agriculture prices (due to extreme weather conditions), the Reuters/Jefferies CRB Total Return Index (CRB) broke solidly above key trend line resistance at 295.60. Increased worries over a possible Israel/Iran confrontation added to the recent uptick in oil prices as well.

Still, the threat of worsening global economic conditions suggests that demand for many commodities may be tempered over the intermediate-term, such as aluminum, copper and nickel. With this week’s Jackson Hole conference expected to hint of more monetary stimulus from Europe, Japan and possibly the United States, a renewed shift into commodities could nevertheless result.

Some argue that in the absence of more normal economic growth expectations, demand destruction for many things could ensue in things like beef and gasoline. Others argue that the monetary effect of central bank easing efforts will ultimately cause commodity prices to move higher.

From a technical point-of-view, the Reuters/Jefferies CRB Total Return Index (CRB) has moved solidly above key “cross” trend line resistance despite overbought conditions on weekly charts. The real question from this vantage point, however, is whether the CRB can extend further and then break above primary downtrend resistance (drawn off the 2008 all-time high of 473.97) that currently sits at 320.00. A break above that downtrend would suggest that central bank stimulus might support a turnaround in global growth expectations. On the other hand, the failure to do so could be a glaring hint that fiscal restraint accompanied by price deflation might emerge instead.

http://www.ogmarkets.com/