Revisiting The CRB Index

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Includes: UUP
by: Marc Chandler

Summary

The CRB drop we anticipated appears to have run its course.

There is one more hurdle before we can confidently say a new leg up is likely.

Technical indicators point in that direction.

The CRB Index is building on last Friday's gains, when it gapped higher. That gap marked the end of the down move we anticipated on March 28. The index fell through the two supports we identified (171.30 and 169.50), before bottoming on April 4 near 164.70.

We had thought that a three-legged correction off the January 20 low was complete. However, the recent price action suggest that a five-wave move is more likely.

First, the gap higher last Friday has not been filled. It leaves a potential five-day island bottom it its wake. Second, the RSI has turned higher and the MACDs are about to cross. Third, today's gains, which have not been retraced much, have lifted the index through the 20-day moving average (~171.60) and tested to 50% retracement of the down move we caught (~171.95).

The 61.8% retracement is found near 173.35. This is the next immediate hurdle, and will not be seen today. A move above there, with the five-day average crossing above the 20-day could signal a retest of the mid-March high near 179.25. That high, incidentally, was a 50% retracement of the drop since the last peak in mid-October. The 61.8% retracement is found just below 185, which also corresponds to the 200-day moving average (today ~185.35).

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.