Commodities in Bear Market Mode

For a very long time, commodities were in a protracted bear market. Each time prices went up, they hit the top of a wide channel and were pushed down… until 2004 when the CRB broke above the channel and went on a wild ride.

More and more the bull market appeared unsustainable as prices accelerated. Comparing the bear market channel with the bull market that ensued, it is easy to see the contrast. While the bear meandered lazily with the rhythm of an endurance runner, the bull market shot ahead with a one track mind.

But now, with the price of crude oil deflating fast, the CRB Commodities Index finds itself again in a clear bear market:

To be precise, the CRB Index is now down 24% from the top in July 2008. If this was an equity market, it would have qualified the standard +20% definition of a bear market.

If this is truly a change in the long term trend, it would not only mean a shot in the arm for equities but also the world economy.

Comments

[NOWHEREMAN:]

OR, if it were a stock, momentum traders would have seen a breakout, the initial surge after 20 years of decline. Followed by a correction and another surge to the upside followed by...?

A Bear market? You have got to be kidding. There will another 3rd leg to the upside, maybe some market topping before a Bear ensues.

2008 Sep 13 06:45 AM

[NOWHEREMAN:]

Sorry about my post, should have read your limited Bio first.

2008 Sep 13 06:48 AM