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CRB
INDEX UPDATES The following Trade Alert updates will be better understood if you first review the original report. To recap: The CRB Index has within it four dominant longer-term cycles -- 6-year, 3-year and 10-month, and 20-week. The powerful 6 and 3-year cycles are due to bottom this year. The 10-month and 20-week cycles will also bottom with this cycle. By confirming a bottom of the 20-week cycle we can have a reasonably high expectation that the 10-month cycle has bottomed, and if the 10-month cycle has bottomed the 3 and 6-year cycles have probably bottomed.
The Monthly
Chart below shows the strong bull market that followed the last bottom
in 1992, in which the CRB Index rose for four years. Notice how prices
tracked above the lower line of the EMA trend indicator for most of the
move. |
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Now in month
12, this cycle is due to bottom. Since the June report it has dropped
to our objective of 209, and a drop below it could be followed by a drop
to our next objective of 195. However, the midpoint of the difference
between the two numbers (209 and 195 in the June report), often provides
support and should be watched for a bottom if the index drops lower. A
Friday close below 209 could then be followed by a bottom at 195 to 202.
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In the Weekly Chart below the bottoms of the average 20-week cycles are indicated by the arrows. Each of the weekly cycle bottoms was confirmed by a mechanical buy signal indicated by the thick red price bar and the entry dot that followed it. About 70% of these signals follow a 20 week cycle bottom, so the odds of the current cycle bottom not being in place are only 30%. A rise above the price high at A will be confirmation of the cycle bottom, indicating Trendline 123 is likely to be penetrated to begin the rise to the high of the 6-year cycle. An upturn in the red RSI3M3 oscillator will also be another indicator that the bottom is in place. A bottom does not necessarily mean that commodity prices will explode. Some markets could move lower as others move higher, even forming a six or seven month base as in 1992. But it does mean the end of the bear markets is near. Review the markets carefully to select those likely to be strong right out of the bottom. Metals, sugar, soybean meal look like leaders; the meats and energies are close to a bottom, while coffee, grains and bean oil may continue drifting lower into late summer or early fall. When we have buying opportunities or have confirmed bottoms in any of these markets, subscribers will be notified by email. |
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The Monthly
Chart below shows the strong bull market that followed the last bottom
in 1992, in which the CRB Index rose for four years. Notice how prices
tracked above the lower line of the EMA trend indicator for most of the
move. |
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Currently in month 12, this cycle is now due to bottom in October, the 15th month from the previous low, and a month in which soybeans and grains frequently end bear markets. The index found brief support at 209, and our next objective based on historical moves is 195. However, the midpoint of the difference between the two numbers (209 and 195, in the June report), which is 202, often provides support and should be watched for a bottom as the index drops lower. Another level to watch is 198.17, the 1992 low of the last 6-year cycle.
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In the Weekly Chart below the bottoms of the average 20-week cycles are indicated by the arrows.
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Each of the weekly cycle bottoms was confirmed by a mechanical buy signal indicated by the thick red price bar and the entry dot that followed it. The recent 20-week cycle bottom has been penetrated, indicating prices are likely to bottom about 20 weeks from the low, most likely in October, probably above 195. … Prices are likely to remain below trendline 123 until after the 20-week cycle bottoms. Review the markets carefully to select those likely to be strong right out of the bottom. Metals, coffee, sugar, soybean meal look like leaders; the meats and energies are close to a bottom, while grains and bean oil may continue lower into October. When we have buying opportunities or confirmed bottoms in any of these markets, subscribers will be notified by email. |
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| 8/28/98 | |
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The monthly chart of the cash CRB Index shows a drop below the last bottom of the 6 and a 3-year cycles in 1992. This is an unusual move, as it follows a rise above the high of the previous 6-year cycle top. The price low on Friday 8/28 is 195.18, well below the 1992 low of 198. Our support level, as explained in the original report on page 2 is now 193 - 195.
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Based on historical moves, a Friday close below 193 could be followed by a sizable decline…. Will prices drop below this level? Shorter-term cycles in the weekly and daily charts would seem to indicate lower prices in the CRB Index. The weekly chart shows the recent bottoms of an average 20-week cycle. The week of 8/28 was only 11 weeks from the last cycle bottom, indicating that a continued decline is likely into October as the 20-week cycle bottoms. However, a ˝ trading cycle of approximately 10 weeks is due to bottom, and could move the CRB higher for several weeks.
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If the CRB does move higher, it is likely to top below the downtrend line and be followed by new lows. A rise above this trendline would be a strong indicator that the 20-week,10-month and 6-year cycles have bottomed. The daily chart shows the CRB is 12 days into a 20-day cycle, also indicating lower prices are likely to be seen this week and probably into next week as this cycle bottoms. |
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What Now? Currently in month 13, this cycle is most likely to bottom in October, the 15th month from the previous low. Our intital report indicated the 3 and 6-year cycles were likely to find strong support at 193 - 195. The Index is currently testing 195, and it would not be unusual for the CRB to go into a sideways trading range forming a base for the next upmove. This will most likely be accompanied by sideways markets in the grains and metals. However, a drop 193 does not show another historical support level until 182. We will have more information on the potential downside in a special report if the CRB drops below 193. |