and 6-Year Cycles in the
this report in PDF format
Long-term cycles in the Commodity Research Bureau Index (CRB) indicate probable bottoms in the agricultural markets and metals July through August with a bull market in full swing this fall.
The DJIA is often used for an overview of the Stock Market, and the Commodity Research Bureau (CRB) Price Index serves the same function for the commodities markets. It is comprised of most active commodities markets measured as a percentage of gain against the base year of 1967. It is heavily agricultural weighted, but also has metals and energy markets.
Dominant Cycles in the CRB Index
This index has powerful and consistent cycles that can be used to forecast months and years into the future. There are three dominant cycles in the CRB Index traced back to the 1940s, and shown on the charts below from the late 60s forward.
and 3-Year Cycles Forecast a Bottom this Summer
Table A lists the cycle bottoms and tops of the 3-year and 6-year cycles shown in Chart 1.
Column 1 lists the bottoms of the 3-year cycle and identifies the bottoms of 6-year cycles with an asterisk. Eleven of 13 3-year cycle bottoms (85%) occurred in months 7 through 12, This would seem to indicate that odds favor a bottom of the current 3 and 6-year cycles July through December.
Column 2 is the price of the CRB Index at each 3-year and 6-year cycle bottom.
Column 3 lists the tops of the 3-year cycle and identifies the tops of the 6-year cycle with an asterisk. Ten of 13 (77%) tops occurred February through July. (Useful information for identifying the next 3-year cycle top.)
Column 4 is the price of the Index at each 3 and 6-year cycle top.
Column 5 is the % move from the cycle top to the low of each 3-year cycle.
Column 6 is Column 5 sorted from the smallest move to the largest move.
Column 7 is a price objective based on the % decline (in Column 6) from the 1995 3-year cycle high at 264. The low for the month of May, 1998, is 214, which coincides with the 8/97 low. It is of interest that the January low for the index was 224, matching the 3/75 low, and once that low was taken out the Index dropped sharply to 214. If the Index drops below 214, watch 209. It could be a support level, and a drop below it could be followed by a decline to 195 as the 3-year cycle bottoms.
Column 8 is the % move from the cycle top to the low of each 6-year cycle.
Column 9 is Column 8 sorted from the smallest move to the largest move. This shows that a decline is likely to find support at 26-27%. The 42% decline was off the inflationary high in 1980 and is not likely to be repeated.
Column 10 is the calculation from the October 1996 3 and 6-year cycle highs at 264 used to anticipate the low of the current 6-year cycle. 193 - 195 (26-27%) is likely to be a strong support level for the 3 and 6-year cycle bottoms if the Index drops below 209. However, to reach this price level, prices would drop below the 198 low of the 1992 6-year cycle bottom and 196, the low of the 1986 cycle bottom. This is unlikely as the second 3-year cycle high on 4/96 was above the first 3-year cycle high on 6/94. This is a bullish pattern that almost never sees a drop below the previous 6-year cycle bottom in the CRB Index, or any market with 3-year cycles.
10-Month Cycles in the CRB Index
The lows of the 10-month cycles are indicated by the up arrows in Chart 2.
· There are three or four 10-month cycles in a 3-year cycle, and 6 or 7 10-month cycles in a 6-year cycle.
· The current 10-month cycle is the third in the 3-year cycle and the sixth in the 6-year cycle. This would indicate the 3 and 6-year cycles should bottom with the current 10-month cycle.
· For the 3 and 6-year cycles to bottom with the next 10-month cycle would take prices into next spring, which would be a 4 and 7-year cycle bottom… possible, but not likely.
low will the CRB Index drop before it bottoms?
will the 10-month cycle bottom?
3 - 20-week cycle forecasts 10-Month cycle low the last week of May through
The normal pattern for a 10-month cycle in a rising 3-year cycle is seven months up indicating commodity prices, in general, could make a sizeable move into the Dec-Feb time period. Once the bottom has been confirmed, the approximate timing and price levels for the tops of the 10-month, 3-year and 6-year cycles can be calculated, and will be included in an updated report.
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