Sunday, November 25, 2007

Bull Flag In Commodities (CRB)



Above is a daily chart of the CRB index and below that is a ratio line of the CRB index vs the S&P500. Since October, commodities have been outperforming the S&P as can be seen by the rising ratio line. A rising ratio line means commodities (CRB) are doing better than the S&P.

Notice now there is a bull flag formation in the CRB. I'm already bullish on gold stocks. If I am right and the CRB does have another leg up, I think it will be gold that will cause the CRB to rally. See my post from Saturday which talks about why I am bullish on the XAU.

4 comments:

clarence said...

Kevin: Is there a head & sholders in the dollar. 1994=93.75 neck 1998= 104.75 sholder 120 head .80 neck 2005 92.50 sholder 2007 76 neck. I expect a swift break from the neck. We held 155.61 on the xau, very criticl. Price objective on the $ is .60 November 2008. Your observation on xau is spot on. Keep up the good work. Your thoughts. Clarence

Kevin said...

I don't see a head and shoulders in the dollar...Thanks Clarence

clarence said...

Kevin: Is it unreasonable to expect a 50% Decline in the dollar from 120 in 7.5 years? An example of this would be 1980=1.60 falling to .85 in 1987 November. Clarence

clarence said...

Kevin: In the above example the dates should have been 1985 to 1993 when we saw a 50% decline in the dollar from 1.60 to .80. Clarence

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