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Commodities Suggest Economic Recovery Stumbling!

  • Written by Syndicated Publisher No Comments Comments
    April 10, 2013

    As a six-year chart of the CRB Index of Commodity Prices shows, declining commodity prices usually indicate demand for goods is dropping and the economy is in trouble.

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    We won’t talk about the bottom falling out of commodity prices and everything else in the financial meltdown of 2008.

    But the CRB Index was also an indicator of the economic recovery stumbling in each of the last three years.

    In the summer of 2010 the CRB Commodity Index fell 15%. The economic recovery stumbled, and the S&P 500 also fell 15% in that summer’s market correction before the Fed came to the rescue with QE2.

    In 2011, the CRB Index fell again, declining 19.5%. And sure enough, the economic recovery stumbled again, the S&P 500 declining 21% before the Fed came to the rescue with ‘operation twist’.

    Last year the CRB Index had only partially recovered from its 2011 decline, and topped out again, and the economy stumbled again with the S&P 500 pulling back 11% to its June low

    And here we are this year with the CRB having topped out last fall, and not recovering at all in the winter months even though the economy seemed to be recovering again and the stock market has been in an impressive favorable season winter rally.

    The CRB has declined 9% so far from its most recent peak, making lower highs on its short-term rally attempts and lower lows on its subsequent pullbacks, showing no signs of reversing to the upside.

    Maybe it will be different this time, but it seems to be yet another indication that the economic recovery is due to stumble again this year.

    To read my weekend newspaper column click hereForget About The Fed Dialing Back QE3 – Buy Bonds!

    To read my previous weekend column, click here: This Is the Most Critical Time for the Market Since 2007!

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    Images: Flickr (licence attribution)

    About The Author

     

    Sy Harding publishes the financial website Street Smart Report Online and a free daily Internet blog at Sy’s Free Blog. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beat the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!

    It includes our research and analysis on the economy and markets, and provides charts and buy and sell signals on the major market indexes, sectors, bonds, gold, individual stocks and etf’s, including short-sales and ‘inverse’ etf’s.

    It provides two model portfolios as guides. One is based on ourSeasonal Timing Strategy, one on our Market-Timing Strategy.

    In depth updates are provided every Wednesday, with interim ‘hotline’ updates every time we make a trade. An 8-page traditional newsletter Street Smart Report is provided on the website every 3 weeks, in pdf format for viewing or printing out.

    There is the Street Smart School of online technical analysis ‘seminars’,commentaries to keep you ‘street smart’ about Wall Street, and much more. 

     

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