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Commodity Price Divergence Bad Omen For Stocks?

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    June 3, 2013

    The stock market usually flourishes in periods when there’s at least some degree of inflation in the economy, and stumbles when commodity prices reverse to deflationary trends.

    The current divergence is odd to say the least.


    The stock market has been in an impressive 7-month rally, while the CRB Index of Commodity Prices has been in a decline for the last 9-months which shows no sign of bottoming.

    Is the stock market about to catch up to the deflationary trend to the downside?

    The consensus of the 35 intermediate-term technical indicators we utilize triggered a buy signal December 11. (Scroll down to the post of Saturday, May 17 to see the condition of that buy signal at that point).

    But we also pay attention to short-term technical analysis so short-term moves will be less likely to surprise us. And our short-term indicators triggered a short-term sell signal within two days of the recent short-term top, calling for at least a pullback.


    Subscribers see your ‘premium content’ area in this blog for the current intermediate-term outlook and recommendations.

    To read my weekend newspaper column click hereToo Big to Fail Banks Certainly Have Not! 

    Subscribers to Street Smart Report: In addition to the charts and recommendations in the subscribers’  ‘Premium Content’ area of this blog, the new issue of the newsletter from late Wednesday is in the subscriber’s area of the Street Smart Report website. We will have an in-depth update on Global Markets there on Monday.

    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.