CRB Index technical outlook – market update

The weekly CRB chart shows that after a severe drop in commodity prices a low is due soon. The timing is pretty much in sync with the overall markets bottom schedule in about 2 weeks. That should happen around 250 as the daily tells at least 5 weaker closes and the weekly requires at least 1 weaker weekly close. Hence, on the upswing, material stocks should be part of the basket you want to own on a trading perspective. That is basically also linked very much to the dollar’s rise, which should end the current rally soon temporarily as well – but still a bit to go in all instances.

Today we have a big reporting day on earnings with 50 out of 500 SPX companies reporting earnings. Another negative going forward for Q4 is that the pension plans of the SPX companies are underfunded by at least $220 bil. as of now (they have a high stock component of 61%). So far the markets are defending the support levels still but as the day goes the markets may drop. We have to follow closely but the charts look very clearly headed lower.

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~ by behindthematrix on October 23, 2008.

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