Another Long Term analysis of the CRB Index( Commodity Index) as well as SP500 ,SP500 : CRB ( Ratio Analysis) and the one and only XAO (All Ords.).
Major downtrend at a major chart support looking at the CRB Index in the main window. In 1999 as well as 2001 the current level held and set the framework for CRB as a LONG TERM CHART SUPPORT. We have punched through the GFC low as can be seen on the chart and at the levels not seen since 2001 for the commodities. I would have thought that the GFC low would have provided the necessary support, but it had failed to do so.
Question is, would the current level, as it did in 1999 and 2001 hold & reverse the decline ? In time we will all find out.
Second window below, is the SP500 monthly line chart. SP500, in relation to it’s up trend line ,drawn from 2009 GFC low, it is still keeping its head above it, indicating a bullish momentum still. We will look at SP in relation to it’s 12 period monthly SMA once the month is over.
Third window is the SP500 vs. CRB index indicating that the stocks are in a relative uptrend in relation to the commodities since 2012 ( see the break of the trend line in the third window).
In the bottom window our mighty XAO, which I still consider to be in a BULL MARKET until 20 % drop on EOM closing basis is on hand. Low in momentum XAO, but doing all the right things so far. If, I see a break of the blue up trend line, I would then be extremely concerned.
Another thing which I want to emphasise is the zone where the uptrend line and the price support lines converge ( both in Blue) on XAO chart at the bottom window. Their role as a significant long term support can not be ignored. That level is the zone of 5000 for XAO. It doesn’t mean that it would hold. Since August this year, it has held on every test.
Chart courtesy of StockCharts.com
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