Commodities Are Now In Bear Market Mode

Published September 10th, 2008 in Natural Resources Tags: bear market, commodities, crb index, crude oil.

For a very long time, commodities were in a protracted bear market. Each time prices went up, they hit the top of a wide channel and were pushed down… until 2004 when the CRB broke above the channel and went on a wild ride.

More and more the bull market appeared unsustainable as prices accelerated. Comparing the bear market channel with the bull market that ensued, it is easy to see the contrast. While the bear meandered lazily with the rhythm of an endurance runner, the bull market shot ahead with a one track mind.

But now, with the price of crude oil deflating fast, the CRB Commodities Index finds itself again in a clear bear market:

crb commodities bear market long term chart

To be precise, the CRB Index is now down 24% from the top in July 2008. If this was an equity market, it would have qualified the standard +20% definition of a bear market.

If this is truly a change in the long term trend, it would not only mean a shot in the arm for equities but also the world economy.

bear market, commodities, crb index, crude oil

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4 Responses to “Commodities Are Now In Bear Market Mode”

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1 Bill K Sep 10th, 2008 at 10:00 pm

Yep like I was saying 2 weeks ago on this site, the commodity bubble has burst. Gold is down more then $75 bucks in that time too. Much more downside to come in my opinion. DUG has been a great long trade for me to short Oil. I have been playing a little DZZ to short gold too. DRR is what I have used to short the Euro against the Dollar, not too much volume on this one, so not good for trading in and out of. All of these trades are working well.

Bill K
2 Blues Sep 10th, 2008 at 10:17 pm

No, why? Gold down, can you spell D-E-F-L-A-T-I-O-N? Look at S&P chart, you think is going go up forever?? Think Japan… Everything is going crashing down, stock, commodity, real estate, EVERYTHING! America financial system is going to C-R-A-S-H!!!

http://www.safehaven.com/article-11208.htm
3 Blues Sep 10th, 2008 at 10:23 pm

Also look at this, I firmly believe deflation is going to set in

http://benbittrolff.blogspot.com/2008/09/gold-oil-pms-more-hedgies-get-whacked.html

Why would commodity and stock going down at same time? That’s what the market been doing as of late!