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Headlines from around the world are focused on the election results from Greece. Is “Greece” the key word or is it about to be “De-flation?”
Two decent barometers of global pricing pressures, Copper and the MS Commodity Index (CRX) may have created multi-year head & shoulders patterns, with the neckline support being tested right now.
Should the necklines break in these patterns, the key action by traders would be to sell and the key headlines would become stories about deflation/lower prices!
I wrote an article over a year ago and then brushed it up in Jan. of this year, showing that the CRX would indeed be the first to issue signals that the deflationary genie had escaped the bottle. The metrics that I pointed out in that study have indeed developed as forecast. If you’re interested in checking out this incredible phenomenon, you can find it here.
Here’s the key chart from that study, showing that a 13 year long trend line has been broken with a vengeance. There’s lots more downside to come. $SPX:$CRX Monthly
Fully believe that the pattern won’t breakdown, and is part of the recovery in all assets, as the economic recovery continues! The metals, equities, economy, should continue to gather steam and achieve escape velocity by 2015-17! This should culminate in a Dow of about 30,000 by year 2032! The central banks won’t all for a dangerous deflationary spiral to ever develop!
I’ve been talking about this for a long time. It all boils down to the banks marginally counterfeiting TRILLIONS of dollars more than the govt is creating, and then when the loans go bad, the money supply plummets. These recession/depressions are SOLELY caused by the banksters! Until we deal with stopping this scam, these cycles will continue.