On the weekly CRB chart, notice the following:
-- Prices are below all the SMAs
-- The 10 and 20 week SMA are nose-diving
-- The 10 week SMA has moved through the 50 week SMA
-- The 50 week SMA is neutral. It will turn negative soon so long as prices remain on their current trajectory
On the daily chart, notice the following:
-- Prices are below all the SMAs
-- Prices have continually moved through previously established lows to make newer, lower lows
-- The SMAs are all moving lower
-- The shorter SMAs are below the longer SMAs
-- The 20 day SMA has provided strong upside resistance for the average.
Bottom line: this chart has become extremely bearish over the last few months. There are no bullish indicators. I would expect relief rallies to occur -- rallies where traders come in because they think prices are overly cheap -- but I would not expect a sustained rally at this point.
1 comment:
"None of these plans/efforts is doing what it is supposed to do: calm the markets and bring a sense of confidence back to the market. The bottom line is clear: despite all of these efforts, the short-term lending markets have completely frozen because no one trusts anyone's officially stated balance sheet numbers regarding what they are worth. This is called "counter-party risk." It simply means that lenders are so concerned about a borrowers solvency even in the short-term that no one is making even the shortest loan."
The complete lack of trust is understandable when we hear that Lehman was handing out golden parachutes as their company was hurtling toward bankruptcy and AIG sent its execs on a luxury retreat AFTER the taxpayers bailed them out.
Apparently these Wall Street boys know themselves quite well.
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