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Notice the following on the weekly chart:
-- Prices are below all the SMAs
-- Prices are at or near their lowest levels in three years
-- All the SMAs are moving lower
-- The shorter SMAs are below the longer SMAs
BUT:
-- The RSI is oversold, and
-- The MACD is oversold
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Notice the following on the daily chart:
-- Prices have been dropping for five months
-- All the SMAs are moving lower
-- The shorter SMAs are below the longer SMAs
-- Prices are below all the SMAs
BUT:
-- The MACD has been rising for a month,
-- The RSI is approaching oversold levels and
-- Prices may be forming a double bottom
A cautionary note: several indicators have been "oversold" for several weeks. It's important to remember that no technical indicator is a fail-safe predictor of future behavior (would that it were). However, they can give important clues into the possibility of something happening. For example, it's simple logic that prices can't drop forever. Hence the possibility of a turnaround in the CRB is possible. However from the fundamental side, we're hearing more and more talk that includes terms like "deflation" and "deflationary spiral." Add to that the formal declaration of a recession by the NBER and the recent dropping in the ISM manufacturing numbers and you have a recipe for lower prices. In other words -- there are no magic formulas to any of this.
