Hamilton's E-Wave Analysis

CRB Jefferies Reuters commodity index

CRB jan 2011

This was my take on the CRB index, the Jefferies Reuters one which is a little different from the “old”one we used to fret about, back in January of this year.

There are two things one must know about commodities. 

1. They are always the last to peak! Normally people do not play them, only when they are in an advanced state of euphoria, prodded along by there brokers.

2. Unlike stocks there are few idiosyncratic attributes that makes these things move. In the end they will gravitate to the marginal cost of production. 90% or so of traders consistently lose money, almost all of the time. (lack of discipline, market convictions).

In short, if my Jan views come true anyone owning oil, gold, coal etc. etc. stocks will get devastated. The TSX with its large exposure to these commodities will get creamed. Here is where we are now!

I was wrong in assuming we might stop at the 50% line, we went a little further. But the large B-wave (the basis for this prediction), is a perfect text-book example. The C is equal to the A in both time and magnitude. There is no alternative count!!

250, the level of the B where the rally paused, is the first target level.That is down another 20% from where we are today. Just think what that does to your and oil stocks!