Commodities vs SPX
Below are some random charts comparing the CRB Commodity Index VS the SPX and then a few key commodities VS the CRB. One of the key takeaways is that since the October 4 bottom in equities the CRB has severely lagged the market and is currently flashing a large divergence.
SPX VS CRB – Notice the move off the October 4 bottom and the relative weakness in the CRB. As the USD moves higher this will further weaken the CRB. Additionally notice the down trending parallel channel that has contained the CRB for the majority of 2011.
Copper VS SPX – Copper has long been a great indicator of equity direction. Notice the relative weakness “Dr Copper” is showing since August 2011.
Oil VS SPX – Oil has outperformed the SPX off the November highs extremely well. It appears the equity market could be very vulnerable to any weakness in oil which lately has struggled to recapture the 2009 up trend line that failed in August 2011.
CRB VS Copper VS Oil - Rather interesting to see how copper is weighing on commodities while oil is doing the opposite. It will be interesting to watch oil in the coming days especially should the USD move higher. Additionally copper is in a narrowing wedge and bear flag pattern that should resolve fairly soon.