The Power of Ideas

Will the CRB Break Out

CRB Index

The following comment and accompanying chart has been provided by Paul LeGrand.

The CRB Index generated a rare vol signal at the close yesterday. I say rare since the CRB has just rallied 30 points (+7.5%) in less than a month.  Roughly two thirds of the time, the vol signal is generated  in well defined trading range markets. Entering a trade in that type of market is straightforward — go with the break-out.  In a market that is already trending, the entrance of a trade is far more difficult. Assuming the signal is correct, either the CRB is going to accelerate to even higher levels or a sharp retracement is directly ahead.

Ironically, 10 yr TIPS breakevens have been under relentless pressure during the same time period as the CRB has rallied.  Either the CRB is ready for a sharp correction or TIPS breakevens should be considered as a
viable option.


September 12, 2007 - Posted by | Charts, Economics, Finance, Markets

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