CRB Index has spent almost 1.5 years trading below its 200 day MA
Source: Short Side of Long
Yes, we understand that everyone hates commodities with sentiment so universally bearish. And yes, we also understand that you will probably disregard this post because you have no interest in buying any commodities. And yes, you will easily find abundance of fundamental reasons as to why commodities will go down again in 2016… and 2017 too. And yes, we here at Short Side of Long aren’t going to bother arguing with you late into the night about this topic.
However, do consider that from a contrarian point of view sentiment is ridiculously low, while prices are very deeply oversold. Raw materials represented by the famous CRB Index, are now trading at levels last seen in 2001 of 184 points. Furthermore, the price range between 175 to 185 is a major support zone dating all the way back to 1973. Will commodities be able to bounce from this important memory zone, which buyers have defended for generations? Even if we told you there is an above average chance, you probably wouldn’t believe us.
Commodity prices have fallen on a support zone dating back to 1970s
