CRB index is an index that measures the overall direction of commodity sectors. The CRB index was designed to isolate and reveal the directional movement of prices in overall commodity trades.
The CRB index measures changes in the price of 22 commodities that are believed to be among the first to react to changes in economic conditions. The CRB Index may serve as an early indicator of changes in the business climate and it is one of the most watched indicators. The index includes raw materials or products close to the opening stages of production.
The recovery from 2008 is corrective (only three waves), which suggests for a “fake” recovery. From the beginning of 2011, the market has made five waves down and has marked the beginning of a downtrend in commodities. For example, gold and silver topped in 2011 and there has been nothing but down-price movement ever since.
Our outlook is highly bearish. Looking at the CRB index we think that commodities could resume their downtrend. There is a possibility for a new bottom, lower than the one of 2008, indicating for an economic depression of major degree.