Commodities Giving Mixed Signals
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The S&P 500 and the Morgan Stanley Commodity Related Index (CRX) have had a pretty decent correlation over the past few years. Their tops and bottoms have taken place close to the same time frames. That's no longer the case. The S&P 500 finds itself around 3% above last April's highs, while the CRX is truly reflecting relative weakness, currently 18% lower than its April 2011 highs!
The weekly chart below reflects that the 61% Fib retracement level looks to have stopped the CRX rally, and now the CRX is breaking support at (1). We are getting "Mixed Performance Numbers" when you compare the S&P 500 to the CRX index. Which index do you feel is sending the correct signal about the economy?
The CRX index could well be sending a key message about the economy and which way to lean when it comes to portfolio construction.
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