DJIA: DOWI: Long-term Dow Jones and Commodity Cycles clean chart
Dow Jones Industrials and Commodity Cycles
Apologies for this chart. Very sketchy. Tradingview data on CRB index only goes back to 1994 so have had to hand-draw
the index in very rough form to try to explain a very obvious but seldom mentioned inverse relationship between stock
markets and commodities. It's less apparent in shorter term 10 year data sets (as next 10 year comparison will show, next
upload) so maybe that's the reason it doesn't get a mention but if you look at the super-long term charts a clear pattern
emerges underneath the shorter term noise...you can clearly see that when the Dow is in bull phase the CRB index trades
sideways to down. And that when the Dow trades sideways to down for years on end, the CRB starts to rally against this
trend. Weird. Counter intuitive. But there. Clearly. The underlying message written into the 110 year history of
this chart is that we should expect further long-term pressure on commodity prices as a whole. That sounds crazy. It would
have in 1949 and 1982, too, probably.
Expect oil prices to struggle to regain $50 and hold for any
length of time. Only hope for commodities in general really is that USD falls a lot further to sustain prices. But as a general
rule of long-term strategy the lesson of this chart is to sell commodity rallies, as opposed to buying the dips. The exact
opposite of current longer term strategy for trading the Dow and S&P. Interesting. Or not?
Apologies for this chart. Very sketchy. Tradingview data on CRB index only goes back to 1994 so have had to hand-draw
the index in very rough form to try to explain a very obvious but seldom mentioned inverse relationship between stock
markets and commodities. It's less apparent in shorter term 10 year data sets (as next 10 year comparison will show, next
upload) so maybe that's the reason it doesn't get a mention but if you look at the super-long term charts a clear pattern
emerges underneath the shorter term noise...you can clearly see that when the Dow is in bull phase the CRB index trades
sideways to down. And that when the Dow trades sideways to down for years on end, the CRB starts to rally against this
trend. Weird. Counter intuitive. But there. Clearly. The underlying message written into the 110 year history of
this chart is that we should expect further long-term pressure on commodity prices as a whole. That sounds crazy. It would
have in 1949 and 1982, too, probably.
Expect oil prices to struggle to regain $50 and hold for any
length of time. Only hope for commodities in general really is that USD falls a lot further to sustain prices. But as a general
rule of long-term strategy the lesson of this chart is to sell commodity rallies, as opposed to buying the dips. The exact
opposite of current longer term strategy for trading the Dow and S&P. Interesting. Or not?