Commodities Down 9 Months in a Row Relative to Equities

How about that for underperformance?

The most widely followed benchmark for the Commodities Market is the Reuters/Jefferies CRB Index. It has underperformed the S&P500 every single month since last September. In other words, when US Stocks are going lower, commodities are getting hit even harder. And when times are good and stocks are going higher, commodities can't keep up:

The current levels for the $CRB Index relative to the S&P500 haven't been seen since 2007. Other than some extreme oversold readings in this particular ratio, we haven't seen any evidence of an upcoming reversal in trend.

The price of Crude Oil has been decimated, down over 23% just in the last 3 months. This is by far the largest component of the commodities benchmark, representing close to a quarter of the entire index. With Crude prices down to levels not seen since early August, this is going to be one area we will be watching closely. Again, like the index itself, other that some oversold readings, we still aren't seeing any indication of a reversal. At least not yet; just lower lows and lower highs. A reversal higher in Crude Oil should bode well for the commodities index, but it doesn't mean that we'll start to see the CRB outperform the US Stock Market.

Some of us like pairs trades and this is one trend that has certainly been working. Now, from a macro perspective, what does this tell us about the intermarket picture? I think these markets are showing us that global market participants are trying to avoid the added volatility that comes with commodities. It makes sense I suppose, with all of the extra uncertainty around the globe.

What do you guys think?

Also See:

Commodities Testing Key Support Levels (Allstarcharts March 10, 2012)

Tags: $DJP $SPY $CRB $SPX $CR_F $ES_F $CR_F