One of my good college buddies always busts my chops because he thinks it’s ridiculous that look at charts all day. Today he calls me about some other stuff, but randomly asked what was my favorite chart. I’m like, “…of all time or right now?”. He said right now, what’s my favorite chart?
It got me thinking. But my first reaction was the SPX/CRB chart. This is one of the most fascinating situations in the world today.
Here is that chart. I first mentioned it in last week’s Inflation post. But it represents the long-term trend for Stocks relative to Commodities. Prices are now running into a key mathematical objective:
You can learn more about how we calculate these levels here.
I’ve seen this story before. Markets often respect these trend extensions. I’m trying to think of the implications of this level coming into play. Rotation into Commodities on a relative basis will likely impact a large number of stocks and sectors as well as global markets with more exposure to natural resources.
Remember, this could be nothing. After all, it’s just one tiny piece of a giant puzzle.
But if asked, JC what’s your favorite chart right now? It’s this one. I think this one could impact markets the most.