Wednesday, February 03, 2010

CRB broke below its uptrend line

The recent weakness in commodities prices is clearly reflected in the drop in CRB index, which has broken below its medium-term uptrend line (SS). The last time CRB broke below its uptrend line (S1S1) in August 2008 was followed by a bear market in commodities as a whole.


Chart 1: CRB's daily chart as at 2/2/2010 (Source: Stockcharts.com)

The break of the uptrend line in CRB coincided with USD breaking above its 200-day SMA line. Again, the same upside breakout was also seen in August 2008. The current minor correction in USD would be a welcome respite for many risk assets, such as equity & commodities, which were badly sold down. A rebound in some of these risk assets is expected until USD regains its upside momentum.


Chart 2: USD's daily chart as at 2/2/2010 (Source: Stockcharts.com)

2 comments:

teh said...

hi Alex,

What do think about OSK? can you comment about it? Is that can go in now?

Tx

Alex Lu said...

Hi Teh,

OSK is now trading near its 200-day SMA line at RM1.20. This should be a good support. However, in the present uncertain environment, I think it could be violated. The next support would be at about RM1.10, given by the horizontal line. I would think the cautious approach is to accumulate slowly from RM1.10-1.20.

By the way, OSK had completed a Bonus Issue of 1-for-4 (ex-date: Jan 21).