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)
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2 comments:

  1. tehThursday, February 04, 2010 1:52:00 PM

    hi Alex,

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

    Tx

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  2. Alex LuFriday, February 05, 2010 9:29:00 AM

    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).

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