There is an indicator which has been around since 1957. It has accurately forecasted every inflationary and deflationary cycle since.
This is my number one indicator for large cyclic trends. You may want to watch this index carefully should you want to invest in certain stocks and commodity related markets.
Over the last half-century, this index has seen some remarkable moves both on the upside and more recently on the downside. I believe that this is the indicator that everyone should watch. If you trade stocks or futures and are interested in world trade trends, this is the indicator to track.
The tenth revision of this index renamed it the Reuters-Jefferies CRB Index (NYBOT_CR) You can easily track this indicator everyday using MarketClub.
You can learn more about this index from our Trader's Blog
Here is a list of the 19 markets that are included in the RJ/CRB index as implemented in the 2005 revision:
Metals: aluminum, copper, gold, nickel, silver
Energies: crude oil, heating oil, natural gas, unleaded gas
Grains: corn, soybeans, wheat
Food & Fiber: cocoa, coffee, cotton, orange juice, sugar
Livestock: lean hogs, live cattle
Take a few minutes to watch this short video and see how you can benefit from this indicator. There is no fee and there is no registration required.
Enjoy the video in every success in the markets,
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15 thoughts on “The #1 Predictor of Inflation or Deflation.”
Thank you for your guideance. I appreciate your specific advise regarding having a plan. I have been trading and studying trading and trends for over twenty years. I would like to continue trading and refine my plan and work with what you believe would have the highest probability of success while implementing your software and strategies.
I am preparing to become a member and have a question. Would you advise trading ETF's or Forex or stocks, or all for that matter while utilzing your systems and tools?
Thanks very much,
Thank you for your kind words I am looking forward to welcoming you to MarketClub
One of the major keys to successful trading is to be diversified. I think trading stocks, forex, and ETFs is all part of that diversification program. You might also want to consider trading in futures. The key is to have non-correlating assets.
Right now, with the breakout in the videos and on the charts...CR, and more specifically, GOLD, are both up triangles BUT so is the DX!! Aren't they supposed to work oppositely, and how do we use that knowledge to interpret the triangles?
Thank you for your feedback.
Relationships such as the CR and the DX are just that relationships. Sometimes they mesh and sometimes they don't mesh. It's all to do with what traders are looking for, sometimes they look for relationships other times they ignore them. I would not put too much stock in this.
Great insight Adam. I think you might be right on the coming global demands...as there could be a pull back. However the larger picture still shows a strong deflation trend. It's scary because, depressions loom around sharp deflationary crashes like this.
Adam, I would be very hesitant recomending that your followers trade the futures markets, with 94% losing money.
I think your statistics are about right, most people who trade in futures tend to lose money. However I have not seen stats on ETFs which are just as risky in my opinion as they are tracking the underlying market that they do not track 100%.
If you want to make futures less risky just deleverage. Stocks are far more volatile than futures that's a statistical fact.
That's my opinion.
I could not find the CR Index you were talking about. I did find this one, CI.G09.E CONTINUOUS COMMODITY INDEX Feb 2009 (E) What is the difference between both?
All you have to do is type in CR in the search box and it should be the first market that comes up with the results in MarketClub. I'm assuming which is never a good thing to do that the Continuous Commodity Index is very similar to the CRB index. You can trade a futures contract on both of them. I would just look at the one that has the most liquidity.
Thanks for your feedback.
All the best,
Is this now the Continuous Commodity Total Return Index? If so, it can be invested through the GCC ETF. If it isn't the same thing, what is the difference and how can it be used as an investment vehicle? Thanks.
That's a good question. I'm not sure if it is the same thing. The Continuous Commodity Total Return Index is one that I'm not familiar with perhaps someone else who is reading this blog would like to reply and give us some insight.
You can always trade the CRB index in the form of a futures contract.
Thanks thanks for your comments.
All the best,
Back in the 70's when I was trading on the IMM in Chicago, I wrote an article called Prices and the Prime for Futures magazine. In it, I took the prime rate and overlaid it over the CRB Index, using 8% prime to equate to 210 on the CRB. As we went through the commodity boom of the late 70's-early 80's, I noticed the two tracked each other quite well. But to be honest, I never really got a handle on which was leading the other, but I surmised that when long term interest rates reached 15%, that the draw of locking in that rate of return for 30 year was what ultimately caused the movement of funds out of the commodities back into the finanacials.
Now we are at another watershed junction of inflation vs. deflation. The collapse of the economy has collapsed the prices of goods and services. Deflation. But the tsunami of inflationary purchasing media about to come is inflationary, nay, hyper-inflationary. I watch the TBT, the ultra short bond ETF, and it has turned the corner. I am buying TBT hand over fist, and believe it will just be a matter of time before all of the inflationary purchasing media will begin to make its way into the economy. All that makes me wonder, maybe wonder about this scenario, is the old expression, "You can lead them to water but you can't make them drink" What if they are so burned, so scared, that all they do with the new purchasing media is use it to pay off bills?
Excellent, excellent post. Thank you so much for taking the time to share your ideas with us. I was a member of the IMM in the late 70s and early 80s trading on the floor of the exchange. There are a lot of very smart traders that came from that era.
The great thing about the markets is that while they change constantly, they never change.
Every success with TBT your ETF. I and going to take a look at that myself.
Adam, while your triangle technology captured the move in CRB index quite nicely, I don't agree the CRB chart is a good indicator for what's coming. In the video, when you talk about oil at 140$, you mention "this is hyperinflation"; 3 months later we had deflation, so the CRB was a poor indicator for what's coming; in the 1st half of 2008 it was signaling hyperinflation is coming but the opposite happened.
Thank you very much for your feedback. I don't disagree with what you say I think that the CRB index reflects the supply and demand for materials and commodities. Having said that using our "Trade Triangle" technology it does show you the trends in those markets. Those trends are eventually translated in to higher or lower prices on the consumer level.
I hope this answers your question.
Every success in the market place and in life.
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