CRB, CCI Commodities Index Gathering Momentum

The Reuters/Jeffries CRB Index and the Continuous Commodity Index (CCI) are both gathering momentum. The R/J CRB Index is the 10th revision of the CCI Index. In 2005the energy weighting increased to 39% from 21.4% while other commodities got cut down (pie chart). Zeal LLC has a bunch of essays explaining the differences. He has charts that show the CRB and CCI decoupling in 2006 due to plummeting oil prices. He believes the old index better depicts the overall commodities market. All here 1, 2, 3, 4). I see this index as a re-flation barometer. If commodity prices catch a sustained bid here it could be planting seeds for a rebound in growth and/or a global commodity inventory/demand balance. Also, global currency dilution could be putting upside pressure on commodities. Monetary inflation benefits those who get the newly printed money first so why not buy commodities on the cheap?

So I decided to chart out both of them and provided the CCI futures curve. It's 5% higher from Cash to August. The charts below are at the close on April 1, 2009. On April 3 the call/put premium ratios were also interesting via barchart.com. For the options expiring 4/9/09 the Call/Put Premium Ratio was 0.07, for 6/12/09 the Call/Put Premium Ratio was 2.11 , and for 8/14/09 the Call/Put Premium Ratio was 2.23. So it looks like sentiment is skewing toward the bullish side but total premium values on Jun and Aug are much lower than April. Très Intéressant!!

From the Charts, the new CRB Index is testing support after breaking the long term downtrend. It's been in a channel since December, 2008. It's also above the 50 day moving average which is positive. Bottom support and the 50 day could provide some bids but if it fails the $200 level looks supportive. RSI looks decent and must stay above 50. As for the CCI, it's also in a channel and is sitting above the 50 day. RSI looks good. This could test resistance levels (382ish) and needs a push to break above that level to set it free. On a technical basis at least.

Reuters/Jeffries CCI Index (Stockcharts.com)


Reuters/Jeffries CRB Index (Stockcharts.com)


CCI Index Futures Curve (Barchart.com