Thursday, January 4, 2007

Commodities Rout - CRB Gets Crushed

Not only did the CRB weeks ago slice through its 200 day moving average, but it's about to do something it hasn't done in years - take out its 200 WEEK moving average: Energy has been a notable leader to the downside. As I recall, when the crack spread for home heating oil was up around $9, they were making the stuff like there was no tomorrow and are now stuck with plenty of supply. Metals both precious and base have also been hammered over the last couple of days. Other commodities like corn, wheat and soybeans... even coffee have been pummeled. The question is why? The answer generally leads to supply vs demand. There may also be another reason. The flurry of new ETF products. Perhaps some unwinding going with these: DBE, DBB, DBP, DBA, DBS, DBG.

One thing is certain, gasoline at the pump east of the Rockies is sure to head back down toward the $2/gal level in the coming weeks.

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