Commodities are not cheap……

not in their own right nor when compared to equities.

In the chart below, the notations (and accompanying ellipses) denote the moment and percentage amount that the CRB Index is trading below its 200 week moving average

Commodities are cheap (more so versus equities) when the CRB Index trades below its 200 week moving average and registers a weekly Oversold reading.

It also signalled a reasonable time to strategically increase your allocation to equities.

There have been only 7 notable blocks when this has happened over the past 30 years.

Today, commodities aren’t cheap compared to equities and I’m not getting any convincing signal to pile into equities.

In both asset classes, I am just trading between the cycle, while maintaining a higher than normal cash allocation.

January 15, 2023

by Rob Zdravevski

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