I read somewhere a couple years ago that the CRB Index over the 20 year bond index (TLT) is a good gauge for current and future inflation. I added it to my list of charts to watch and see some interesting relationships have developed over the years. The low point was in 2003 which lines up well with the end of the bear market deflation that started in 2000. Inflation (defined as the ratio charted in this post) then slowly rose from 2003 to early 2006 where it peaked. Using this range, inflation moved back to the 50/50 point in October 2007.
Chart courtesy of Stockcharts.com
Inflation then rose sharply to 25% of the 2003-2006 range above the 2006 high. This occurred at 75% of the time cycle which along with the 50/50 point hit shows this range is significant and should be watched. Inflation is now back to the 1:1 ascending Gann angle and could bounce from here. If this ratio continues below the 1:1 diagonal then it will probably finish below the 2006 high when time runs out of this cycle - estimated at the end of 2008.
Post Modified: October 9th, 2008 at 12:00 am
Tags: Bonds · Inflation-Deflation · Square of Range1 Comment
1 response so far ↓
Andy - what is the 100 top stocks list for ? I mean i know what it means but how is one supposed to use that information ? Since they are 100 best stocks i am sure they are not at good entry points. They are broken out and somewhere hanging in the air.