Chart of the Day: Commodity Crash

Today’s chart of the day focuses is on long term prices of commodities. The chart below uses CRB Index, but from time to time I also use CCI (Continuous Commodity Index) as well as RICI (Rogers Intentional Commodity Index.

Chart Of The Day: Commodity crash is 2nd worst in almost four decades

Source: StockCharts (edited by Short Side of Long)

Throughout the 1980s and 1990s, when commodities moved in a sideways bear market, the annualised losses did not exceed 20% threshold. However, during the Lehman Panic in 2008, prices tumbled by over 50% over a 12 month period. Furthermore, the recent crash in commodity prices on annualised performance basis is down 30% from 12 months ago, which is the second worst price sell off in such a period in almost four decades.

So have commodities found a bottom? The strong support around the 200 level on the CRB Index most likely implies that the answer is yes. However, the question is what kind of a rebound will prices experience? Will it be a V-shaped rebound seen in 2009/10, will it be a basing pattern or will it be yet another sideways secular bear market we saw during 1980s/90s?