A little bit on Commodity

The above Chart was imported from Bloomberg.

Red line is UBS Bloomberg CMCI

Orange line is S&P GSCI

Green line is RJ/CRB Commodity

Light blue is Rogers INTL

Navy blue is Brookshire INTL

The patterns are more or less the same. I usually follow the CRB commodity index.

A popular question is "how low can the commodity goes ?"

When crude oil touched US $146.00 a barrel 4 months ago, some analyst was projecting the price to reach US $200.00 by 2009. 4 months ago, the belief was that, "even if there is a price pull back, it will not drop below US $100.00 a barrel". On 13 November, the Brent Crude Future closed at US $51.75. The trend and speed of dropping is the same for other commodities. So, how low can it goes?

Refer to the chart above, from the peak in July 08, using Elliott wave count, we are at wave 7. If 7 has the same magnitude as wave 3, since wave 5 is an extended wave, wave 7 may end at -40.

From the point of -40, a bearish possibility is a wave 8 rebound follows by a wave 9 down south to-50 or -60. A bullish possibility is -40 is the bottom of current down trend, in the next few months, it can recoup at least 50% of its losses. My bet is on the bullish version. I hope I am right.