Baltic Dry Index that measures the shipping cost in transportation of commodity in bulk and has been commonly used by many as an indicator of economic activity, has been dropping for several months without any reversal sign. Whereas the CRB index which tracks the price movements of a basket of commodities has been moving consistently higher during the same period.
Dow has also been moving higher during the same period on expectation of improving economy and company earning. Some said the market is liquidity driven.
But personally, I think something is not right somewhere. It is either the BDI has to start to move higher to be inline with CRB and DOW or the later two have to drop rapidly to catch up with BDI.
Based on the long-term chart reading, whether the October 2007's peak is major wave 5 or the mega wave (III), chances are Dow and CRB have to go lower to be inline with BDI. When will Dow reverse its direction? How much longer can it last? One thing is for sure, the longer it dragged, the sharper the fall would be. This last ride can be very juicy, but once get caught, it can be very very painful too.
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