I have already put up a chart of the CCI this week in which I noted that it was approaching the top of its trading range that has held for the entirety of this year. The reason I seem somewhat obsessed with this is the fact that this chart, in my opinion, is the clearest indicator of how the war between the deflationists and the inflationists is faring.
Until we get a decisive breakout of this trading range in one direction or the other, the uncertainty that has gripped the markets for what now seems an eternity will continue with the subsequent wild price swings up one week and then down the next.
My analysis of this chart suggests that until we get a clean break of the 500 level, it is hard for me to get too excited about the prospects for a shift in investor sentiment decidedly in the favor of inflation. When we do however, I suspect that prices will move rather quickly as the rush into tangibles will commence in earnest.
As noted in the cartoon that Jim had commissioned, it is inevitable that the madness involved in Quantitative Easing has set the stage for “something terrible our way cometh”. We will be alerted to its arrival by means of this simple little price chart.
Stay tuned for we are in uncharted waters much like the Black Pearl arrived at when it sailed to the end of the world and was caught up in the maelstrom therein housed.
Click chart to enlarge in PDF format