Commodities to Tumble as ‘Blob’ Eats Credit: Technical Analysis
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Commodities may skid 43 percent over the next 16 months, returning to the four-year low of February 2009, as deflationary concerns commandeer financial markets and drain credit, said Walter J. Zimmerman Jr., the chief technical analyst at United-ICAP in Jersey City, New Jersey.
The attached chart shows that the Standard & Poor’s GSCI Index of 24 raw materials has become tied to swings in the S&P 500 index on a daily basis since September 2008. Zimmerman said the stock market has been dictating prices of crude oil, gasoline, copper and silver on an hour-by-hour basis for more than a year, a sign that commodities are trading on economic expectations rather than their own supply and demand. He said that has never happened before.