Commodity Crash- A Warning Sign For Stocks?

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Commodity Trading Research
Commodity Crash- A Warning Sign For Stocks?
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• Hi, My name is Justin and Im with Commodity
  Trading Research, today were reviewing our
  recently published article

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• Commodity Crash- A Warning Sign For Stocks?

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• No doubt about it, the commodity crash of the
  past year has been harsh and unforgiving . The
  majority of hard assets have sunk to multi-year
  lows thanks to a host of market specific factors.

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• Energy, metals, softs- theyve all been hit hard.
  To get an overall idea of how commodities have
  performed the past year, look no further than the
  Reuters/Jeffries CRB index

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• As you can see, this closely watched index has
  plummeted 30 over the past twelve months. In
  case youre unaware, the CRB index reflects an
  equally weighted basket of 19 of the worlds most
  important commodities.

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• Of course, much of the CRB downturn has to do
  with the enormous downturn in the energy markets.
  WTI crude is off 53 in the past year, while
  natural gas is down by 35.

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• But thats not all

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• Precious metals platinum and palladium are down
  by 29 and 17, respectively. Coffee and sugar
  have collapsed 41 and 29 in turn. And lets not
  forget copper

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• The red metal, which is seen as a bellwether of
  global economic health, has careened lower by 25
  since September of last year. Believe it or not,
  copper is reaching prices last seen in 2009,
  during

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• the extreme uncertainty of the global financial
  crisis. The hefty copper downturn brings an
  important question to mind

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• Is the past years sell offforecasting a
  tumultuous downturn for the global economy?

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• As you may know, there are already some big
  worries coming out of China. The worlds second
  largest economy is hitting a major road bump in
  terms of economic growth.

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• Recent manufacturing and import/export data
  reveals the country is slowing quite rapidly.
  Heres the deal
• Wall Street cant figure out if Chinas economic
  dip is just a short-term blip, or

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• if their economy is indeed coming in for a hard
  landing. As Im sure youre aware, US equity
  markets are suffering through a rather intense
  bout of volatility because of China.

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• In fact, the SP 500 is already down over 10
  from the all-time highs set just two months ago.
  Take a look at this long-term chart

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• As you can see, the SP 500 has experienced a
  remarkable run-up since the lows of financial
  crisis in early 2009. But as you can also see,
  the past few weeks of trading havesent the SP
  500 sharply lower.

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• Heres the question
• Is the recent selloff in equities the start of an
  even bigger downturn- one that copper and other
  commodity markets have been forecasting for over
  a year now?

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• Its an important question, and one that has a
  multitude of opinions for answers.
• Heres how I look at it

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• If demand for copper and other commodities is
  really weakening as much as the hard asset
  markets have priced in over the past year, there
  could be big trouble brewing for the global

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• economy-and the equity markets as a whole. As a
  result, the recent stock downturn could very well
  be the start of a larger correction. In fact, the
  odds are quickly growing of a drop to the red
  trend line in the chart above.

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• Such a downturn would mean the SP 500 has at
  least another 10 of downside ahead of it.
• Invest accordingly

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