-->The first chart shows the CRB Commodities Index. What we see here is a clear breakdown. RSI is heading down and the weekly histograms have turned negative. The blue 10-week moving average is below the red 40-week MA, and after a mild little rally, the 10 week MA has turned down again. Not a pretty picture -- in fact, it's a deflationary picture.

Die Charts fehlen hier!

Next we see the wise old devil that we call Dr. Copper. Why"Doctor"? Because copper is used everywhere for everything including housing. Because copper is used everywhere, economists call it"The Doctor." It's a time-honored barometer of the world economy. The trend here is clear enough. I call this a"waterfall formation." And it's not inflationary.



Below we see a daily chart of oil. Oil is the life-blood of the world economy. Some call it"black gold." Call is what you will, right now oil appears to be topping out. That's a plus for transportation companies, but it's basically deflationary. Declining oil implies a world slowdown or at least a slowdown in transportation. RSI is pushing into oversold territory, but MACD could go considerably lower. In all, it's not a healthy picture for the planet's"life blood."



What about housing and the hoped-for"soft landing"? The verdict is still out. But if anyone has a handle of what's coming up in housing, it should be the homebuilders. Below we see a weekly chart of one of the leading builders, and the chart is typical of the major builders.

This is how I interpret this chart. I see a long crash-like decline taking TOL from a high of 58 in July of 2005 to a low of 22 in July 2006. Following crash action, there is always a rebound that tends to recover up to 50% of the crash losses. Such a rebound should have taken TOL back to 40, but the recovery, so far, has halted at 33. I call that weak action.

Now we have three declining tops (red arrows), which is hardly bullish. We also see the histograms about to go negative. Conclusion -- I can't see how this chart can be construed as a plus for housing.



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The paragraphs below were posted on Bloomberg.

Jan. 4 (Bloomberg) -- Bill Gross, manager of the world's biggest bond fund, says the Federal Reserve will lower its benchmark interest rate by a percentage point to 4.25 percent this year to avert a recession.
Ten-year U.S. Treasury note yields, which move inversely to prices, will decline to about 4.50 percent, Gross wrote in a report published on his firm's Web site. The 10-year yield, 4.6 percent at 4:36 p.m. in New York, has risen the past two years.

The Fed will start cutting its target for the overnight lending rate between banks during the first half of the year as the economy's growth rate, unadjusted for inflation, slows to about 4 percent, Gross wrote.

Schönen Samstag noch!

Emerald.