Where Have Investors Been Putting Their Money?

Above is a 3 year daily chart of the CRB index and in the lower pane is a ratio line of the CRB compared to stocks. If the ratio line is rising it means commodities are doing better than stocks. A falling line indicates commodities are weaker than stocks.

As you can see, the CRB and the ratio line are BOTH rising which means commodities have been doing much better than stocks since October 2007. Money has been moving into commodities such as gold, oil and agriculture and leaving the stock market.

What I find interesting about the above chart is that a rising ratio line has almost always coincided with lower stock prices.

Stocks have been consolidating over the last few weeks while the ratio line has been rising. In my opinion, this means we will likely see a break to the downside in the stock market.