Bearish chart of the day

The financial cliche "past performance is not a guarantee of future results" is pretty pointless, since anyone looking for a guarantee shouldn't be investing the money he inherited in the first place. (It can be assumed the money was inherited because anyone stupid enough to expect a guarantee couldn't possibly have earned any money to invest himself).

While the past is not a guarantee of future events, it certainly can be a predictor. Human intelligence would never have evolved if this were not the case.

Here's a chart I've been referring back to since the spring: the CCI (index of commodity prices) with the orange 233-day moving average drawn in (233 is a Fibonacci number and appears to be slightly more accurate as a lower bound than the 200-day, which is also drawn in as a green dotted line).

This chart cannot predict the future. But it does tell us that since 2002, the steadily rising 200 and 233-day moving averages have been broken only twice, despite being tested >25 times. Once in 2008, and then a few days ago. Moreover, a very important horizontal line of support (see red-green line) was broken almost simultaneously. So, to the extent that past patterns suggest future events, I'd say the recent break of the 233-day moving average is significant and unlikely to reverse in the short term. Strikes me as an early indicator of 2008-like deflationary pressure ahead, as the moving averages are poised to roll over and have their second period of decline in almost a decade.