This chart compares inflation adjusted stock prices with a secular momentum measure of commodity prices. The oscillator has been inverted to approximate price moves in equities. Since the mid-nineteenth century, there have been four occasions when the oscillator has reversed to an upward direction; i.e., signaling a secular decline in commodity prices. The timing has usually been late but each signal was followed by several years of rising stock prices. In the last couple of months the oscillator has again reversed to the upside, so if past is prolog and the latest marginal signal turns into a decisive one it is probable that equity prices could be headed much higher. Certainly a relationship worth monitoring in the period ahead.
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