A full explanation of the indexes, by Martin Pring, here:
http://stockcharts.com/school/doku....cators:prings_inflation_and_deflation_indexes
In a way, it looks as if Pring is reinventing the wheel, because a chart of the CRB Index looks very similar to his inflation/deflation ratio.
He does, however, point out that "in many cases the Ratio leads the commodity market at both peaks and troughs".
A few quotes from the page linked above.
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http://stockcharts.com/school/doku....cators:prings_inflation_and_deflation_indexes
In a way, it looks as if Pring is reinventing the wheel, because a chart of the CRB Index looks very similar to his inflation/deflation ratio.
He does, however, point out that "in many cases the Ratio leads the commodity market at both peaks and troughs".
A few quotes from the page linked above.
- The Pring Inflation Index comprises mines and energy stocks. These are equities that benefit from rising commodity prices.
- Deflation sensitive stocks include industry groups such as banks, insurers, utilities and so forth. These equities tend to out-perform when economic conditions are either weak or in the early phase of a recovery and represent the components of the Pring Deflation Index
- These indexes are best used by plotting a ratio between them-the Inflation/Deflation Ratio. The StockCharts formula for this would be !PRII:!PRDI
- A rising ratio is inflationary and a declining one indicates a deflationary environment
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