There is another technical tool which is especially helpful in
comparing bond prices to commodity prices: relative strength, or
ratio, analysis. Ratio analysis, where one market is divided by
the other, enables us to compare the relative strength between
two markets and provides another useful visual method for
comparing bonds and the CRB Index. The experts of the ratio
analysis have been in great demand since recently according to
the information provided by job search web sites. Ratio analysis
will be briefly introduced in this section but will be covered
more extensively in Chapters 11 and 12. Figure 3.13 is divided
into two parts. The upper portion is an overlay chart of the CRB
Index and bonds for the three-year period from late 1986 to late
1989. The bottom chart is a ratio of the CRB Index divided by
the bond market. When the line is rising, such as during the
periods from March to October of 1987 and from March to July of
1988, commodity prices are outperforming bonds, and inflation
pressures are inte