Market Observations on Commodities
25 Jan 2011
From the beginning of 2007 to July 2008, oil prices began a triple-digit trek. In that time period, alternative energy soared, but mainly in two segments: solar and uranium. Wind turbine companies like Vestas Wind Systems performed, but it was First...
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20 Jan 2011
We don’t normally discuss our views on the stock market except in relative terms vis-a-vis bonds or commodities, but in this edition we take a direct look and conclude that the stock market is now not only fundamentally overvalued but at risk of a...
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11 Jan 2011
The energy sector has been dismissed over the past two years since the lofty days of $147 oil in favor of technology, consumer discretion, industrial, and financial stocks; however, with just $10 to go before hitting triple-digit prices again, the...
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4 Jan 2011
Over the last two days, commodity stocks and commodities opened strongly, but quickly lost ground to profit-taking in the early morning hours. The consolidation process seemed orderly until today when silver dropped $1.80, gold dropped $47.90, and...
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29 Dec 2010
In 2009, China spent $89-billion for imports of crude oil, $50-billion on iron ore, and $30-billion on copper. However, even before the final tally for 2010’s import bill is calculated, Beijing understands that the era of cheap commodities is over,...
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28 Dec 2010
Rare earth metal miners were roaring this morning with many of the Market Vectors Rare Earth ETF component holdings up double-digit percentage points. On my daily volume breakout screen, 5 of the top 16 volume breakouts were in rare earth/strategic...
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2 Dec 2010
I received a very timely sell signal on energy on August 15th 2008 and have waited for a buy signal ever since. FINALLY, after nearly two years we have a buy signal on the 12-month relative performance differential for energy, which came on August...
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16 Nov 2010
After the Fed announcement on November 3rd, uncertainty left the market and investors jumped into equities with both feet. Since then, stocks have corrected in the face of the April highs, a logical point of reference for supply to enter into the...
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11 Nov 2010
We are now on a collision-course with an enormous devaluation event for the US dollar and the Fed having to choose between defending the dollar (via rising interest rates) or preventing the federal government from a fiscal emergency brought about as...
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11 Oct 2010
There were several pieces of economic data released last week. Factory order data was released and met with a big yawn. Nothing released drastically altered prevailing perceptions of the manufacturing sector, which is seen as working its way through...
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13 Sep 2010
Earlier this month, in a previous report, we discussed how European monetary union (EMU) did not eliminate intra-EMU currency risk but rather transformed it into credit risk. In recent weeks, this credit risk has surged again, with spreads for Greek...
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21 Jul 2010
Over the course of the last two months the markets have had a lot of volatility and yet have essentially gone nowhere. While surveying the markets I see a host of indicators, indexes, commodities, credit spreads that are at a cross roads of sorts in...
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7 Jul 2010
It is no secret that China has become the marginal player in the past decade in terms of global economic growth and commodity consumption. No longer is it that when the U.S. catches a cold the world sneezes, as it is now China that drives world...
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22 Jun 2010
Like all governments, the Chinese government is interested in promoting stability. Nothing promotes stability like a full stomach, nor incites instability like the threat of an empty one. Today’s article argues that in spite of uncertainty in the...
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21 Jun 2010
How do we measure wealth? In some unit of account. Money is meant to function, among other things, as a unit of account, the denominator for any given asset value. But if the purchasing power of a currency is unstable, either due to inflation or...
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2 Jun 2010
Recent market developments have attracted substantial attention from those who are anticipating another financial crisis ahead. Credit spreads are widening as liquidity conditions tighten. Equity markets around the globe have corrected meaningfully...
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17 May 2010
The Commodity Futures Trading Commission (CFTC) provides the Commitments of Traders (COT) report on a weekly schedule detailing long and short positions for the derivatives market. A trader can discern a lot of interesting statistics from the report...
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13 Jan 2010
From 2008 to 2009 it was a real gut check for commodity bulls in terms of reevaluating the secular bull market thesis, but from my vantage point the fundamentals behind commodities have not changed. What 2008 to early 2009 is likely to represent in...
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23 Dec 2009
A key tenant to profitable investing is being in the right areas at the right time. For example, during the highly inflationary 1970s the best performing sectors were basic materials and energy (commodities) while inflation-sensitive sectors such as...
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15 Sep 2009
The quiet interludes, the ones without the heavy drama of wide swinging market days, these can often be just as nerve wracking as the fast trending markets. To some degree, from an analytical point of view, the one benefit that we find when...
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1 Jul 2009
Today’s article will be the first part of a two part series addressing whether commodities represented a bubble this decade with the benefit of hindsight to look at the correction in commodities over the past year.
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18 Mar 2009
Probably the biggest development in the commodity sector is the solid break of oil through its 50 day moving average (MA), which has acted as price resistance since crude’s peak last year.
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2 Feb 2009
Gold has been a leader in the move of industrial commodity prices. By bottoming and topping first, gold anticipates moves in commodity prices. The difference in time from the lead to the lag varies, but the relationship has held true for quite some...
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12 Aug 2008
For the last 4 weeks, commodity markets have been shredded with prices moving steadily lower across the board. From the July highs, spot Copper is down 17.72%, nearby Gold down 17.03%, Spot Silver down 24.62% and spot Platinum down 26.54%.
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16 Apr 2008
Last week's WrapUp provoked a lot of responses from both the commodity bulls and bears. I had hoped to get ahead of the likely bear comments by addressing several of the arguments that they would likely claim but ran out of time and space as last...
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9 Apr 2008
Enough is enough! As most commodities rallied strongly in February and into early March, many in the financial press were calling commodities a "bubble." What happened to the commodity bubble of 2005, 2006, 2007?
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7 Mar 2008
From a Dow theory perspective, the primary bearish trend confirmation that occurred the on November 21, 2007 remains intact. According to Dow theory, it’s the close that counts and up until March 7, 2008, the averages have both been operating within...
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16 Jan 2008
The Japanese yen has started rising against all of the world's major currencies as the yen carry trade may be unwinding. Traders have for years borrowed cheap yen at interest rates near 0% to reinvest those funds throughout the world.
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2 Jan 2008
The markets sold off in early morning trading after the Institute for Supply Management (ISM) released their manufacturing report. The index fell 3.1 points in December to 47.7, putting it below the expansionary threshold of 50.0 for the first time...
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14 Jun 2007
One of the wonderful attributes of technical analysis is the ability to go back in history to view how prices performed and visually compare their traits with events that are happening today. The past performance of the financial market is never an...
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