The Only Strong Commodity Sectors at Present are in Energy


Author Larry Berman

Posted: 12 Mar 2012 reposted from etfcm

There appears to be a base pattern developing in the broad DJP commodity indices, but the steeper contango seen in many commodities is taking a toll on the buy and hold commodity investor. The only sectors that look strong at this point are in the energy sector (except natural gas), which has become so cheap by historical standards it is actually compelling.

Natural gas equities as measured by FCG is still not as cheap as one would expect given the price of the underlying. ECA, the pure natural gas play is developing a major base pattern and looks compelling to accumulate on weakness. We do however expect significant disappointment during the next earnings period on the gassy energy stocks.

Copper looks to be struggling and industry leader FCX is clearly showing very poor behaviour after it failed breakout over its 200-day average. Agricultural stocks within MOO, also look to be undergoing more corrective price action that probably has 5-10% downside before it is attractive.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: