{"id":11161,"date":"2012-04-25T02:30:41","date_gmt":"2012-04-25T06:30:41","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=11161"},"modified":"2012-04-25T02:30:41","modified_gmt":"2012-04-25T06:30:41","slug":"2012-has-delivered-attractive-bargains-commodities","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2012\/04\/25\/2012-has-delivered-attractive-bargains-commodities\/","title":{"rendered":"2012 Has Delivered Some Attractive Bargains In Commodities"},"content":{"rendered":"<p><strong>(This is an excerpt from an article I originally published on Seeking Alpha on April 23, 2012. <a href=\"http:\/\/seekingalpha.com\/article\/516961-2012-has-delivered-some-attractive-bargains-in-commodities\" target=\"_blank\">Click here to read the entire piece<\/a>.)<\/strong><\/p>\n<p>Commodity stocks have generally underperformed the stock market in 2012. I still cannot decide whether this weakness represents a leading indicator of broader weakness to come or a fortuitous relief to inflation pressures that keeps economic growth just barely strong enough to stay out of recession. Regardless, this post describes the few opportunities I have found this year to refresh some commodity trades.<\/p>\n<p>{snip}<\/p>\n<p>I list below the trades I have executed year-to-date excluding gold and silver. {snip} The most important concept for the commodity crash playbook is to <em><strong>start<\/strong><\/em> purchasing commodity stocks once they have erased all their gains since the U.S. Federal Reserve telegraphed the coming of a second round of quantitative easing at the end of August, 2010. I have tended to sell most of these on subsequent rallies expecting additional opportunities to re-establish positions at lower prices as the global economy worked its way closer to a China-related slowdown. At this late stage in the game, I am much more likely to hold for a longer period since the next rally could be the start of the next major move upward.<\/p>\n<p><strong>iPath DJ-UBS Coffee TR Sub-Index ETN (JO)<\/strong> (March 7, 2012)<br \/>\n{snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_11168\" aria-describedby=\"caption-attachment-11168\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/04\/120420_JO.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/04\/120420_JO.png\" alt=\"JO continues to sell-off as coffee prices continue their descent from lofty heights\" title=\"JO continues to sell-off as coffee prices continue their descent from lofty heights\" width=\"500\" height=\"350\" class=\"size-full wp-image-11168\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/04\/120420_JO.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/04\/120420_JO-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-11168\" class=\"wp-caption-text\">JO continues to sell-off as coffee prices continue their descent from lofty heights<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p><strong>Market Vectors Rare Earth\/Strategic Metals ETF (REMX)<\/strong> (March 19, 2012)<br \/>\n<a href=\"http:\/\/drduru.com\/onetwentytwo\/tag\/mcp\/\" target=\"_blank\">I am a long-standing fan of {snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_11169\" aria-describedby=\"caption-attachment-11169\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/04\/120420_REMX.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/04\/120420_REMX.png\" alt=\"REMX remains below its price from the first day of trading\" title=\"REMX remains below its price from the first day of trading\" width=\"500\" height=\"350\" class=\"size-full wp-image-11169\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/04\/120420_REMX.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/04\/120420_REMX-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-11169\" class=\"wp-caption-text\">REMX remains below its price from the first day of trading<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p><strong>Vale S.A. (VALE)<\/strong> (March 23, 2012)<br \/>\n{snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_11172\" aria-describedby=\"caption-attachment-11172\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/04\/120420_VALE.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/04\/120420_VALE.png\" alt=\"VALE has traded under its QE2 reference price for 8 months\" title=\"VALE has traded under its QE2 reference price for 8 months\" width=\"500\" height=\"350\" class=\"size-full wp-image-11172\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/04\/120420_VALE.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/04\/120420_VALE-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-11172\" class=\"wp-caption-text\">VALE has traded under its QE2 reference price for 8 months<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p><strong>BHP Billiton Ltd. (BHP)<\/strong> (April 4, 2012)<br \/>\n{snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_11165\" aria-describedby=\"caption-attachment-11165\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/04\/120420_BHP.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/04\/120420_BHP.png\" alt=\"BHP bounces along support\" title=\"BHP bounces along support\" width=\"500\" height=\"350\" class=\"size-full wp-image-11165\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/04\/120420_BHP.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/04\/120420_BHP-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-11165\" class=\"wp-caption-text\">BHP bounces along support<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p><strong>Freeport-McMoRan Copper &#038; Gold Inc. (FCX)<\/strong> (April 16, 2012)<br \/>\n<a href=\"http:\/\/stockcharts.com\/h-sc\/ui?s=$COPPER&#038;p=W&#038;st=2009-04-21&#038;en=2012-04-20&#038;id=p86707748622\" target=\"_blank\">Copper prices are about 18% off their post-recession highs in 2011<\/a>. {snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_11174\" aria-describedby=\"caption-attachment-11174\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/04\/120420_FCX.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/04\/120420_FCX.png\" alt=\"FCX hits its QE2 reference price again\" title=\"FCX hits its QE2 reference price again\" width=\"500\" height=\"350\" class=\"size-full wp-image-11174\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/04\/120420_FCX.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/04\/120420_FCX-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-11174\" class=\"wp-caption-text\">FCX hits its QE2 reference price again<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p><strong>iShares MSCI Brazil Index (EWZ)<\/strong> (April 17, 2012)<br \/>\nEWZ hit <a href=\"http:\/\/drduru.com\/onetwentytwo\/2010\/06\/04\/20pct-rule-works-on-ewz\/\" target=\"_blank\">a long-standing rule<\/a> I have in place to buy EWZ anytime it drops to 20% below its 52-week high. <a href=\"http:\/\/drduru.com\/onetwentytwo\/2011\/11\/29\/ewz-triggers-20-rule-again\/\" target=\"_blank\">I last bought in November<\/a> and sold into 2012&#8217;s rally. {snip}<\/p>\n<p><strong>Hedges: Caterpillar (CAT) and ProShares UltraShort FTSE China 25 (FXP)<\/strong><br \/>\n{snip}<\/p>\n<p>Overall, I see commodities at an important crossroads. Sluggish economic growth and sovereign debt issues have kept major central banks in accomodative monetary policies. Easy money is always an important catalyst for improving the risk\/reward of owning commodities. If these policies fail to maintain a floor on economic activity, then commodities will certainly weaken further from here. However, a response with further monetary easing will make lower commodity prices even more attractive. For now, I am not as actively fretting about the downside risks as I am eagerly anticipating the upside opportunities from an eventually more robust global recovery.<\/p>\n<p>Be careful out there!<\/p>\n<p><strong>(This is an excerpt from an article I originally published on Seeking Alpha on April 23, 2012. <a href=\"http:\/\/seekingalpha.com\/article\/516961-2012-has-delivered-some-attractive-bargains-in-commodities\" target=\"_blank\">Click here to read the entire piece<\/a>.)<\/strong><\/p>\n<p>Full disclosure: long JO, REMX, VALE, FCX, BHP, EWZ, CAT, CAT puts, FXP, MCP<\/p>\n","protected":false},"excerpt":{"rendered":"<p>(This is an excerpt from an article I originally published on Seeking Alpha on April 23, 2012. Click here to read the entire piece.) Commodity stocks have generally underperformed the stock market in 2012. I still cannot decide whether this weakness represents a leading indicator of broader weakness to come or a fortuitous relief to &#8230; <a title=\"2012 Has Delivered Some Attractive Bargains In Commodities\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2012\/04\/25\/2012-has-delivered-attractive-bargains-commodities\/\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[673,181,4,199,524],"tags":[631,845,484,685,493,494,489,488,948,525,526,949,661,846],"class_list":["post-11161","post","type-post","status-publish","format-standard","hentry","category-agriculture-2","category-brazil","category-china","category-commodities","category-rare-earths","tag-bhp","tag-bhp-billiton-ltd","tag-coffee","tag-commodities-crash-playbook","tag-fcx","tag-freeport-mcmoran","tag-ipath-dow-jones-ubs-coffee-total-return-sub-index-etn","tag-jo","tag-market-vectors-rare-earthstrategic-metals-etf","tag-mcp","tag-molycorp","tag-remx","tag-vale","tag-vale-s-a"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>2012 Has Delivered Some Attractive Bargains In Commodities - ONE-TWENTY TWO: Trading Financial Markets<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/drduru.com\/onetwentytwo\/2012\/04\/25\/2012-has-delivered-attractive-bargains-commodities\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"2012 Has Delivered Some Attractive Bargains In Commodities - ONE-TWENTY TWO: Trading Financial Markets\" \/>\n<meta property=\"og:description\" content=\"(This is an excerpt from an article I originally published on Seeking Alpha on April 23, 2012. 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Click here to read the entire piece.) Commodity stocks have generally underperformed the stock market in 2012. I still cannot decide whether this weakness represents a leading indicator of broader weakness to come or a fortuitous relief to ... 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