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Two Ways to Play: Commodities Shine for the New Year


Strengthen your portfolio in good times and bad.

Commodities Shine for the New Year

Commodity prices are set to rise in 2010 as global activity expands after the Great Recession, according to Thomas Helbling of the International Monetary Fund.

Helbling notes that even with inventories at levels above average, the demand side should be the main source of upward pressure.

He also feels prices are likely to remain high from a longer-term perspective noting, "The effects of the crisis have been to reduce prices somewhat below their 2008 peaks, but demand is expected to continue rising at a solid pace as industrialization continues in emerging and developing economies.

"Accommodating this demand will eventually require further capacity expansion in many commodity sectors, with some need to tap higher-cost sources."

From the Bull Pen: In the short term, with crude oil up nine straight days, it could be due for a pullback. Using the oil ETF (USO), one option is to wait for gapfill at $39.50 to initiate new positions. If and when.

From the Bear Cave: Watch the Dow Jones transportation ETF (IYT) pulling back to $73 support. It could actually be a buying opportunity, but should it break, it could signal more downside to come for the stock, as well for the broader markets.

For more ways to play and other trading ideas from more than 30 top market pros, take a free trial to our Buzz & Banter.

A Quick Check Around the World

Asian trading closed with the Nikkei 0.25%, India 0.73%, Hang Seng 2.09%, Shanghai 0.45%, and Taiwan 0.04%.

Across the pond, we see the FTSE 0.51%, CAC 0.04%, DAX -0.07%

As of 8:25 AM EST, S&P Futures are trading +6.25 to 1116.75. Nasdaq futures are +17.75 to 1876.50

A Look at Commodities

Over in commodities, crude oil is +0.05 to 81.55 while gold is +7.800 to 1126.10 this morning. Silver is +0.192 to 17.655 and copper -0.085 to 3.3975.

The dollar Index is -0.1950 to 77.6350.

On the Radar


10:00 Factory Orders 0.5% cons.
10:00 Pending Home Sales -3.1% cons.

Click here for the full trading radar.

Good luck today!
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No positions in stocks mentioned.

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