Will 2013 be the year of the Commodity?

Update from initial post:

Strength is obviously in the diversified chemicals like ASH, ENM, KRO, FMC and MON. Weak action in CF,POT, AGU but these can play the catch up game and I’ll look for some pullback action this week or next. CAT and JOY acting well also with market strength  especially CAT in the big cap plays.  A huge shout out to Patrick Hoog at InvestorTradeStocks for the research he did in the Diverse Chems.  He it on the nail on the head with ASH, KRO, FMC and ENM.

FCX had a nice bounce off the lows and this has built a great low-end level for risk as did many other gold stocks like NEM, ABX, CDE

Currencies: I had been long AUD/JPY and NZD/USD. The Aussie trade was stable and still is strong but I’ll scale out as of today. The NZDUSD entry was poorly executed and I lived through some pain for several sessions but it worked out very well and I’m flat. I’m looking for a new entry upon pullback from today highs.

Commodity ETF’s: GLD~ in and out actively for now but a good trade from the massive sell off two weeks ago. I’m looking to get into JJC and will watch for an entry spot.

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Original post:

2012 has not been kind to the metals and soft commodities for many reasons. China fears, droughts, ect.. Every day I listen to a Guru come on TV touting Gold and Silver but in the end, they are down and of this article,  Feb. Gold is trading at 1672, Silver at 29.94. Way off their highs for the year. Commodity Currencies have felt this also as the Aussie dollar, Canadian and New Zealand dollar are still under pressure along with metal prices across most pairs. So now we know what did not perform this year.

Let’s take a general look at the numbers:

Chart by FinViz

Chart by FinViz

Next year brings new challenges from the Fiscal Cliff issues to Germany under stress now. lets not forget  the China factor. But I’ll watch these commodities very closely along with the equities that will benefit from a potential commodity rally into the spring. I feel it will start early to mid – January. Wall Street loves to sell things so they can buy cheaper. We must think like this if we plan on taking advantage of a move into a potential strong commodity season. I’ll also get a lead into the commodity currencies as a first clue. I think gold and silver have a decent bounce and then stealth rally as Platinum and Copper firm up.  I’ll look for upgrades early in January in these groups (We just saw FCX upgraded this week). to take advantage of this, I would want to be tracking the performance in the following:

Equity groups:  Miners, Agriculture Chemical and Specialty Chemical(s), Transportation of rail and trucking. Agriculture support and heavy equipment, Industrial and Basic Materials.

A few names to watch from the above mentioned groups:

NEM,FCX,CDE,ABX,CF,AGU,POT,MON,MOS,TNH,FMC,EMN,ASH,KRO,WLK,CSX,JBHT,UNP,NSC,CAT,JOY,DE,CMI.

Currencies: Aussie Dollar strength, New Zealand Dollar strength and Canadian Dollar strength:

Commodity and sector ETF’s: GLD, SLV, PPLT, JJC, XLI, XLB, XLE.

Final thoughts: I listed just a few names above, but there are many more stocks & ETF’s that track commodities that can be added. If I’m correct, I’ll revisit this post and scope out the best names I feel will perform the best. I’ll position to the long side across the best performers and dabble in the commodity ETF’s as this weakens continues. The goal is to be long across a few fronts but not stubborn if this fails to materialize. I expect the performance to pick up in mid January- lasting through spring.

Nick Pirraglia

Disclaimer: The material provided is purely for educational purposes only. No information contained herein is a solicitation or offer to buy or sell any securities. The information provided is in no way investment advice from Nick Pirraglia, TradersThinkTank or any other contributed content. The opinions, analysis and commentary on this website are purely the subjective views of the author. Nick Pirraglia is not a Registered Investment Advisor and under no circumstances should any content from this site be used as investment advice, recommendations, or trading advice. Please consult your financial advisor prior to making investment decisions.

About Nickolas Pirraglia

Nick Pirraglia started his career in trading in 1991 after returning to the US as an Army Officer deployed in Iraq. He began as a bond broker and worked his way into trading. Expert mentoring, hard work and a disciplined approach to the markets has allowed Nick the ability to maintain a very successful career in Capital Markets and Trading for over 20 years as a professional OTC Market Maker and independent trader. Nick has also managed the trading desks for a two Dallas based capital management companies and traded equities for a Dallas based hedge fund. Nick has trained and mentored thousands of customers in the rigors of trading, technical analysis and risk controls. Recently, Nick had broadened his market experience through the design and product management of two automated trading platforms. He has the pleasure of working with some of the brightest minds in the trading community and has collaborated with experts in data, design, engineering and trading psychology. An avid long distance runner, Nick completed several marathon events, qualified for the Boston marathon, completed several long distance Triathlons to include finishing a full Ironman triathlon.
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