Tuesday, June 1, 2010

When Will the Market Rebound - June 02, 2010

Via Bloomberg (a brief summary):
The biggest slump in commodities since the Lehman collapse may be an indicator of a bearish market, however it could just be a correction.

The Journal of Commerce Industrial Price Commodity Smoothed Price Index (which tracks steel, cattle hides, tallow, burlap, and other commodities) declined 57 percent in May. According to a managing director at the Economic Cycle Reseach Institute, the JOCSINDS reflects clearer signs of supply and demand than futures markets because half the items it tracks do not trade on exchanges used by speculators. It is important to note that the index fell at a 56 percent annual rate in October 2008 and two months later, the National Bureau of Economic Research declared that the U.S. was in a recession.

Despite this news, one analyst believed that the market is “underestimating the strength of the fundamentals” and “overestimating the impact [of the European debt crisis].” Another analyst stated, “There are headwinds, concerns both in Europe and in Asia that are making investors rethink their decisions and maybe take some profits, but I believe that the longer-term growth story remains intact,”… “I don’t think it’s a broader slowdown. I think it’s a correction.”

My opinion: The recent dip in the markets is likely a correction and a buying opportunity.


Dan Auriemma
Summer Analyst
Analyze Capital LLC

1 comment:

  1. Nice find. I usually do not follow this index much. If you want a good feel for commodities I suggest you take a look at the following: S&P GSCI, Reuters/Jeffries CRB Commodity Index, or Rogers International Commodity Index.

    "My opinion: The recent dip in the markets is likely a correction and a buying opportunity." Which markets are you speaking of? Commodities? Equities? Debt? Please be a bit more specific with your opinion.


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