Commodity Stocks Remain Hot

Today is the first trading day of 2011. The major stock market indexes all started the trading session with a large gap higher open. The leading stocks in 2010 where the commodity stocks and they remain the leaders today. Remember, once the Federal Reserve Bank Chairman Ben Bernanke announced his quantitative easing or U.S. Treasury purchase program the stock markets have gone wild to the upside. Remember in late August 2010 the Dow Jones Industrial Average was trading under the psychological 10,000 level. Today the Dow Jones Industrial Average is trading around 11,686.00. That is a 1600 point rally in just four months. Many traders and investors have have seen oil, gasoline, gold, silver, copper, cotton, and most every other commodity soar to new highs for the year.

This morning Freeport McMoRan Copper & Gold Inc.(NYSE:FCX) is making a new 52 week high. This stock is the leading copper stock in the market and is followed closely by many traders and investors. When copper rises it is a sign of market strength. The opposite is true when copper declines it is a sign of market weakness. As long as this stock remains strong the markets could continue to climb. Southern Copper Corp.(NYSE:SCCO) is also a leading copper stock that is making new 52 week highs today.

Cliffs Natural Resources Inc.(NYSE:CLF) is a leading iron ore pellet producer that is making a new 52 week high this morning. This stock will often rally when the Chinese markets rally or report positive economic news. The Shanghai Index has rallied over the past few trading sessions and this has certainly helped CLF to advance higher on the daily chart. At this time the chart remains in a strong technical position.

The commodity stocks are where the major action is in this market. Right now most commodity stocks seem to be trading right along with a strong Chinese market. Please remember that the Chinese central bank just raised interest rates by 25 basis points and this only seemed to stall out the commodity stocks for a day or so. Therefore, the overall trend remains strong for most of the leading commodity stocks.

Nicholas Santiago
Chief Market Strategist

Nicholas Santiago started trading in 1991. In 1997, he became a licensed Series 7 and 63 registered representative. He managed money for a large, affluent private client group. After applying his knowledge to his client base, he decided it was time to begin teaching those interested in learning his methods. He is an expert in Technical Analysis. He has become an accomplished technician in the studies of Elliot Wave, Gann Theory, Dow Theory and Cycle Theory. In 2007, he partnered with Gareth Soloway to form InTheMoneyStocks.Com and realize his dream of educating others about the truth of the markets.

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