Commodities Market

Commodities led the market through the first half of 2008 and then, along with financials, led a tremendous decline as the economy went into a recession. As the market has been rising, so have the commodities. More and more signs are pointing toward the economy reaching a bottom, one of which is the price of oil.

Oil has been an indicator of the economy as price movements have reflected consumer demand. Oil has been on a tear as it reached a 2009 high at just under $55. I like a natural gas play better than oil as Obama make try a green strategy. Apache has been on a tear as demand has strengthened. It just crossed $80 after being at $60 a few weeks ago. If you have to play oil, I would go for an oil services company as they will have most of the growth. I look for oil to continue its way back to high prices. The world is dependent on oil so once people have money again, look for them to travel more and for OPEC to decrease supply to raise prices.

I also like agriculture plays. Ag follows oil as, it too, reflects demand. IPI and AGU are the best plays as both are smaller companies with lots of room to grow. If you want a more stable company try MON. These companies will gradually increase as food prices increase. Once food increases and ag increase, then look at machinery.

These prices should really start to move into the summer. After summer, look for these prices to somewhat stabilize. Demand will increase but after summer no one will be traveling. If you are looking for a six month play, look at commodities to make you some cash money.