Commodity Cash Cow – Cashed Out?
Only a month ago, sizzling commodities prices seemed destined to soar higher with record-breaking rallies in crude oil and corn. But now the boom appears to be taking a breather, cooled by a weakening economy and a milder Mother Nature.
In just seven trading days, oil has lost more than $20 a barrel, or 14 percent, as record energy prices eat into demand. Meanwhile, corn has fallen 21 percent, soybeans 12 percent and wheat 8 percent since the start of the month, as ideal farming weather boosts Midwest crops battered by recent floods. Even gold, a bellwether of the commodities boom, has lost ground, falling 6 percent in the last week.
As commodities reverse course how should you trade?
I like Vale as an iron ore play in Brazil, says Tim Seymour. I think that’s a buy on the dips. Also look at Gazprom. And if you’re nervous about the space then as you get long also short the ETF as a hedge. That’s iShares MSCI Brazil Index (EWZ) or the Russian Depository Index (RDX) respectively.
If you're looking for a commodities trade, I like Bucyrus and Joy Global as a trade, adds Joe Terranova. But, by and large, I'd stay away from resource stocks for the time being.
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Trader disclosure: On July 24, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (WMT), (MSFT); Finerman Owns (GS), (WM); Finerman's Firm Owns (SUN), (TSO), (VLO), (MSFT); Finerman's Firm And Finerman Own (C) And (C) Leaps; Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM), (BBT); Seymour Owns (AAPL), (BAC), (F), (MER), (MSFT), (TSO), (BX); Seygem Asset Management Is Short (MTL); Seygem Asset Management Owns Gazprom
Terranova Owns (YHOO), (INTC), (IYT), (BNI), (GOOG), (CME), (RIMM), (VLO), (SA), (XLF), (FCX), (SU); Terranova Is Long Crude Oil September $154 Calls, Terranova Is Short Crude Oil September $130 Calls, Terranova Is Short Crude Oil September $130 Puts, Terranova Is Long Gold Futures (December)
Terranova Is Chief Alternatives Strategist Of Phoenix Investment Partners, Ltd.; Phoenix Investment Partners Owns More Than 1% Of (DBV), (RWX), (LNET), (EXR), (SKT), (DLR), (IGE), (ARE), (DBC), (ABD), (OFC), (CLB), (BLV), (CNTY), (FL), (HPC), (PSPT), (ESS), (OIIM), (BIG),(ENG),(PFD),(DRH)
Terranova Is Co-Portfolio Manager Of The Phoenix Diversifier PHOLIO; Phoenix Diversifier PHOLIO Owns (IGE), (DBC), (DBV)
Charles Schwab Is A Sponsor Of "Fast Money"