Outside The Stocks: Commodities

Monday, 29 Jun 2009 | 5:49 PM ET

Considering the recent strength in commodities this quarter, should you play them long over the next three months?

It seems that when the quarter closes the big winners will be the energy , industrial and materials sectors. They all helped drive gains in the overall stock market as investors looked to put money into areas that would benefit from an improving economy. And they share a common theme: commodities.

Outside the Stocks
The Fast Money discuss whether investors should bet on commodities next quarter.

However there may be more than meets the eye behind these advances. The moves were not entirely based on fundamentals. Harry Rady, chief executive of Rady Asset Management, notes that some of the strength stemmed from investors who were afraid of being left behind by the market's advance.

"People didn’t want to miss the rally," he says. "There doesn't seem to be much rhyme or reason. We're kind of in a trading range and people are looking for things to do."

Considering the recent strength in commodities this quarter, should you play them long over the next three months?

Depends on whom you ask.

The Bulls

Gregory Weldon of Weldon Financial tells the desk he’s rather bullish. He expects the dollar to continue to weaken and as a result boost commodities. In particular he likes gasoline, copper, platinum, soybean and metals. He suggests playing it with a long position in the Powershares DB Base Metals Fund or the PowerShares DB Agriculture Fund .

My feeling is that iron ore and steel have lagged tremendously, adds Tim Seymour. I expect demand to increase into year end and steel companies could be making a turn here. And with industrial production up in Japan, I think it's exciting for commodities.

The Bears

However, a few days back, strategic investor Dennis Gartman told us “Many commodities are breaking to new lows and that concerns me. I think that we could see as much as 3 weeks of downside movement. “

And an interesting article published byBloomberg also suggests thinking twice. It says commodities could “struggle to repeat their gains in the next three months as supply expands and speculators sell.”

”Commodities have gotten a little ahead of themselves,” says Walter “Bucky” Hellwig to Bloomberg. “As long as there’s uncertainty about growth, there's going to be a headwind that commodities won’t be able to overcome.”

What do you think? Tell us now!

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Trader disclosure: On June 29th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (C), (GS), (BTU), (AGU), (INTC), (MSFT), (NUE); Seymour Owns (AA), (AAPL), (BAC), (BX), (EEM), (FXI), (INFY); Seymour's Firm Owns (QCOM), (NOK), (EEM); Terranova Owns (TER), (RIMM), (MSFT), (XBI), (MS), (ABT); Finerman Owns (RIG), (ELX); Finerman's Firm Own (NOK), (PBR), (RIG), (TBT), (ELX), (HPQ); Finerman's Firm Owns (BAC) Preferred; Finerman Owns (BAC) Preferred; Finerman's Firm Owns (WFC) Preferred; Finerman Owns (WFC) Preferred; Finerman's Firm Is Short (IJR), (IYR), (MDX), (SPY), (USO)

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