"I expect China to come in with a solid PMI number north of 50 for sure," he tells the Fast Money desk. However he concedes if the number is weaker than 50, commodities will take a big hit. "Commodities clearly are the risk trade and if you do see China weak, you'll have to run."
PMI aside, Stephenson is bullish commodities long-term. "Big picture ten year out, five years out, even one year out commodities are going to be hot. They'll be the one thing that will be working in this market."
However if you're not a professional trader rather that play the contracts, he suggests looking at the following stocks as proxies.
Freeport McMoRan
Cliffs Natural Resources
Alcoa
Chevron
Cenovus Energy
"It's far too hard for amateurs to roll contracts and look at times series; ETFs have problems as well so I recommend (retail investors) settle in on the commodity producers."
And he likes these companies no matter what happens with the broad market. "Commodities do well oftentimes when other investments don't do so well. In part because they're raw material imput into other processes."
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Trader disclosure: On July 30, 2010, 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 (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck; Terranova owns (AMZN), (EMC), (CREE), (BRCM), (LRCX), (COP), (AXP), (BMO), (CSX), (PEP), (CVS), (GS), (PCP), (C), (APA), (FCX), (JOYG), (MMM), (MOS), (UAUA), (WYNN), (GOOG), (BBY), (SU), (KOL), (XBI), (BAX), (JNPR), (UAUA), (RIMM); Finerman owns (AAPL); Finerman’s firm owns (BDX); Finerman’s firm owns (COV); Finerman’s firm owns (STS); Finerman owns (JPM); Finerman’s firm owns (JPM); Finerman owns (BAC); Finerman’s firm owns (BAC); Finerman’s firm owns (RIMM); Finerman owns (RIMM); Grasso owns (ASTM), (ABK), (BAC), (BA), (BGP), (C), (CSCO), (DYN), (JPM), (LPX), (MO), (NDAQ), (PFE), (PRST)
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