GO
Loading...

Is the Commodity Bull Back on Its Feet?

The S&P snapped a three-day losing streak on Wednesday largely buoyed by a rebound in commodities and commodity related shares.

The Reuters/Jefferies CRB index, a broad measure of commodity performance, rose 2.3 percent. Before Wednesday's advance, the CRB index was down more than 9 percent for the month.

"We're seeing a snap back. But is it sustainable? That is the going to be the million-dollar question," says David Lutz, managing director of trading at Stifel Nicolaus Capital Markets in a Reuters interview.

Is the commodities bull back on its feet?

Instant Insights with the Fast Money traders

Trader Brian Kelly does believe the bull has more room to run. He thinks Wednesday's gains are a sign that the recent sell-off over the past few weeks were nothing more than a liquidity event as margin requirements increased. In other words he does not think the commodities sell-off was about global demand concerns.

Also he says, “I watch cotton , corn and copper – they’re all holding key technical levels – for me they’re leading indicators.” In fact he’s long BHP Billiton as a bullish bet on global growth and long Andersons "because they’re very levered to wheat."

Tim Seymour largely agrees and suggsets the Fed minutes could provide a floor under commodities. "The Fed doesn't appear to be in a hurry to tighten anytime soon," he says. "I'd look at Freeport, CF or Cliffs - names that are cheap on valuation."

Joe Terranova is also bullish and follows the same theme. He says, “don’t look at futures go with the producers.” He suggests long Freeport McMoRan with a $45 stop as well as long position in 3M or Joyglobal .

Trader Steve Cortes is on the other side. He says that Wednesday's gains should be viewed in a larger context. “When you consider that in a matter of days crude went from $115 to $95 and silver went from $50 to $32, the small gains of late are irrelevant,” he says.

Cortes believes that the commodities rally is a bubble that’s about to burst; that it was generated by dollar weakness stemming from QE2. But now that QE2 is winding down he anticipates dollar strength.

Trader Steve Grasso sides with Steve Cortes. He believes gains in energy are nothing more than a bounce because because the energy complex became oversold.




______________________________________________________
Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment but not have it published on our Web site send those e-mails to fastmoney@cnbc.com.

Trader disclosure: On May 16, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova Owns (OXY); Terranova Owns (XOM); Terranova Owns (KSS); Terranova Owns (BJ); Terranova Owns (DIS); Terranova Owns (TM); Terranova Owns (MCD); Terranova Owns (PEP); Terranova Owns (PFE); Terranova Owns (BAX); Terranova Owns (V); Terranova Owns (JPM); Terranova Owns (VRTS); Finerman and Finerman's firm own (AAPL); Finerman and Finerman's firm own (BP); Finerman and Finerman's Firm own (CMI); Finerman's Firm owns (IBM); Finerman owns (C); FInerman owns (JPM); Finerman's Firm owns (JPM) leaps and (JPM); Finerman's Firm owns (TGT); Finerman owns (UNG); Finerman's Firm is short (IWM), (MDY), (SPY); FInermans firm is long S&P Puts, Russell 2000 Puts;Weiss owns (UUP); Weiss owns (NS); Weiss owns (ETP); Weiss owns (COP); Weiss owns (DVN); Weiss owns (BRCM); Weiss owns (MRK); Weiss owns (AKAM); Weiss owns (DE); Weiss owns (NAV); Weiss owns (JPM); Weiss owns (HBAN); Weiss owns (NIHD); Weiss owns (HK); Weiss owns (TWM); Weiss is short (X); Steve Grasso owns (AKS), (AMD), (ASTM), (BA), (BAC), (C), (D), (HOV), (JPM), (LIT), (LPX), (MHY), (NDAQ), (PFE) and (PRST); Steve Cortes owns (SO), (EXC), (KFT), (K), (GS), (MS) and (TGT). Steve Cortes is short Nikkei. Steve Cortes is short EEM vs. S&P Long; Pete Najarian owns (AAPL); Pete Najarian owns (HPQ); Pete Najarian owns (MS); Pete Najarian owns (MSFT); Pete Najarian is long (KGC) calls

Dennis Gartman
Funds Managed by Dennis Gartman are short Yen
Funds Managed by Dennis Gartman own Asian Short term Government Bond fund
Funds Managed by Dennis Gartman own gold, copper, corn, crude oil, soybeans

Steven Grasso
Stuart Frankel & Co and it’s partners own (ABX)
Stuart Frankel & Co and it’s partners own (CSCO)
Stuart Frankel & Co and it’s partners own (CUBA)
Stuart Frankel & Co and it’s partners own (GERN)
Stuart Frankel & Co and it’s partners own (HPQ)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own (MSFT)
Stuart Frankel & Co and it’s partners own (MU)
Stuart Frankel & Co and it’s partners own (NEM)
Stuart Frankel & Co and it’s partners own (NYX)
Stuart Frankel & Co and it’s partners own (PFE)
Stuart Frankel & Co and it’s partners own (PRST)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co and it’s partners own (XRX)
Stuart Frankel & Co and it’s partners are Short (QQQQ)
Stuart Frankel & Co and it’s partners are short (AAPL)

For Anthony Scaramucci
Skybridge is a Fund of Funds Manager
Funds held May or May not Own the Recommended Securities

For Joe Terranova
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (NRCI)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLF)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of DOMINO'S PIZZA UK & URL PLC
Virtus Investment Partners Owns More Than 1% Of (DRYS)

For Brian Kelly
Accounts Managed By Brian Kelly Capital Own (TLT) Calls”
Accounts Managed By Brian Kelly Capital Are Long Australian Dollars
Accounts Managed By Brian Kelly Capital Own (AGO)
Accounts Managed By Brian Kelly Capital Own (EBAY)
Accounts Managed By Brian Kelly Capital Own (MCP) Calls
Accounts Managed By Brian Kelly Capital Own (BHP)
Accounts Managed By Brian Kelly Capital Are Short Yen

For Mike Khouw
Cantor Fitzgerald is a market maker in (RIMM)

For Colin Gillis
*No disclosures

For David Riedel
*No disclosures



CNBC.com and wires

Contact Fast Money

  • Showtimes

    Halftime Report - Weekdays 12p ET
    Fast Money - Weekdays 5p ET

Halftime Report