Commodities Continue to Slide

Stocks clawed back their losses heading into the close of Monday trading, but commodities failed to rebound and traded close to the lows of the session. The S&P 500 headed into positive territory just before the close, while PowerShares DB Crude Oil Double Short (DTO - commentary - Trade Now) remained 7% above the previous close. SPDR Gold Shares (GLD - commentary - Trade Now) lost 0.5%, while PowerShares DB Gold Double Short (DZZ - commentary - Trade Now) climbed more than 1%.

U.S. Natural Gas (UNG - commentary - Trade Now) sank more than 4% and fell below its 52-week low, flashing a bearish signal for the commodity. I've previously mentioned that natural gas has a stronger industrial component than oil and a cool summer may also be reducing electricity via air conditioners.

A motley crew of winners were sprinkled among an otherwise double-short-dominated list of daily winners. iShares S&P California Municipal Bond (CMF - commentary - Trade Now) added 1.5%, Claymore/AlphaShares China Real Estate (TAO - commentary - Trade Now) bounced 2.44% and iShares Korea (EWY - commentary - Trade Now) advanced more than 3.5%. Samsung, which makes up more than 16% of EWY, guided analysts higher on second-quarter earnings. Shares of Samsung gained 5.5% in Korean trading and the gains carried through to EWY, contributing roughly 1% of the day's gain.

The U.S. dollar finished higher on the day, with PowerShares DB U.S. Dollar Bullish (UUP - commentary - Trade Now) up slightly. CurrencyShares Japanese Yen (FXY - commentary - Trade Now) had a better day, up about 0.5%. CurrencyShares British Pound (FXB - commentary - Trade Now) lost 0.70% and CurrencyShares Swedish Krona (FXS - commentary - Trade Now) dipped 0.5%.

After several straight days of commodity losses, a pullback would not be a shock. However, the new 52-week low on UNG and continued weakness in gold says that commodities, and possibly equities, have further to drop. The pound and krona are on the fault lines of European banking troubles and turbulence in the financial markets over the past two years have been accompanied by a strong yen as well as renewed strength in the dollar.

This may be shaping up as an eventful July, similar to the one witnessed last year when commodity prices began their plunge and Fannie Mae (FNM - commentary - Trade Now) and Freddie Mac (FRE - commentary - Trade Now) grabbed investors' attention.

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At the time of publication, Dion had no positions in the stocks mentioned.

Don Dion is the publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.

Dion is also president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.