Nostalgia for Summer 2008 in Commodities

Futures markets are front-runners, meaning they tend to factor in future events well before they occur. It appears that futures markets are presently factoring into their price structures a rebounding world economy that will lift the major industrialized nations out of recession before the end of this year. This scenario also suggests that by the time the world's economies are officially out of their recessions, commodity futures markets will have already put in their peaks.

To extrapolate further, if the world economies do indeed pull out of recessions before the end of 2009, which recent world economic data does generally suggest, then most commodity markets will likely be peaking in the coming weeks.

Veteran traders also know better than to stand in front of a steaming locomotive. At present the steaming locomotive in the market place is rising commodity prices. Smart traders will patiently wait for those early technical clues that suggest the bull market moves in commodity futures markets have run their course and prices will embark on fresh downtrends.

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Know what you own: Major oil and gas stocks include Exxon Mobil (XOM - commentary - Trade Now), Chevron (CVX - commentary - Trade Now), BP (BP - commentary - Trade Now), PetroChina (PTR - commentary - Trade Now), Total (TOT - commentary - Trade Now), ConocoPhillips (COP - commentary - Trade Now) and Royal Dutch Shell (RDS - commentary - Trade Now).

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At time of publication, Wyckoff had no positions in the stocks mentioned, although positions may change at any time.

Jim Wyckoff is a senior market analyst for TradingEducation.com a free educational Web site. In addition, Wyckoff writes a blog offering current market commentaries every morning on TraderBlogs.com. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Wyckoff appreciates your feedback; click here to send him an email.