This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Time to Buy These 3 Commodities

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By David Sterman

NEW YORK ( StreetAuthority) -- When it comes to commodities, there are two factors that dictate prices. The first factor is the underlying demand for the commodity, which can exceed or lag relative supply. The second factor is the technical picture, which is in focus for global investment-bank desks, which simply respond to the direction of a price of a commodity while paying little attention to the fundamental forces in place.

Right now, it's the latter factor ruling the markets. Many commodities are being dragged down by technical factors as losing sessions beget more losing sessions. As a result, silver, platinum and copper have all been sucked down, each trading more than one standard deviation below their 50-day moving average. On a technical basis, this "oversold" condition usually is a considered a "buy" signal. Come to think of it, the fundamental picture also means it's also time to buy. Let's take a closer look at silver, copper and platinum.
There are several ways to play a rebound in copper.

These three metals sold off sharply in recent months on fears that the global economy -- led by a sputtering U.S. economy -- was headed for a slowdown that would crimp demand for these commodities, which have a range of industrial applications. Yet as we've seen in recent weeks, the potential systemic shock that some were anticipating in July and August is now less likely to happen: Recent U.S. economic data have been decent enough to likely deter a recession; Europe is belatedly tackling the Greek debt crisis, and the rest of the world is cooling to a more moderate but still-respectable rate of growth.

This means demand for these commodities is unlikely to slump sharply from current levels, and pricing should rebuild at least part of the way back. This isn't a call for a boom in the commodities sector, but a solid opportunity for a rebound snapback. If that's the case, then what's the best way to play for each metal?

Silver

Mining firm Coeur D'Alene Mines Corporation ( CDE ) is always a solid play on silver when the metal is in an oversold state. I made a pair of suggested trades on this stock earlier this year. Back in January, I thought it looked undervalued at $22. But in April, I thought the stock had run too far too fast -- up to $35, and suggested profit-taking (or even possibly shorting the stock).
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
CDE $3.62 4.90%
FCX $11.80 -0.30%
PPLT $95.31 -0.07%
AAPL $121.30 -0.87%
FB $94.51 -0.74%

Markets

Chart of I:DJI
DOW 17,710.77 -35.21 -0.20%
S&P 500 2,107.60 -1.03 -0.05%
NASDAQ 5,136.1530 +7.3680 0.14%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs