Quick Take: Commodities Could Be Better Value Than Stocks Right Now
NEW YORK (TheStreet) -- U.S. equities are flat on Wednesday following Tuesday's big gains. Mark Newton, chief market technician at Greywolf Equities, told TheStreet's Debra Borchardt that commodities might be the better place for investors to be.
Newton said he prefers to use the Continuous Commodity Index (CCI) over the Jefferies Commodities Index ETF (CRB), since the latter is too heavily weighted toward energy.
The CCI has retraced approximately one-third of 2011's big move lower and has really started to break out over the past several weeks, he said.
He added that almost everyone has been talking about deflation, which, if this move in commodities continues higher, will make these economists dead wrong.Newton suggested this move higher could be the start of another cyclical bull market, as part of the larger and longer lasting secular bull market that began in 2000. Many commodities that can be tied to geopolitical tension -- such as energy and metals -- have obviously been moving higher.
But Newton pointed out that even grains and soft commodities have begun bottoming out and moving higher. So given the rally U.S. equities had in 2013, it may not be surprising to see commodities outperform the broader stock market over the next several years, assuming the current rally can be sustained. Specifically, he concluded gold needs to have a pullback over the next month or two if a more serious and larger rally is to ensue.
-- Written by Bret Kenwell in Petoskey, Mich. Follow @BretKenwell
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV