There is very little to say about Monday's stock-market action, except that the indices did what they should have done -- which is to back off -- and as soon as the S&P 500 was down 9 points, the put-call ratio zoomed up above 100%. By day's end, the market had rallied, and the put-call was at a much more neutral reading in the 80% area.
With that out of the way, have you noticed the lack of love for commodities after a poor 2012? Of course, at midyear the major concern had been corn trading above $8 during the height of the drought. You might recall that, right as the grains were topping out in early August, the folks at CNBC finally got around to doing a special report on the drought.
No one seems to recall that now. But, then again, perhaps none of these folks actually go to the grocery store and buy food. We are seeing those high grain prices begin to filter in at the retail level. At least I am.
I thought of this as I considered that corn is due for an oversold rally. It is far too soon for anyone to get hysterical about possible drought conditions for next spring -- but I can tell you that, here in the Midwest, we have had very little snow this winter. If that doesn't change, it will be another difficult summer for the grains. In the meantime, doesn't corn look like a bounce candidate?
Now let's check in on gold. The price dropped to $1,626 per ounce Friday, missing my target of $1,625 by a buck. I am still not bullish on the metal, but I do think it can and should rally back to that $1,675-ish area.
As far as silver is concerned, on a short-term basis last week's plunge and recovery interests me enough to make me surmise that it wants to rally a bit. Last week's action looks like a shake-out. I don't think silver can rally all the way back to the underside of the broken uptrend line, but I'd say an attempt at $31.50 to $32 per ounce -- around the downtrend line, which is currently at $32 -- would be doable. If silver takes a week or two to attempt a rally, the descending downtrend line ought to coincide with that little spike higher around $31.50, which was put in last week before the Federal Reserve minutes changed everyone's views.
Heck, maybe we should just look at the chart of PowerShares DB Commodity Index Tracking Fund (DBC). The fund is trying to bottom, and you know where you would be wrong: under that uptrend line.
I would prefer if the hate for commodities was just a little bit louder, but at least very few favor them at the moment.