Wednesday, May 11, 2011
Do not buy commodities or metals yet
There are quite a few people saying buy the pullback in commodities. I would be wary of that advice as the dollar looks like it is going to rally for a while. Typically commodities and stocks go down when the dollar rallies.
Dollar extremely oversold and unloved
I do not expect that the dollar will go on some multiyear rally but I do think too many people are to negative on the dollar so it is due for a bounce. This could be a multi week or multi month bounce. This would mean weakness in the commodity sector and tie in nicely with the sell in May and go away thesis I have talked about in the Actionable Intelligence Alert. I think we watch and wait and build cash levels as I think there will be an excellent buying opportunity in metals and energy later this year.