The Race of Commodities

Jim Trippon  |

As we enter the second week of the trading year, the positive movements have investors seeking out new positions for potential gains throughout the New Year.

At the close of Wednesday, we saw the S&P continue to remain above the critical level of 1291 with our next indication point being 1297. If we were able to see the S&P hit this second level, this would signal another movement to 1303.

By mid-week, the S&P had already reached roughly a 3% gain on the year. In turn, we have seen gold rise by nearly 5% and silver is up 3.6%.

In 2011, oil prices experienced an extremely volatile year, but 2012 should shape up to be a different type of trading environment. There have been indications of oil reaching $150 per barrel by mid-summer, but there are a couple items we will be keeping a close eye on that could affect this move.

First, the European debt crisis needs to remain in control coupled by their successful debt auctions. Although, it wouldn’t devastate oil prices it could contribute to the volatility.

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Second, would be the potential of political turmoil in the Middle East and the effect of supply constraints. As we mentioned in the past issue, Iran has definitely been flexing their muscles, but hopefully this is only a temporary issue. The bright side of oil demand is we know it’s not going anywhere; if anything oil demand will only increase.

Let’s put commodities to the side for just a bit.

The U.S. has been able to come into 2012 as a more stable counterpart to the worldwide economy; especially in light of all the troubles abroad. U.S. Treasury prices were able to rally on investors seeking a safe haven with 30 year yields reaching just below 3%.

The other big news for the U.S. economy is earnings season began this week. Over the next several sessions, we will see the news flooded with corporate profits and in turn some impactful economic data.

Although there are a number of uncertain items on the table, we have seen tight daily trading ranges in the first part of 2012. This has kept volatility relatively low.

For further information on the ETF markets, you may visit or join us at for our daily market commentary. I will look forward to bringing my exclusive insight to you next week.

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