Making Money Alert: Behold the Commodities Bounce

After a long downtrend in the commodities market, a big bounce is underway.

Recall that in last week’s Making Money Alert, I wrote about the gains in gold and gold mining stocks. Those gains really have ramped up since that mention, but it’s not just the precious metals’ segment that has been enjoying a bounce of late.

The entire commodities sector has been on a tear. One look at the chart of the GreenHaven Continuous Commodities Index Fund (GCC) shows the big rebound in the space off of the multi-year lows we witnessed in January.

As you can see, commodity prices have spiked significantly during the past month, with GCC up nearly 7%. The latest resurgence in the space now has GCC back above its 50- and 200-day moving averages.

So, why are commodities doing so well here?

While there’s no single reason for the boost in commodities, there are various factors that likely are responsible for the 2014 rebound. First, the commodities segment got way too oversold last year, and now there’s a reversion to the mean where buyers are coming in as a value play. Then there’s the recent decline in the value of the U.S. dollar. A weakened dollar is bullish for commodities.

Other key reasons for the recent boost in commodity prices are growing sentiment that the global economic picture is starting to improve materially, and that situation could mean increased demand for all sorts of commodities. Finally, there’s a combination of fear over both a return in inflation that could further reflate commodity prices, as well as a fear-induced bid in the market in response to the equity market sell-off to start the year.

I suspect commodity prices — especially gold and gold mining stocks — will continue to rise in the weeks and months to come. This trend is one that subscribers to my Successful Investing newsletter already are tapping and, I suspect, will continue to ride higher in the coming weeks.

If you’d like to find out more about my Successful Investing advisory service, I invite you to check it out today.

Was that it for the Correction?

After a horrible start to 2014 that saw the S&P 500 sink about 5% through the first five weeks of the year, stocks in the broad measure of the domestic market have come roaring back.

The chart here of the S&P 500 shows the decline in January that took the index down below its 50-day moving average. The pullback took stocks all the way down to where they were back in October. But since falling to its early February low, the S&P has recaptured all of its lost mojo.

The index now is firmly above its 50-day moving average and appears to be heading back to new highs.

So, was that it for the correction? Is the wider sell-off that many thought was firmly in progress now just a bad memory?

The price action of late certainly suggests that things are “back to normal” in terms of being bullish. Of course, these days “normal” means stocks that are overhyped, overbought — and a market that’s overly bullish.

As always, the charts don’t lie. The recent surge in stocks toward new highs represents a renewed bullishness, so keep an eye on stocks here to see if, in fact, we breach that new high territory. If we do, then we definitely can say that was it for the correction.

ETF Talk: ProShares Offers Alternative Investments

The traditional advantages of investing with exchange-traded funds (ETFs) are that they provide transparency, flexibility and cost effectiveness. But an additional implicit benefit is the chance to gain exposure to investment vehicles or strategies which are out of your reach as an individual, either because you lack the required capital or because the strategy is mostly available to professionals.

ETFs offer the chance to invest in a range of alternative investments other than traditional stocks and bonds, yet with the simplicity of buying and the transparency of pricing that is available in the stock market. One ETF company which specializes in alternative ETFs is ProShares.

Founded in 2006, ProShares now offers more than 140 alternative investment ETFs, the largest alternative investment ETF lineup in the United States. ProShares is especially well known for its funds that provide magnified exposure (2x or 3x the daily earnings) to an index or inverse earnings of an index.

For instance, those who began the year betting against the S&P 500 by investing in the UltraPro Short S&P500 (SPXU) ETF temporarily saw their contrarian bet pay off big, as it jumped 10% by the end of January. However, the volatile nature of triple-inverse investing becomes obvious when you see that, as of today, the ETF has a year-to-date loss of 0.71%. Last year, when the S&P 500 gained more than 30%, SPXU was down 60.04% for the year.

Alternative investing can be attractive to those seeking maximum diversity in their portfolios, and using alternative investments from ProShares allows you to do so in a variety of ways, and with a variety of funds. However, if you use alternative investments, I recommend that you do extra research to be clear about how much risk you are accepting.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

Introducing the Thematic Growth Portfolio

Have you ever wondered what really drives the best stocks in the best industries higher? We all have from time to time. But actually, the reasons don’t reside in some dark forbidden place open to a select few. In fact, they’re right out in the open, and in plain sight, IF you know how to identify the powerful “themes” driving specific stocks into the stratosphere.

At Fabian Wealth Strategies, we think one of the keys to enhancing total portfolio return is by investing in securities that benefit from these powerful trends, or themes, in the market.

That’s why we created the Thematic Growth Portfolio.

This portfolio is the brainchild of our highly respected colleague, Chris Versace. Using his keen insight of the megatrends operating in what may appear as disparate fields to some observers, Chris is able to ferret through the vast universe of companies and identify stocks with the greatest potential for delivering enhanced returns to risk-tolerant investors.

In our newest digital seminar: Introducing the Thematic Growth Portfolio, Chris Versace and Doug Fabian dig into the details and explain how they take advantage of transformational shifts in the biggest wealth-producing trends operating in the market today.

In this one-hour digital seminar, you’ll learn:

• About Chris and his accomplished background
• The macro economic factors influencing stocks right now
• How we identify “Investable Themes”
• How the Thematic Growth Portfolio is constructed
• About specific stocks riding the biggest themes higher
• How you can participate in the Thematic Growth Portfolio
• Much, much more…

This FREE digital seminar includes an interactive PowerPoint presentation, along with an accompanying audio presentation by Doug Fabian and Chris Versace.

Download this FREE digital seminar right now, and find out how you can put the power of the Thematic Growth Portfolio to work for you today.

NOTE: Fabian Wealth Strategies is a Securities and Exchange Commission-registered investment adviser, and is not affiliated with Eagle Publishing.

Wisdom from a Racing Legend

“In racing, I wanted to be a winner and to be a winner you have to be willing to roll the dice.”

–Bobby Rahal

The auto racing legend gives us advice that’s pertinent not just on the track, but to just about anything you do in life. If you want to be a winner, you simply have to tempt fate and take chances. Yes, you could lose, but you’ll never succeed unless you try.

Wisdom about money, investing and life can be found anywhere. If you have a good quote you’d like me to share with your fellow Making Money Alert readers, send it to me, along with any comments, questions and suggestions you have about my audio podcast, newsletters, seminars or anything else. Ask Doug.

In case you missed it, I encourage you to read my e-letter column in last week’s Eagle Daily Investor about how the dovish policies of Federal Reserve Chairman Janet Yellen and Congress are propelling stocks.

Best,

Doug Fabian