Thursday, January 11, 2007

Another view from the top of the dot-commodity boom super cycle

ABN Amro suggests the dot-commodity boom is about to go sphttt if not bust.

This from fiancial blooger Gary D. at Between the Hedges, which is, by the way, an excellent source of market information:
A five-year boom in prices of industrial metals, such as copper and zinc, is set to end in 2007 as the pace of supply growth rises, analysts at ABN Amro Holding NV said in a report. “We are witnessing the definitive end of the commodity price boom that began late in 2001. Prepare for a down year for commodities as markets move towards increasing supply surplus,” the report said. The annual average prices of industrial metals are likely to fall between now and 2010.

Stuart Kelly and Shiyin Chen picked that up, also, in a Bloomberg report on the falling market yesterday.

The ABN report was also noted by Australia's The Age and Sky News.

But it's just old hat here in Guambat's burrow. See Anatomy of a "super-cycle" top and Fouled out to left field.

Similar thoughts about the state of the broader market are expressed by Steven Vita at his Alchemy of Trading blog:
[Bulls] are unnaturally quiet when the market struggles, but I'm sure that far-off in some padded cell they're flapping gums about how bad Emerging Markets and plunging commodities and huge margin debt and internal divergences are all good for U.S. equities.

But you know something, we're only a few days into 2007 and things could turn around despite what that first 5 Trading Days Of January is apparently saying about the broader market.

And yes, I do wish that I had bought Apple Computer, but it's ingrained in me to think that you shouldn't do Breakout Trading in the 5th year of a cyclical bull market and, moreover, that the best time to practice that art is at the beginning of new advances, especially brand new advances coming out of bear markets.

So I did quite a bit of that in 2003-2004 and I'm doing almost none of it now.

That may be a mistake and I'll have to mull it over during lunch, but I can't help thinking that for every fresh Apple there's another rotten stock just waiting to cost you money.

Guambat frets he may be turning, or more likely has already turned, into a Guambear and "longs" to be a Guambull. And he'll probably be too early to that party, too, considering his tendency to hit to left field.

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