Stock market gains continued for the sixth consecutive week as the Dow lingers around the 11,000 level and a full recovery from the July 2008 lows that began the decline…

I had to pause as I typed that last word.

Even as a 20-year market veteran, the old timers liked to point out that most traders have never really seen a sustained bear market only corrections. The 1987 Black Monday when the DOW lost 22% in one day occurred my freshmen year in college. Healing over time it regained all of the losses in 2 years by 1989 while I was still learning business theory and hitting the books. So the word “decline” may underplay the force and magnitude of the financial uncertainty that occurred.

Price is relative and money can be made in all market conditions, which is important to keep in mind while looking back at the past 2 years.

Further more, it hasn’t been long since the Nasdaq hit 5000, Crude oil was at $10 a barrel just a few short years ago and Gold was below $100 an ounce in the 1970’s. Interest rates recently hit zero for short-term money – marking an inexplicable negative real return. Corn has traded below 60 cents in the past with Soybeans hitting $16.00 a bushel in 2008. With a broad perspective it’s plain to see price movement goes both ways.

Much to my continued amazement, the reflation of beaten down assets continues to surprise and bewilder investors. I find myself in a day-to-day battle among colleagues and TV’s talking heads defending the current uptrend — but as you can see, it’s still intact.

The depressed stock shares and commodity resources stopped digging the hole lower in March 2009 and resumed the value role for investors, who were searching to retain and maintain returns. Look no further than the new yearly highs in crude made last Monday at $87 coinciding with new yearly S&P highs at 1188 (already eclipsed by today’s upside action).

The current move to Dow 11,000 measures an even shorter 18-month time period to regain ground than the 1987 sell off. This bullish stock price recovery action has left many commodities lagging behind and relatively unappreciated in many uses of the word.

This week marks the beginning of the earnings season for the quarter once again. The four times a year short-term corporate scorecard can be a boost or bailout for sidelined skeptics that have watched the S&P 500 rally more than 75% from the 2009 lows. Better than expected results can fuel the hot running furnace of finance.

This from Reuters:

Keep your eyes pegged to the market this week – earnings numbers could easily fuel a buying frenzy as companies to marginally better than the Wall Street set expect.

It all comes back to commodities,
Alan Knuckman
Penny Sleuth

April 14, 2010

Alan Knuckman

Alan Knuckman brings two decades of commodity trading experience to his role as managing editor of Resource Trader Alert, a weekly newsletter providing analysis and real-time updates on current and evolving market conditions. His options, futures, and currencies experience have made him a sought after commentator on issues shaping both hard (extracted or mined) and soft (grown or produced through the agriculture industry) commodities. He is a frequent guest on major international media outlets including CNBC, Sky News, MarketWatch, Bloomberg, Fox Business Network, CNN Money, and Reuters.

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