By InTheMoneyStocks.com on April 5th, 2010 3:31pm Eastern Time
The first quarter of the year started with a broad based rally with new leadership in place. The small cap stocks seemed to take over during the first three months of the year as the market leader. Prior to this time, gold and most commodity stocks lead the markets higher in 2009. Currently, the iShares Russel 2000 Index ETF (NYSE:IWM) which tracks the small cap stocks is higher by nearly 20 percent from the February 5th, 2010 pivot low. The move higher in this index is viewed as a positive according to many traders and investors as they are willing to take on risk.
Since April began many commodity and commodity related stocks are soaring higher after lagging last quarter. Leading energy names such as Exxon Mobil Corp. (NYSE:XOM), Chevron Corp. (NYSE:CVX), and Noble Energy Inc. (NYSE:NBL) are trading sharply higher today.
Commodity stocks such as Cliffs Natural Resources Inc (NYSE:CLF), U.S. Steel Corp. (NYSE:X), and Newmont Mining Corp. (NYSE:NEM) are all at new highs for 2010. These moves to the upside have come even as the U.S. Dollar is flat for the day. Is this a sign of inflation coming back into the market place or just global demand? My guess is that it is inflation at this time.
Regardless if this move in commodity related names is being driven by inflation, China demand, or anything else, inflationary stocks are undeniably trading sharply higher today. However, many of these leading commodity related names are coming into daily chart resistance levels soon, therefore, don't overstay your welcome.
Nicholas Santiago
Chief Market Strategist
InTheMoneyStocks.com
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