OK, you caught me lapsing into pop culture again. If you were alive back then, the title is a tribute to Kool Aid competitor Funny Face - a drink mix from the 60s and 70s with rhyming names and a healthy image that actually caused cancer. Goofy Grape and Lefty Lemon were made with cyclamates. They changed the names of Chinese Cherry and Injun Orange - as they should - in a hurry.
Let's bring this back to the purpose of this post as a follow up to the earlier tease. Today's Barron's Online column was inspired as early as last week when fertilizer stocks were acting funky. It did not make sense to me that during a global food crisis fertilizer and seed stocks were stumbling. Then Friday hit and several were clocked. Remember that the Dow was up 76 or so points that day.
In researching the column, it became clear that commodities were not acting very bubbly at all. I won't bore you by rehashing the list that scored bearish reversals, went limit down or simply stopped rallying before the weekend. But the list is fairly broad.
No, gold and silver where moving higher already. So were coffee and cocoa. Meats were still OK but grains had stalled and even rubber was not bouncing back (sorry, had to take it).
Copper, as a metal, was also doing well but copper stocks clearly had other ideas. The charts in today's column could not be any clearer and now that the deadline has past I had time to look deeper into base metals. Titanium Metals (TIE) is far from a bull trend. Same for a few uranium stocks with big dog Cameco (CCJ) sporting a serious RSI divergence.
For those of you who do not get the paid Barron's Online (I was moved from free to behind the pay site a week ago), Southern Copper (SCCO) has confirmed a head-and-shoulders top.
What's going on? The chain of events from Libya pushed up oil which pushed down the economic outlook meaning less demand for commodities. I am not so sure how all of the sudden food prices should take a hickey (corn and wheat were limit down today) because demand for something to eat does not depend on oil - or does it? Energy is needed to grow and harvest the stuff. But wait - higher oil should mean higher prices for your box of Cap'n Crunch, not lower.
Bubble-heads, maybe your were right. Corn was the last market to correct and all of them did look a little frothy. But you won't find and corn and wheat puts in my portfolio. Funny how one of three DJ industry groups to rise today was food products. I guess they can still pass along the price increase on a can of Spam.