PowerShares DB US Dollar Index Down (NYSE: UDN) is a rules-based index composed solely of short USDX futures contracts. The USDX futures contract is designed to replicate the performance of being short the U.S. dollar against the following currencies: euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. UDN closed at $26.69. UDN over all option implied volatility of 18 is below its 26-week average of 22, according to Track Data, suggesting decreasing price movement.

PowerShares Commodity Index volatility (NYSE: DBC) is a rules-based index composed of futures contract on six of the most heavily-traded and important physical commodities in the world: crude oil, heating oil, gold, aluminum, corn and wheat. DBC closed at $23.97. DBC over all option implied volatility is of 38 is below its 26-week average of 42, according to Track Data, suggesting decreasing price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Gold initially touched $1000/oz this morning as a confluence of factors caused investors to flee to safety. While initially hitting the $1000 mark and then settling back a bit, gold prices appear to be running unabated while investors' willingness to hold stocks, even overnight, waned.

Gold futures hit this high amidst the dollar sinking to 12-year lows against the yen, oil prices hitting $110, and news of Carlyle Capital on the verge of collapse.

With the Federal Reserve continuing to add liquidity to the market and the perception that Fed Chief Bernanke is willing to print money at all costs in order to bring back economic growth and provide a backstop to the entire financial system, investors are fearful of runaway inflation and continue to pour money into hard assets as a hedge.

While the move in gold continues to capture all the headlines, the real winners in this flight to hard assets are the soft commodities and oil and its derivatives. Individual investors can use ETFs linked to the price of gold, like the StreetTracks Gold ETF (NYSE: GLD), or gold and precious metals mutual funds.

Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund

Investors frequently like to chase "hot stocks." While not based on fundamentals, momentum investing does sometimes work as stocks that are "working today" frequently "work tomorrow" as well.

So, as 2008 is 1/6th done, it's time to look back at the highfliers from 2007 and see where they're trading today. As usual, the analysts at Bespoke Investment Group have some good data and charts for us.

In a post, titled "How the Best Have Done," Bespoke analyzes the best performing U.S. stocks of 2007 and tracks them into 2008. The results:

• First Solar Inc. (NASDAQ: FSLR), 2007's best performer, is down 21.86% year to date. See BloggingStock's Aaron Katsman's article on why he shorted this stock into the New Year.
  
• The second best, Onyx Pharma Inc. (NASDAQ: ONXX), is down 49.51%.

While some solar stocks are down big in 2008 after a huge run-up in 2007, the big winners are heavily concentrated in materials, agriculture, and energy. BPZ Resources Inc. (AMEX: BZP) is the stock on the list that has done the best in 2008 -- rising another 44% so far this year.

Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.

I happen to love Jackie Chan. My kids do as well. Just as we watch family movies together as a family, we also talk about investing. While I have not yet started discussing the benefits of writing covered calls with my 4 month old, I do talk about investing basics with my older kids. They clearly understand that "stocks go up and they go down." Why is it so hard for us to handle bear markets -- we know they come.

Anyway, I started to think how martial-arts master and family favorite Jackie Chan would deal with our current topsy-turvy market.

One of our favorites is Drunken Master, a film whose plot centers on a young and mischievous Wong Fei Hung, played by Jackie Chan. He gets into trouble in a variety of ways, including showing up an overbearing assistant kung fu teacher, unknowingly making advances on his own cousin, fighting with his aunt, and beating up the son of an influential man in town.

Chan tends to:

In case you were too busy watching Obama win in Iowa or voyeuring in on Britney's travails, we're in the midst of what some pundits call a "supercycle" of a commodities bull market.

For more on this supercycle, I recommend reading uber-trader Jim Rogers' work on commodities. Jim was, along with George Soros, the founder of the Quantum Fund. He has been pretty accurate with his predictions regarding hard assets and the ensuing demand/supply issues that are being exacerbated by demand from India and China. There's an insightful interview with him here that's really good reading.

From the interview: "Nobody has discovered a gigantic oil field for thirty years. That's not a theory; that's a basic fact. In the meantime, demand for oil has been going up for many years. That's not a theory, either; that's a simple fact. Likewise, there has been one lead mine open in the world for the past twenty years, and the last lead smelter was built in the U.S. in 1979. I could continue: the number of acres devoted to wheat farming has been declining for 20 years.

Back in my hedge fund days, we did a TON of work on U.S. egg prices. This was back in 2003-2004 in the throes of the Atkins craze. Pasta companies, companies with a lot of exposure to grain, and anything anti-Atkins was taking a hit. Even the great, Weight Watchers (NYSE: WTW), with just a great business model and brand, was getting whacked. It looked like Atkins, and its seemingly lethal blend of high fat and high protein, was going to stay.

We decided to play this trend by purchasing Cal-Maine Foods (NYSE: CALM), a huge distributor of eggs to the likes of Wal-Mart (NYSE: WMT) and other huge grocery outfits. Based in Jackson, Mississippi, and run by an effervescent CEO, Fred Adams, Cal-Maine rode record egg prices those couple of years. In 2003 alone, the stock was up almost 1000%.

What Mr. Adams told us then was that although Atkins was helping to increase demand for eggs, the egg itself was making a comeback. Once shunned as solely a cholesterol-delivery device, the egg is back in fashion and recognized for its overall health benefits.

So far this year, the Commodity Research Bureau Index is up 16.62%. Given all the headlines about high prices at the pump and near-$100 a barrel crude oil, some might naturally assume the best performer among the six sub-groups in the benchmark index is energy. That is incorrect.

In fact, the grain sector is the true king of commodities for 2007. This CRB sub-group, which includes wheat, corn, and soybean futures, has outpaced the broader measure of commodity futures prices by 34.61%, a relative gain around twice that of the energy complex.

Here is a breakdown of the performance (in percent) of the various sub-groups relative to the CRB (through yesterday):

Grains	34.61%
Energy	17.19%
Precious Metals	6.33%
Industrials	0.31%
Livestock	-15.24%
Softs	-18.52%

Michael Panzner is a 25-year veteran of the global stock, bond, and currency markets and the author of Financial Armageddon: Protecting Your Future from Four Impending Catastrophes and The New Laws of the Stock Market Jungle.

Mr. Bernanke's first move as Fed Chairman will be an historic one. Not only did he drop the Fed Funds rate by 50 bps, but he did so in the face of gold breaking out in a major way. As the U.S. stock market was booming on the Fed's decision, gold also rallied, hitting $723 in yesterday's trading, up from $650 in mid August. The metal has also broken through its major resistance level at $690.

While gold has been going through a major bull market this entire decade, one would expect inflation to be going higher and bond prices crashing, similar to the 1970s. But that has not been the case. While there was some inflation as the economic expansion aged, it was by no means hyper-inflationary.

Are gold and equity prices now correlated? It sound crazy, but that is the way they are trading now.

One warning. Gold is an eerily correct commodity; do not dismiss its ascent lightly. While equities will continue to rally for a while, keep an eye on gold. It is telling us there is plenty of cash around the world. And history tells us when there is plenty of cash around the world, people will do some unwise things with it.

A big crop report released this morning is once again bringing a lot of attention to corn and the global demand for ethanol. It all makes sense. With democracy and capitalism flourishing around the world, the demand for energy will boom and ethanol is a viable way to provide lower emissions fuel.

Even President Bush in his State of the Union address called for the United States to become less dependent on foreign oil. His solution: corn-based Ethanol?

However, as a reminder, investing is about "skating where the puck is going to be" as hockey great Wayne Gretsky used to say. Or as legendary John Templeton would say, look for points of "maximum pessimism."

There is little that is pessimistic about the outlook for corn today. Farmers throughout the U.S. are going to be planting it this season. Why? Because corn prices are approaching 10-year highs and the wide-spread belief is there is money to be made.

Conversely, the argument to invest in cotton might be more compelling. In a Barron's interview (subscription required) in January, Art Samberg of Pequot Capital said while cotton consumption in the US has been in decline, China's consumption, which has been growing nicely, is picking up more steam. Cotton consumption in the U.S. has fallen from 12 million to 5 million bales a year due to the growth of polyester and other materials. However, Textile spending is on a big upswing in China -- up 27% in '06, after jumping 36% in '05. Chinese consumption, which had been growing 4% to 6% per year, is now growing 15% per year.

Samberg said go long the December '07 cotton contract. Strong corn and soybean prices means U.S. farmers are going to remove acreage from cotton to earn better profits in corn and soybeans.

Supposedly, there have only been four times since 1913 when cotton was this cheap relative to grains like corn and wheat, with the last time being 1974. From 1974 to 1976, cotton tripled in price.

Last week, commodity and company earnings sent some seriously mixed signals.

Gold, historically a pretty good indicator of excess money flowing through the economy, took off, jumping over $20 an ounce. Gold has been in a tight trading range the past year or so, a sign that Fed policy was correct by halting rate increases. However, it is tough to read what last week's rally was all about.

Housing data, conversely, an important component of the overall economy, was simply awful. Reports from the home improvement retailers -- Home Depot (NYSE: HD) and Lowe's (NYSE: LOW) -- were exceptionally weak, with same store sales down 5% to 11% depending upon the month you wanted to look at.

However, macro data such as employment and wage growth remain good, but employment is a lagging, not a leading, indicator.

With that said, in addition to gold, a lot of other commodities took off during the week.

In the tech world, semiconductors, one of the most hypersensitive economic indicators, fundamentals have been deteriorating since November 2006 and there is little evidence this market has bottomed.

Signals are too confusing to be comfortable with the market. Most indexes have had great rallies since the fall. It is time to take some money off of the table. There is little evidence that 1st quarter earnings will be that good.

In addition, another consideration is a seasonal factor. The Fed tends to add more money to the economy in the second half of the year and slows down money supply growth in the first half of the year. This is a reason why the market's performance tends to be weakest during the April through September time period and stronger from October through March.

These mixed signals tell me to start pruning your portfolio. We are in for a bumpy ride and it will be nice to have some cash on the sideline to do some buying when market volatility and investors' fear increases.

There is a report out that Howard Schultz, Chairman of Starbucks Corp. (NASDAQ:SBUX) wrote an internal e-mail to the company's executives basically warning them about complacency. The text of his e-mail sent shivers through the ranks at Starbucks, but investors should be applauding.

I wrote an earlier article about Starbucks becoming bigger than McDonald's Corp. (NYSE:MCD) in the years to come. Ray Kroc, the legendary founder of McDonald's, had a similar reputation as Howard Schultz. Both men could easily have gone to the golf course and been clipping coupons, but their passion and energy is boundless. Kroc was known to show up at any McDonald's across the country unannounced and start interviewing dining customers. He wanted to know what they thought, what they liked and more importantly, what they disliked about McDonald's.

Howard Schultz is in essence doing the same thing. His memo warned company management about the competition creeping up and catching Starbucks. He also warned about the commoditization of the brand and the service. There is no room for this at Starbucks.

Schultz mentioned that even though the company has grown from 1,000 store units to now 13,000, this is no time to be complacent or take the Starbucks customer for granted. This type of leadership is what will propel Starbucks to their goal of 40,000 store units worldwide. It's also the kind of leadership that will allow Starbucks to achieve that goal with excellence.

Georges Yared is the author of recently released books "Baby Boomer Investing...Where do we go from here?" and "Stop Losing Money Today" For more info go to http://www.georgesyared.com

Yesterday, gold was up over $23 in trading, hitting a seven month high. A CPI report of 2.7% helped send gold flying.

The concern is that with energy and home prices having declined since the spring of 2006, that the CPI would be close to zero or even negative by now. Yesterday's data show there is still plenty of liquidity in the economy to keep it going and rate decreases are going to be pushed out for a while. The possibility of an increase or two exists if growth ticks up a bit too much.

We blogged in October about the merits of investing in Newmont Mining (NYSE: NEM). Our rationale was the huge correction in its stock price and the discount it sold for relative to the value of its gold reserves. The value of its gold reserves are estimated to be 20% to 50% higher than its stock price.

Newmont reports earnings today, not that it really matters since it trades relative to the price of gold price. But it would be worth a listen.

There are a number of factors which favor the outlook for gold. Most countries have floating currencies or have their currencies backed by floating currencies. Central banking mistakes will lead to higher levels of inflation -- and we know that central banks will make mistakes.

Newmont is a good hedge in a world of floating currencies and awash with cash.

TheFly blogged to avoid commodity stocks back in the spring. Our timing was quite good. However, a lot of these stocks have corrected significantly and are beginning to represent good value.

Pioneer Natural Resources (NYSE: PXD) was mentioned by Archie MacAllaster in this weekend's Barron's Roundtable (subscription required). Pioneer is the third largest independent oil and gas producer in the U.S. and its stock has come down from a high of $54 to $38 -- a big correction.

According to MacAllaster, Pioneer had forward sold a lot of its output considerably below today's prices. Therefore, as these contracts come off, Pioneer can sell their gas at much high prices and earn greater profits, despite the recent natural gas price pullback. Pioneer's reserves are all domestic, so they will benefit from better prices due to the inevitable decline in U.S. reserves.

Also, Pioneer has shrunk it shares outstanding from 145 million to 125 million and is supposedly on its way to 100 million shares outstanding.

Art Samberg, of Pequot Capital fame, provided a compelling argument to go long cotton in this weekend's Barron's investor round table (subscription required).

For you commodity traders out there, Samberg said go to long on the December '07 cotton contract. His reasoning is while cotton consumption in the U.S. has been in decline, China consumption, which has been growing nicely, is picking up more steam.

Cotton consumption in the U.S. has fallen from 12 million to 5 million bales a year due to the growth of polyester and other materials. Conversely, Textile spending is on a big upswing in China - up 27% in '06, after jumping 36% in '05. Chinese consumption which had been growing 4% to 6% per year is now growing 15% per year.

According to Samberg, China's cotton consumption has increased from 25% to 39%-40% of world cotton consumption.

Because of strong prices of corn and soybeans -- corn being used for ethanol production, US farmers are going to remove acreage from cotton to earn better profits in higher priced corn and soybeans. Supposedly, there have only been four times since 1913 when cotton was this cheap relative to grains such as corn and wheat. The last time was 1974. From 1974 to 1976, cotton tripled in price.

InvestmentTools.com has some great charts on copper prices. It is not a pretty picture. Below are two charts, but you can find plenty more on their webpage.

This first chart goes back to 1990. For the most part, if this chart went back to the beginning of time, the price of Copper really never stayed above $1.60. However, since 2004, copper prices have broken through the $4.00 level.