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Commodities and population growth

"Population growth will likely spur increased demand commodities," says ETF expert Doug Fabian. In Making Money Alert he looks at PowerShares DB Commodity (NYSE: DBC).

"World population growth trends suggest massive numbers of new global citizens on the way -- citizens that are going to require essentials such as food, clothing and shelter.

"For investors who want to ride this population wave, I offer you the PowerShares DB Commodity Index, an exchange-traded fund that seeks to track the performance of the Deutsche Bank Liquid Commodity index.

Continue reading Commodities and population growth

Options Update: Dollar, commodity indices down, volatility low

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

'Growth' expert focuses on agriculture and commodities

"We think we've seen the worst and will likely see some improvement in the economy going forward," says growth stock specialist Harry Domash, editor of Winning Investing.

Among his buy recommendations, the advisor looks at two agriculture plays: Agrium (NYSE: AGU), a producer of fertilizers, and the diversified exchange-traded fund, PowerShares DB Commodity (ASE: DBC).

"Headquartered in Calgary, Alberta, Agrium is a major North American producer and marketer of fertilizers. Agrium operates plants in Canada, the U.S., and in Argentina. Its major product is nitrogen fertilizer but it also makes potash and phosphate products.

"Agrium sells to wholesalers and through more than 800 company-owned retail stores in the U.S., Canada, and South America. Its stores also sell seed and other farm supplies.

"Agrium just recently completed its acquisition of UAP Holding, which had operated 370 distribution and storage facilities North America. Everything related to agriculture is booming, and Agrium, not counting its UAP acquisition, is growing sales around 30% annually.

Continue reading 'Growth' expert focuses on agriculture and commodities

Best bets from big block traders

"Some 20,000 or more million-dollar block trades are made each day," says Peter Way in Block Traders ETF Monitor, which assesses the activity of these trades. Here's some current top "big block" bets.

"Since it's these big dollar pressures that move markets, we want to know what they are likely to do next. Our analysis determines what the pros' expectations are for the coming prices of stocks, from the way
they protect investments they have or are making.

"Based on our proprietary analysis of this big block activity, we determine the prospects for each ETF sector to determine where prices will be in the next 3 months. We seek the best balance of upside risk and downside exposures.

"We don't want to buy anything that doesn't offer a net payoff of better than 5% over three months, or an annual rate of +22%. International and global ETFs. and emerging markets still hold appeal, with MSCI Brazil iShares (NYSE: EWZ), the best bet.

"Where's the beef? Must be in MOO, the Market Vectors International Agricultural ETF (ASE: MOO). Prospects for it are the best combined odds & payoffs in the group.

"The ETFs that have been providing the most reliable and productive gains of late have been in commodities. Without any leverage, there are currently a number that appear attractive, given the volume market-makers' appraisals. The PowerShares DB Agricultural Index ETF (ASE: DBA) outranks just about all of the 2,500 issues we cover. PowerShares DB Commodities Index ETF (ASE: DBC) also offers strong buy credentials."

Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.

Resource favorites from the Aden sisters

"A once in a lifetime super bull market in commodities is underway," note resource experts Mary Anne and Pamela Aden. Here, the advisors look at some favorite commodity stocks in their The Aden Forecast.

"Commodities are in a mega super rise is because of the dramatic changes in the global economy. The rise that started in commodities in 2001 has continued to expand over the years and we believe the upmove is just warming up and it has years to run.

"There are several reasons for this. The weakening dollar and low interest rates have certainly helped push up the whole sector while investment demand grew as an inflation hedge. But the key reason why the commodities are in a mega super rise is because of the dramatic changes in the global economy.

Continue reading Resource favorites from the Aden sisters

Nate Pile's portfolio hedges

"The current environment is one of the most challenging I have seen in the twenty years I have been following the market," says Nate Pile, who has added some ETF hedges to his Nate's Notes portfolio.

"I am also introducing two ETFs this month that can be thought of as 'indirect hedges.' Rather than being a 'short' fund, we are choosing funds that track commodity prices, which in turn, will provide a hedge against any market declines that may result from investor concern about rising inflation.

"In addition, these two new ETFs is may appreciate in value even if the market does rally from here. I actually think there is a very good chance we will make money on these 'commodity ETFs' regardless of what the stock market does next. Anyhow, without further ado, I present to you the following two ETFs:

"The PowerShares Deutsche Bank Commodity Index Tracking Fund (ASE: DBC) is designed to reflect the performance of the Deutsche Bank Liquid Commodity Index, an index that tracks six important commodities (current index weightings approximated in parentheses): light crude (33%), heating oil (19%), wheat (14%), corn (12%), aluminum (12%), and gold (10%).

Continue reading Nate Pile's portfolio hedges

Best Stocks for 2008: Bet on commodity bull with DB Commodity ETF (DBC)

For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.

"The commodity bull market has a long way to run, powered by explosive growth in the BRIC (Brazil, Russia, India, China) countries," says Sean Broderick, resource stocks editor for Money & Markets.

"My top conservative pick to play the broad commodities bull market is the broad-based exchange-traded PowerShares DB Commodity Index Tracking Fund (NYSE: DBC).

"As an ETF, it is like a mutual fund. However, ETFs usually have lower costs than a mutual fund and you can buy and sell an ETF throughout the day, whereas a mutual fund trades once a day.

The PowerShares DB Commodity Index Tracking Fund has a long name but a simple idea -- the fund invests in commodities: crude oil, heating oil, aluminum, gold, corn and wheat. DBC invests in that basket of commodities by purchasing futures contracts. It rebalances annually to 35% crude, 20% heating oil, and 10% to 12.5% of the other four."

Agriculture sector: time to chew it over?

Many of those who take an active interest in commodity markets have noted the relative attractiveness of the agriculture sector.

In particular, they cite increased demand for grains and other foodstuffs stemming from rising per capita incomes in emerging economic superpowers such as China and India.

As it happens, the technical picture suggests now might be a good time to think about investing in the sector, at least in the short-term.

In recent days, the ratios of the PowerShares DB Agriculture Fund (AMEX: DBA) to the PowerShares DB Energy Fund (AMEX: DBE) and the PowerShares DB Commodity Index Tracking Fund (AMEX: DBC) have broken out, hitting new five-month highs.

Relative strength like this often precedes a decent move higher in the notional price of the asset in question.

Some might say that's something worth chewing over.

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.

Symbol Lookup
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DJIA+4.3910,231.33
NASDAQ-3.742,150.32
S&P 500-1.291,091.79

Last updated: November 10, 2009: 10:55 AM

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