Monday, March 07, 2005

commodity popularity

Commodities are being talked about. After all...it's cool to trade commodities! All the hype is in commodities now because of expanding economies worldwide. Nations like China, the U.S., and Australia are clamoring for more commodities. See what this has done for prices. Mostly raw material prices have gone up. Many economists on the talking head shows are saying that this demand is to go for another two years. Then what? Think about this....could commodities become the next internet stock bubble? You folks look at the charts just like I do: short-term, mid-term, short-term. Ask yourself if you see a bubble expanding. Then ask yourself if you see the bubble popping. The "overboughts" (i.e. the traders who say this bull has to stop sometime soon) will most likely be overruled by the popularity of trading commodities. Brokers and analysts will ride the bull for entire "eight seconds"... and then what? The cowboy has to get off somehow and when he does....look out. Think of this...because you folks know as well as I, "somebodys" are going to get burned. The price starts going down and somebody says "it's only a correction".... and it looks like it is, but all of a sudden the bottom drops out. The big question to ask is when this could happen.

No comments: