In a recent survey of COMMODEX® System subscribers, we discovered an astonishing fact. Approximately 20% never trade commodity futures! We were wondering why someone would subscribe to a daily commodity futures trading system… year after year… if they weren’t going to trade commodities.
One day, a Michigan man called to renew his subscription. In the course of conversation, he revealed that he was one of the 20% who never traded futures. Of course, we wanted to know why he was spending his hard earned money if he wasn’t going to use the system.“Oh, but I am going to use the system!” he exclaimed. He went on to explain that COMMODEX was his secret to successful “sector rotation” and stock market timing. In addition, he used COMMODEX to help judge the economy and probable direction of interest rates and inflation. All of these factors dynamically affect stock values.
As an example, he noted that COMMODEX signaled the long side of the energy complex in 2000. After watching energy prices soar, the Michigan man noticed that energy stocks did not reflect the potential increase in profits. So, the Michigan man immediately began weighting his portfolio toward energy stocks. Despite the huge sell-off in other sectors during 2000 and 2001, he made substantial returns as his sector rotation paid off big.
He went on to explain that he focused upon several sectors using COMMODEX as his guide. He correlated agricultural stocks like foods and food processing to prices of grains and meats. He tracked retail clothing by watching cotton demand as reflected by price trends. He tracked banking stocks in conjunction with interest rates. He also used COMMODEX interest rate futures to gauge the value of real estate investment trusts (REITs).
The Michigan man laughed as he boasted that he was “one step ahead” of government statistics. As an example, he pointed out that the Department of Labor and Statistics released an August report showing a substantial decline in energy prices for June. However, he knew this decline would be completely offset by August’s action. Thus. he positioned himself for the September report. He was right on the money.
He noted that the COMMODEX® System was short interest rate futures going into August and decided not to refinance his mortgage until COMMODEX showed a turn-around in the interest rate futures. He held off through September, 2001 and was glad he did. Mortgage rates plunged after the disastrous terrorist attacks on the World Trade Center and Pentagon.
The Michigan man had already abandoned stocks in favor of bond funds when COMMODEX remained consistently short stock index futures. COMMODEX tracks the E-mini, S & P 500, DOW Jones Industrials, Nasdaq 100, Russell 2000, NYSE Index and Value Line. It also follows the Nikkei 225.
The Michigan man described how virtually all markets are interrelated. Interest rates drive the Money Supply. Money Supply impacts stock values. FED policy is based upon inflation and recession indicators. Raw commodity prices determine the Producer Price Index (PPI) and the Consumer Price Index (CPI)… key indicators watched by the FED. Declines in copper, aluminum, and silver reflect industrial health and general economic direction. Energy prices determine transportation, heating, cooling, and production costs as well as the price of fertilizer, petrochemicals, and plastics.
The Michigan man went on to explain that stocks and even bonds are anticipatory. It does not matter what the news is today. You need to know what the news will be tomorrow. That’s why he considers COMMODEX an essential tool for any serious investor.
Do you want to test his theory? Sign up for a 3-month email trial. Start tracking stocks in conjunction with commodity prices and see for yourself. If you like what you see, we’ll let you extend your subscription to a full year by applying your 3-month rate to the discounted yearly rate. See if you can improve your performance by using commodity price trends to forecast the direction of stocks and financial markets in general.