Even a commodities bull like me is very impressed by the resiliency of commodities, especially the king of them all, crude oil. Yesterday, after the dollar fell sharply against the euro, the commodities skeptics must have licked their chops to short all commodities, especially the most hated of them all, crude oil. They got another big smackdown as crude is up over $5 from the intraday lows yesterday. In less than 24 hours. Insane strength. The financial media all want commodities lower, they keep saying its a bubble, that its all speculators, and use the weak dollar as a crutch for commodities strength, when its the supply demand fundamentals driving the prices. People, they are not making more cheap crude oil. But they sure are making a lot more shares available, in the form of dilutive financing for banks. What dummy is going to buy bank stocks which keeps getting printed and sell crude oil, an essential commodity, which keeps dwindling? Bottom line, the best investment in the world right now is still crude oil.
Have you ever heard of USO? Don't even need to trade futures to take advantage of the upmove in crude. I would never short crude at these prices with these fundamentals. Fade me if you want, I dare you.
If bear stearns had been allowed to fail, commodities would have been sold to make margin calls caused by frightened banks. the only demand in commodities at these levels is from over leveraged hedge funds looking for better returns. Bailing bear stearns caused the risk appetite and the greed factor on wall street to step up a few notches.