Commodities Due for A Rise

Commodities have crashed as the fast money moved out. But I suspect a resurgence. Nowhere else is there growth >20%.

I am a strong believer in a 12 week cycle wherein investment companies tend to make their investment decisions around week 7 or 8 (basically a month before end of the quarter).

It's consistent with the buy-on-the-rumor, sell-on-the-fact behavior, except this follows the practical behavior of funds. Practically speaking, 2 months into the quarter, most companies have a feel for where they will be at quarter end. And hedge funds trade less in analysis and more in insider information. By Week 8, their spies are giving them early indication of performance expectations.

We are halfway through Q3 and approaching that point. Already I am noticing the early trail of a commodity promotion.

If I'm right, you'll start to see analysts upgrading agriculture, coal, oil and gas. Here's an example

http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=AP&date=20080818&id=9038612

Notice that a key reason for the upgrade: oversold sector.

I am especially watching NG because this is the first year that the UK is a major importer. I expect a lot of competition for They and other countries are much more reliant on NG for heating and cooking. One solid hurricane in the Gulf and a cold snap in the Northern hemisphere, and gas prices will surge

Bear in mind that expectations are for a heavier than usual hurricane season. I don't like counting on a hurricane to move gas stocks up, but that is the reality.

Also, with the Olympics over, I expect a surge in Chinese commodity demand. That should startle folks and drive interest back into these sectors.