Fortunes have been lost in the commodities markets in the past two weeks. And much of the selling has been in precious metals with silver leading the way as it plunged more than 30% in just one week. Will futures-based investments rise from the ashes of defeat?

Dorsey Wright & Associates point out that the collapse moved a basket of futures, illustrated by the fall of the PowerShares DB Commodity Index ETF (NYSE: DBC), to its most oversold reading since June 2010. And it moved the market from a 49% “overbought” reading to a 68% oversold reading in just weeks. 

Along with the futures, many commodities-based investments have fallen, such as Transocean Ltd. (NYSE: RIG) that the Trade of the Day recommended selling short on April 14 at $77, just before it broke the neckline of a head-and-shoulders reversal and fell to under $66.

But not all commodities-based stocks are alike, and it is during times of stress that the truly superb companies maintain their trends, signaling that they are the leaders of their sectors and the desirable cornerstones of investment portfolios. Here are some of the names that the Trade of the Day has recommended that have held despite an avalanche of selling in their group:

• In the oil sector, Baker Hughes (NYSE: BHI) recommended on May 5 
• In the agricultural group, AGCO Corp. (NYSE: AGCO) on Feb. 11
• Deere & Co. (NYSE: DE) on Nov. 30
• Caterpillar (NYSE: CAT) on March 25 selection

Volatility is a characteristic of commodities-based investments, and traders accept the risk because emotionally based sell-offs provide great value. But value accrues to the stock investor, as well, since the burst of a bubble not only eliminates the weak companies but illuminates the strong. 

For another cornerstone commodity stock, see the Trade of the Day.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.

If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.

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