At this time it appears that the commodity stocks are taking their lead from the Shanghai Index(SHA:000001). The Shanghai Index has rallied Monday and Tuesday. Last night the Shanghai Index traded higher by 2.15%. The Chinese government mentioned over the past few days that they would likely loosen the credit measures when it comes to the Chinese housing markets. Prior to last week the Chinese had been trying to tighten credit when it came to the housing market.
Today we are seeing many commodity stocks trading higher such as Freeport McMoRan Copper & Gold Inc, United States Steel Corp (NYSE:X), and Cliffs Natural Resources Inc (NYSE:CLF). These are just some of the leading commodity stocks that will benefit if China goes into another housing boom. At this time it is the commodity stocks that are keeping the major stock averages from falling or declining further today. As long as the commodity names hold up today do not expect much more of a decline. However, if these commodity stocks begin to decline then this market could get ugly and decline much more.
Chief Market Strategist