Energy, Basic Materials Leading Market; Dead Cat Bounce?

The sectors that are leading the market on Friday are Energy and Basic Materials - the two sectors that have been smashed down this week. When this trade is over, it will be painful, but it may just be getting started. Look at the trend in energy and basic materials since the Summer of 2010.

Are you really willing to call a top to this bull market? Does that seem advisable? What kind of bull market only lasts 6 months anyways? Looking back, this week will likely have been a very good buying opportunity in commodities, energy and basic materials stocks.

Jim Rogers, who founded the Quantum Fund with George Soros, has a pretty simple outlook on commodity prices. He has said repeatedly that his belief is we are maybe 60% of the way through a multi-year boom in commodities.

This is how Rogers looks at it - if the global economy gets better, he will make money as commodity prices continue to rise. If the global economy weakens, he will make money because Central Banks will print money. Look back at this line of thinking since the March 2009 lows. It might not be complicated, but it sure has been spot on.