Providing an update on the market keys discussed here on April 2, Roque gives his insight on these six bellwethers in the accompanying video:

• Copper and Freeport McMoRan Copper & Gold: Roque is focused on commodities because of their sensitivity to economic activity and inflation; "if the market's going to have some leadership we believe it will come from that sector," he says. Roque prefers copper to oil because it's "not as emotional" and sentiment driven. After the big rally from the lows, copper is likely to move sideways at best and "needs to base if it's going to rally again," he says. The same is true of Freeport McMoRan and Roque recommends reducing positions for those long the mining giant.
• Mosaic and Monsanto: The ag stocks are the "weakest link" among Roque's bellwethers which, he notes, all bottomed before the S&P and have outperformed the index since the March lows. If Mosaic and Monsanto continue to deteriorate, "assume the others will weaken as well," which will have negative implications for the broader market, he says.
• Goldman Sachs and Morgan Stanley: Financials are still 13% of the S&P 500 and Goldman and Morgan are likely leaders if Wall Street is going to return to "some semblance of its former glory," Roque says. Goldman, in particularly, is the bellwether of the bellwethers, the technician says, suggesting Goldman at $150 is the market's "Maginot line"; which side of $150 Goldman is on will signal the S&P 500's general strength or weakness.

As detailed here, Roque says the market deserves the "benefit of the doubt" but he sees limited upside for the foreseeable future...

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Crude oil prices fell again today. Perhaps, it’s another sign the commodities rally is losing momentum.

Even if that’s the case, Jeffrey Saut chief investment strategist at Raymond James isn’t expecting a repeat of last year’s crash. A commodities bull since 2001, Saut is cautious in the near-term, believing the recent rally went “too far, too fast.”

But he’s still very-much a long-term bull on commodities and related stocks: “The seeds of inflation have clearly been planted.”

So what’s the trade?

Saut is focusing on resource- producing nations and likes the ETFs of Brazil (EWW), Canada (EWZ) and Mexico (ticker: EWW), to name a few. “If we are in a new worldwide bull market. I think they’ll be the leaders,” he states.

In terms of specific companies, he’s found opportunities in the convertible preferred shares of agricultural giant Archer Daniels Midland, and the mega-mining firm Freeport McMoRan Copper & Gold (FCX)
 
Off camera, he also mentioned playing the emerging market and frontier markets theme with names like NII Holdings (NIHD), Millicom International Cellular (MICC) and Harsco (HSC).

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From The Business Insider, June 23, 2009: 

At some point in the last month, everyone came to the conclusion that Ben Bernanke had whipped deflation ("it"), and that the only question left was how to avoid inflation once the economy rebounded.

The talk was all about rising yields, soaring commodities, a weakening dollar, and how to drain liquidity when the time came. Would the Fed be able to stick the landing? Could we tolerate a little bit of inflation if it meant not cutting the recovery short?

What a difference a week makes. Here comes the D-word again.

With the rally sputtering, and the economy showing few meaningful signs of recovery, suddenly the market is back to its old fears.

Oil has moved sharply lower, and gold, which just a couple of weeks ago was knocking on $1000 now looks set to break below $900, to the eternal disappointment of its fans. Sure, gas prices have bounced back, but still, the CPI showed its biggest drop in 50 years last week...

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The House of Representatives is set to vote on an energy and climate bill by Friday. The bill's "cap and trade" component is designed to curb greenhouse gas emissions, a major part of the Obama Administration's push to green energy.

The administration's aim is to "divert away from dirty hydrocarbons; we simply cannot do that," says energy expert Stephen Schork, editor of The Schork Report. "Wind and solar sound very good, and in a perfect would be the answer but we don't live in a perfect world."

Specifically, Schork is concerned about the ability of alternative technologies to provide a steady stream of electricity, particularly at times of peak demand, like summer when air conditioners are running full throttle. "You need to keep an incremental amount of natural gas on hand for when the wind doesn't blow and the sun doesn't shine," he says.

Natural gas, in particular, is a resource the U.S. has in ample supply...

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Crude futures fell 3.8% to $66.93 a barrel Monday, the lowest settlement since June 3, according to Bloomberg. Meanwhile, gasoline snapped a 54-day winning streak, falling to the lowest levels since May 26.

Monday's slide could be just the start of a major correction for oil and gas prices, says Stephen Schork, editor of The Schork Report.

"We're in a topping phase" for oil, which means a "material correction" for prices at the pump, Schork says. In fact, the former NY Mercantile Exchange energy trader believes gasoline prices have likely peaked for the summer, which is good news for the crimped U.S. consumer.

Still, Schork is only "cautiously bearish" on energy prices, noting financial markets - especially commodities - often trade more on psychology and momentum vs. fundamentals...

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Everyone is right to fret about inflation but the "deflation scare" isn't over yet, says Charles Nenner, founder of the Charles Nenner Research Center.

Renowned for his cycle work, Nenner sees deflation remaining dominant until year-end and inflation not picking up for another 18 months. But that will be the start of a 30-year (yes, year) upcycle for inflation says Nenner, who spent 12 years as a market-timing consultant for Goldman Sachs.

The investing implications of this scenario are clear:

• Nenner is bullish on gold for the long-term and even more bullish on gold mining stocks, which he says are currently cheap relative to bullion.
• After a secular decline, Treasury yields are set to rise, with Nenner predicting the 10-year yield will reach 5.50% by Spring 2013, a 45% rise from Friday's close of 3.78%.

What's less clear is the timing of this trade...

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Just as the market is rebounding from a dismal 2008, so too is the hedge fund industry, which enjoyed one of its best months ever in May.

The Credit Suisse/Tremont Hedge Fund Index was up 4.06% in May, the best month since February 2000. Hedge Fund Research says hedge funds are up an average 9.4% this year through May, the NYT reported.

Strong gains have been registered this year by fund managers who suffered badly in 2008, including Citadels' Ken Griffin, as well as those who profits most from the credit crisis, including John Paulson, Clusterstock notes.

Veteran hedge fund manager Jeff Matthews of Ram Partners is somewhat bemused by all this. The focus on month-to-month hedge fund performance is a direct result of the flood of institutional money into the industry in recent years, he says.

The industry lost its bearings - and its focus on the long-term - when hedge funds became a favorite "alternative" asset of pension funds and endowments, says Matthews...

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Joe Ransom, senior portfolio manager of Silvant Capital Management, is a big believer in the growth potential of big-cap tech stocks, as detailed in part one of our discussion.

Here in part two, Ransom discusses his favorite non-tech growth names, including healthcare and related plays like Amgen, Gilead Sciences and Express Scripts.

But Ransom's favorite long-term growth play is energy, where he favors names like Occidental Petroleum, Hess and Southwestern Energy.

The veteran fund manager notes there are company-specific reasons to own the names discussed in the accompanying video, rather than (just) being beneficiaries of macro or demographic trends.

Silvant Capital, which has about $3.8 billion of assets under management, is long all those names in Ransom's funds, including the RidgeWorth Select Large Cap Growth Fund (STTAX), which is up 12.5% year-to-date.

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Crude's rally to a 7-month high above $72 per barrel Thursday is "less about speculation than it is about a realization we're not going to see as much demand destruction as people thought," says Paul Kedrosky, a senior fellow at the Kauffman Foundation and noted blogger.

Despite evidence speculators are moving back into energy in a major way, Kedrosky believes crude's rally is mainly being driven by an unwinding of an "unprecedented twofer" that dragged crude down from its peak near $150 last July: Higher prices, culminating in a price-spike in early 2008, was the first level of demand destruction, followed by the "wheels coming off the global economy" in late 2008/early 2009, he says. "Now, we can stop discounting that [second] phase and talk about demand coming back in growth markets," such as China and India.

In sum, Kedrosky believes...

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With crude and copper hitting 7-month highs, gold pushing $1000 per ounce and Tim Geithner in China defending America's profligate spending, inflation is remerging as major theme for policymakers and investors alike. In the latter category, "Black Swan" author Nassim Taleb has joined John Paulson among the growing number of investors making big bets on a weaker dollar and rising inflation.

With soaring U.S. budget deficits and the Fed's printing press running on overdrive, it's not a stretch to say big inflationary pressures are baked into the economic cake.

But don't put all your eggs in the inflation basket just yet, says Jon Najarian, co-founder of OptionMonster.com. Najarian recommends no more than 10% of assets be put into inflation hedges...

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