COMMODITIES AND THEIR RELATED STOCKS CONTINUE TO DROP -- GOLD AND OIL SERVICE INDEXES BREAK SUPPORT -- COPPER DROP HURTS FCX -- JOHNSON & JOHNSON HITS NEW RECORD AND LEADS DRUGS

ALL COMMODITIES ARE IN THE RED ... The CRB Index is trading 12 points lower today with all seventeen commodities in the red. Chart 1 shows the DB Commodities ETF (DBC) falling to a three-month low. The other charts show losses in energy (Chart 2), precious metals (Chart 3), agriculture (Chart 4), and base metals (Chart 5). Not surprisingly, stocks tied to falling commodities are among the day's biggest losers. That includes gold, energy, and basic materials.

Chart 1

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COMMODITY STOCKS TUMBLE... Chart 6 shows the Market Vectors Gold Miners ETF (GDX) falling to the lowest level in ten months. Chart 7 shows the Oil Service Index (OSX) trading below its 200-day average. All of the other energy indexes (including natural gas) have already broken that support line. Chart 8 shows the Materials Sector SPDR (XLB) losing more than 3% today. The recent bounce in the XLB failed at its 200-day moving average. Its relative strength line (bottom of chart) has been falling for a month. That's about how long commodities have been falling. Copper is also breaking support levels.

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FALLING COPPER HURTS FCX ... Chart 9 shows the price of copper falling below 350 for the first time in six months. That's taking a heavy toll on Freeport McMoran Copper & Gold which is today's biggest percentage loser in the materials group. Chart 10 shows FCX tumbling to five-month low. Its relative strength line peaked in early July along with the price of copper. Weakness in commodity stocks appears to be confirming the view that global economic weakness is pulling commodity markets lower. With the rest of the market on the defensive, healthcare is once again the day's strongest group.

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JNJ LEADS PHARMACEUTICALS PHARMA HIGHER ... We've been focused on biotechs lately. Big pharmas are attracting money as well in the healthcare sector. Chart 11 shows the AMEX Pharmaceutical Index nearing a five-month high today. Its relative strength line took off in mid-June. The top performer in that group is Johnson & Johnson. We've shown the stock before, but here it is again. Chart 12 shows JNJ trading at a new record high today. Its relative strength line has been rising since mid-May when the rest of the market turned down.

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