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Our subscribers know we have been riding the bull market since its infancy and for good gains. Based on events over the past few trading days, we think there are a few good points to make this morning regarding markets.

With the news yesterday from the Fed that there are some members taking issue with the Federal Reserve continuing on its purchases of bonds in open markets we think now may finally be the time to walk away from bonds and possibly even open a short position in a hedge trade. Bonds are relatively easy to understand as there is a set amount that you can get once the bond matures as your highest return, zero if the entity goes under and somewhere between those two figures if the entity needs to restructure the debt to stay afloat.

You know going into the trade at all times what your maximum gain and loss are, which cannot be said for other securities or investments. With the highest rated bonds trading at near record highs, thus their yields at near record lows, we think that capital is beginning to find its way into the stock market. We have seen the Dow Jones, Nasdaq and S&P 500 move higher with little resistance, and this is in the face of some bad news along the way which was simply brushed aside.

So although bonds could trade higher should investors begin to worry about the return of their capital rather than the return on their capital, we believe that the risk/reward scenario at this point is heavily skewed towards using high yielding dividend stocks rather than bonds.

With Apple (AAPL) now the largest company in the world based on market capitalization and Facebook (FB) coming public in the near future, there is a lot to excite the market. After a decade of lousy returns and people declaring buy-and-hold dead, we argue that the next five years will see stock rising as capital seeks higher returns. We want to own what makes the products believing that we have been in a multigenerational commodity bull market for the past decade already and that there is another decade with the best gains yet to come.

So with that said let's look at what is moving markets.

Middle East & Oil

As promised, Iran held a news conference to publicly defy the Western world regarding their nukes and indicate they are intent upon completing their stated and unstated goals with their nuclear program. We remain long oil via high yielding companies focused on American production. The 'oily' shale plays have held in strong lately, and we will continue to ride our winners. We think Chesapeake Energy (CHK), even with its considerable natural gas exposure, is only going to ratchet up its oil exposure via the drill rig over the next two years so we will speculate with CHK at these levels.

It is unconventional and against the current market current, but we play the probabilities of success and no one in the industry has had more success over a longer period of time than Aubrey McClendon. We once invested anywhere a certain Mr. Lundin was associated with in any meaningful capacity, which served us well over many years…the same applies here.

Kodiak Oil & Gas (KOG) is another name we like. The company is a Williston Basin play that has consistently delivered for investors. We are still kicking ourselves we did not buy it in the $3 range, but given where natural gas prices have gone and are headed, Kodiak seems destined to find itself in our portfolio sooner rather than later - it is officially on our watch list to add on any pullback.

Precious Metals

Gold and silver are down for any number of reasons. It is possible investors are reallocating assets still, and the news that some on the Fed Reserve Board did not want to be buying bonds in the future does not help with the inflation argument which many gold bugs hang their hats on. Whatever the case may be, we still like the idea of silver at these levels. We hold it in the actual 1 oz. coins, so our trade is highly illiquid and up from the $8/oz level. This is certainly a long-term trade in our view as many of our readers already know.

Rare Earths

To say we have been disappointed in the price action of the REEs of late would be an understatement. The sector seems to have been relegated to risk-on and risk-off trades, so this we have noted for the trading playbook. We are a bit curious as to why Molycorp (MCP) which used to either move the sector or move in tandem with the sector - they were highly correlated at one time - has ceased its leadership role, even membership for that matter, in the sector. When we watch our lists and the sector is green Molycorp is red, and when the sector is red Molycorp is green. The correlation is broken, and the stock has been stuck within a relatively tight trading range while its peers have moved considerably.

Investors in the sector sure have learned to deal with delays. That is one possible explanation, and it is a trend we see more and more of. Quest Rare Minerals (QRM) issued a press release (click here) announcing the postponement of their prefeasibility study, nothing new in the industry and it was because of geology or to get even more specific the metallurgy. The process is tedious and actually cracking the code is nearly impossible, but we do expect Stans Energy (OTCQX:HREEF) to release a prefeasibility report in the near future that will shock the world.

The rare earth world has stuck their noses up at Stans since the early days, but the company has delivered and met many of our bold statements since we began covering them. The recent drill results proved that the tonnage of the mine is larger than previously thought, and the prefeasibility study will prove that this mine is indeed economic. Since we see this potential news for what it is, we recommend initiating a trade on Stans for this news alone for possible gains of 50-100% as this would be the only HREE mine outside of China proven economic and with proven production methods already in hand. The downside on this is 30-50% if the report does turn out to be uneconomical, so it does entail some risk.

Uranium

Uranium shares rallied yesterday into the close. This is uber bullish, especially considering the market selling off. We continue to believe that near-term producers in the US are the best way to play this trend, and would refer you to past articles to get our picks.

Farming

File this under 'when winning feels like losing' because that is surely the predicament that Deere (DE) shareholders find themselves in. Beating on the earnings, but once again we find the shares down based on management's conservatism. If history is any indication, next quarter might very well be a surprise, but there are some obstacles ahead for the company especially when one considers the tax law changes in the US and the fact most farmers have replaced a good deal of their equipment over the past few years.

However, crop prices are still historically high and America's farmers are booking profits beyond belief so it only reasons that the US and North America as a whole will continue to provide steady growth while the company focuses overseas to expand the business and meet their lofty long-term goals.

Graphite

We are seeing more and more about graphite pop up in emails and articles sent to us. We put it on the backburner due to our success in rare earths, but it appears that this might be the next resource sector investors rush into. The story sounds good, but we are starting our due diligence today.

Markets

Greece fears are back since the Europeans still have not reached a deal. It is something we have talked about, and will have to continue to talk about as the Europeans are basically holding the world's markets hostage. This morning Asia markets are red, with the Nikkei 225 down 0.24%, the Hang Seng down 0.41% and the Straights Times down 1.14%. Europe is taking the brunt of the losses with the FTSE 100 down 0.73%, the DAX down 1.06% and the ATX down 1.21%. Today will be a day to add to positions on any major pullbacks in stocks in our portfolio, and see if we can get a decent price for Stans.

Source: Thursday's Commodity News To Trade On