For a majority of companies, third-quarter results could be below those of 2008, with per-share profits for the S&P 500 at a projected drop of 15.4%. More than 340 businesses could see a year-over-year drop in profits, according to Zacks. Projected revenues show median company sales may drop 7.2%, with more than 360 companies expected to experience a year-over-year drop in earnings.

There are a lucky few that are forecasting actual earnings growth compared to last year:

Homebuilders. First off, conditions were already deteriorating and mortgages were hard to come by last year. Secondly, more new and existing home sales translates to a more stable housing market.

• SPDR S&P Homebuilders (NYSEArca: XHB): up 35.4% year-to-date

Insurance. Insurance companies can potentially pull off double-digit growth. Some firms can bounce back higher from prior-year losses while others may see true growth. Property and causality insurers have been sparred by a calm hurricane season so far, and most insurers benefited from a recovering financial market.

• KBW Insurance (NYSEArca: KIE): up 33.2% year-to-date

Health Care. The medical sector is still raking in the profits. The sector is not correlated to commodity prices and is less economically sensitive. The result is that medical companies are showing both revenues and earnings growth this quarter.

• Vanguard Health Care (NYSEArca: VHT): up 12.7% year-to-date

On the flip side, here are a few sectors that could report contractions:

Commodity. Commodity-related companies reported strong profits last year and as a result, energy and metals companies may show drops in third-quarter profits this year.

• iShares Dow Jones U.S. Oil & Gas Ex Index (NYSEArca: IEO): up 33.8% year-to-date

• PowerShares DB Base Metals (NYSEArca: DBB): up 53.7% year-to-date

Banks. Many banks still remain unprofitable. High joblessness, high level of foreclosures and poor real estate market all affect banks. The result is a projected report of losses for the sector.

• iShares Dow Jones U.S. Financial Sector Index Fund (NYSEArca: IYF): up 20.1% year-to-date

Max Chen contributed to this article.

Strong employment reports, renewed auto and housing demand and signs of a recovery in China have helped spur the base metals’ strong run, says Sara Jane Tasker for The Australian. The rebound has been so strong that analysts expect it to continue for the rest of 2009.

Some other points:

• According to Citigroup, copper has led the base metal recovery, up $600 in recent trading. So far this year, it has gained 100%.
• Aluminum has climbed around 30% despite its London Metal Exchange inventories remaining at record levels, says Michael Taylor for Reuters.
• Base metals should continue their upward journey as fundamentals in a global recovery strengthen and the demand from China remains healthy.
• China is expected to account for 38% of the world’s copper demand by 2014, up from 28% in 2008.

• SPDR Metals & Mining (XME): up 53.7% year-to-date; holds companies involved in the metals and mining industries

• iShares Dow Jones U.S. Basic Materials (IYM): up 40.7% year-to-date; composed of companies involved in the production of basic materials

• Market Vectors Steel (SLX): up 66.5% year-to-date; pure exposure to steel companies

• PowerShares DB Base Metals (DBB): up 55.4% year-to-date; holds futures contracts for aluminum, copper and zinc

For more stories about base metals, visit our base metals category.

Among the factors leading to strength in commodities in general, and base metals in particular, include:

• Global stock markets are feeling more positive, thanks to eurozone economic sentiment and China’s promise to maintain a growth-friendly economic policy, reports Barani Krishnan and Rebekah Curtis for Reuters.

• Manufacturing in China is picking up the pace, while it’s stabilizing in the United States, writes Angel Commodities for Commodity Online.

• One analyst noted that China alone helped copper gain 15% last month, and 80% overall this year, says Nidhi Sharma for the Economic Times.

• A weakening dollar is adding an extra lift to the demand for major base metals, such as aluminum, copper, nickel, zinc and lead, Sharma notes.

• PowerShares DB Base Metals (DBB): up 57.5% year-to-date

For more stories about base metals, visit our base metals category.

Commodities have been enjoying a recent run-up that has many consumers fearing a repeat of summer 2008. In the last three months, PowerShares DB Base Metals (DBB) gained 10%, United States Oil (USO) rose 14% and United States Gasoline (UGA) jumped 23.8%.

What we saw was a number of uptrends in this area in which many of these types of funds crossed or were approaching their long-term trend lines. But if recent news is any indication, the trend may be petering out. If it is winding down, you can protect yourself and any gains you might have made in the run-up by watching the trend lines. When a fund drops below its 200-day or 8% off the recent high (whichever comes first), sell it.

Having an entry and exit strategy, particularly when it comes to volatile areas of the market, can help guide you as to when to buy and when to sell. More importantly, it can help you remove your emotions and make decisions based on the market’s messages.

Meanwhile, The Economist lays out the ups and downs in food prices based upon inflation in two timeframes: the past three months and the year through February 2009. The evidence is emerging that the cost of food from country to country is affecting some countries more than others.

Despite a big fall from peaks in 2008, food-price inflation remains high in places such as Kenya and Russia, while China has experienced a drop in high commodity prices that is passed along to the consumer.

Both the United States and France are experiencing the same pattern as China, while Kenya, Russia and Pakistan are getting hit hard by inflation of commodity prices.

High food costs could impact agriculture ETFs as demand in certain countries and the adoption of a Western diet keeps costs at high levels.

• PowerShares DB Agriculture (DBA): down 2% year-to-date

• SPDR S&P Emerging Europe (GUR): up 20.7% year-to-date

For more stories on agriculture, visit our agriculture category.

The current surge in commodity prices maybe a result of strong purchasing by China, but most of the buying has been to build stockpiles. This kind of buying isn’t seen as sustainable in the long run, reports Keith Bradsher for The New York Times.

Commodities and shipping executives note China’s recent purchases of commodities that include iron, aluminum, copper, nickel, tin, zinc, crude oil, canola and soybeans. China is storing these commodities for several reasons: in anticipation of higher prices in annual contracts, for strategic reasons or to insulate domestic producers from any potential falling global prices.

J.P. Morgan (JPM) calculates that China’s iron ore imports were 33% higher in April year-over-year. Crude oil imports were up almost 14%, aluminum oxide imports were up 16%, refined copper imports jumped 148% and coal imports climbed 168%.

There are some economists that are bullish on commodities, citing the eventual recovery of the U.S. and European economies, while others think this is just the beginning of another commodity bubble. Whatever it is, watch the trend lines for signals.

• PowerShares DB Base Metals (DBB): up 30.3% year-to-date

• PowerShares DB Oil (DBO): up 34.8% year-to-date

• Market Vectors Coal ETF (KOL): up 71.9% year-to-date

For more related stories, visit China or Commodity ETFs categories.

Max Chen contributed to this article.

Part of this recovery can be attributed to President Barack Obama’s $787 billion stimulus package, which is aimed to target the construction industry, the Federal Reserve’s actions to put more spending money in the hands of consumers and businesses and other similar stimulus packages and interest rate cuts seen around the globe.

Granted crude oil is a far cry from its peak of $147/barrel seen in July, but the volatile commodity has gained about 40% since February of this year.  Take a look at United States Oil (USO), which is up 7.12% over the last month. Many analysts suggest that black gold will continue to be a “hot commodity” because of tensions in oil-producing regions and the rise in the middle class of Asian countries, especially China.

Metals are another commodity that have seen a nice spark, gaining nearly 30% since mid-February.  Most can thank China for this recovery.  What’s amazing is that China is on the road to an overall economic recovery much more quickly than expected and one indicator of this is that the New Orders and New Order Exports lead metal prices by one month.  This is one reason upward momentum has been seen in the metals market, states Prieur du Plessis of Investment Postcards.

China’s prosperity has enabled the nation to accumulate significant amounts of metals at bargain prices to bolster strategic reserves, especially copper, and its government has been buying up domestically produced metals at set prices to keep their uneconomical mines above water.  Keep in mind that China and the enormous growth of emerging markets is what fueled the last surge in commodity prices and it could fuel the next one.

If you want to grab exposure to these commodities, take a look at the following ETFs:

• SPDR Metal & Mining (XME): up 31.3% over the last month and 9.7% year-to-date; trading above both its 50- and 200-day moving averages

• PowerShares Base Metals (DBB): which is up 19.8% over the last month and 22.3% year-to-date; to add icing to the cake, it has crossed both its 50- and 200-day moving averages.

Kevin Grewal contributed to this article.

On Friday, gold futures closed slightly higher on flight-to-safety buying, reversing an eight-day losing streak, reports Allen Sykora for The Wall Street Journal. That wasn’t the case earlier this week, though, as even when the market sank, gold followed suit.

One expert said that this time, gold is being driven higher by two things: equities weakness and physical demand.

But is this one-day rally going to last?

On the “No” Side…It is thought that the drop in gold is a function of how weakly other markets are performing and a deleveraging effect has been attributed to anything related to the financial markets. Gold is also traditionally a commodity used in Jewelry or in electronics. Both sectors have been doing poorly under diminished demand.

On the “Yes” Side…But the weakness in jewelry and industrial demand is also starting to be offset by increases in investment demand like bar hoarding and official coins, writes Keith Lerner for IndexUniverse. Furthermore, ETFs have also driven up investment demand because of the ease with which individuals may invest in the commodity. If investment rates in ETFs continue, ETF purchases for this year could surpass the 2,120 tons acquired for jewelry in 2008, which would make ETFs the top source for demand.

Wherever you land, there’s an ETF to represent your sentiment. But watch those trend lines:

• SPDR Gold Shares (GLD): up 6.3% year-to-date
  

• PowerShares DB Gold Double Short ETN (DZZ): down 12.6% year-to-date

Gold Miners. Another way to invest in gold is through gold miners. Golding mining shares and the price of gold are inseparably linked. As production costs from steel and energy go further down, gold mining operations are seeing better margins on top of an increased price in gold, reports Dominic Lau for Reuters UK. Further lowered costs can also be attributed to the depreciating currencies in regions in which gold producers are operating.

But take note that gold mining shares tend to be more volatile than that of their bullion counterpart. It is calculated that on average for every 1% fall in gold prices, gold miners’ shares could drop 3%.

• Market Vectors Gold Miners ETF (GDX): down 2.5% year-to-date
  

U.S. copper futures are near three-month highs after a report on non-farm payrolls failed to deliver any surprises, leaving prices elevated, reports Reuters. Market momentum may extend to $1.75, and one broker says the level of $1.70 appears to be a base of resistance.

• PowerShares DB Base Metals (DBB): up 2.7% in the last week; down 0.4% in the last month; down 11.9% in the last three months; copper futures are 32.7% of the fund

For full disclosure, some of Tom Lydon’s clients own shares of GLD.

We wrote a report back then, which thoroughly covered the commodities area, from the broad-based funds to the single commodities. From that report, many commodities went on to hit record highs.

How things have changed. Oil, gold, gas and more all have corrected sharply. It’s a matter of great debate now what’s going to happen next. One thing that’s for certain is that the tanking of most commodities illustrates the importance of having an exit strategy. Our own is to exit when a fund is 8% off the recent high or below its 200-day moving average – and most commodities are off their highs by double digits.

Right now, there’s a looming threat of inflation. The government is printing new money by the truckload, which could lead to an inflationary situation down the road. Commodities are often high first, which is why they’re still worth keeping an eye on despite the correction.

Some, like Jim Rogers, say not to count out commodities, now or ever. That’s because the credit crisis is creating an inability for farmers to get loans, which means they can’t grow. This will lead to supply shortages, after which high prices ultimately will follow. Food demand is expected to increase, as populations in emerging markets boom and many of those areas adopt a more western diet. Staple commodities, such as corn, soybeans, wheat and sugar could very well continue to see historic levels of demand. And the assets flowing into such ETFs don’t seem to have slowed much, either.

This fascinating chart from U.S. Global Investors shows how commodities over time might have price swings, but eventually revert to their long-term averages, also known as “mean reversion.” Not one category in this chart has shown any consistency in the nine-year period it tracks. By allocating your assets and remaining diversified, investors can gain some volatility protection.

Oil has been holding steady for a few weeks, around the $40 a barrel mark. There’s a big fight going on now: declining consumer demand that remains far below production, and OPEC can’t seem to cut production enough at this point.

Gas prices are moving up, however. In the last month, the cost of a gallon of gas in Orange County has risen 27 cents. The disconnect between the two can be blamed on refineries, which are operating at their lowest capacity since 1992.

The outlook for gold is mixed. While there’s agreement that prices will probably stay put for now, the question is how high will they go? Some call for $1,500 an ounce, others are expecting as high as $2,000 an ounce.

No one can say for certain where commodities are headed, which is why we so firmly adhere to the trend-following strategy instead of relying on predictions that are often at odds with one another. Many hours have been spent by experts, trying to call which way commodities will go and when. For now, we’re going to wait for the trend to appear. At the moment, it’s simply not there.

• PowerShares DB Agriculture (DBA) is an ETF that contracts on some of the most liquid and widely traded agricultural commodities — corn, wheat, soybeans and sugar. DBA hit a high on Feb. 26, 2008, and has fallen 41.3% since then.

• Market Vectors Global Agribusiness (MOO) tracks the stock-based DAXglobal Agribusiness Index and provides exposure to 40 worldwide companies in five segments: agricultural chemicals, agriproduct operations, agricultural equipment, livestock operations and ethanol/biodiesel production. The top five components, by market weight, include: Mosaic Co. (MOS), Potash Corp. (POT), Monsanto Corp. (MON), Deere & Co. (DE) and Archer-Daniels-Midland (ADM). MOO’s high was on June 17, 2008; it has since declined 54.3%.

MOO made a distribution on Dec. 26 that is not reflected in the chart above.

• ELEMENTS Rogers International Commodity Agriculture ETN (RJA) seeks to replicate an index that represents the value of 20 agricultural commodity futures contracts. RJA’s high was hit on Feb. 26, 2008, and the ETN has declined 44.2% since then.

• For a more diversified energy play, the PowerShares DB Energy Fund (DBE) replicates an index tracking the prices of two different grades of crude oil, heating oil, gasoline and natural gas. The high was reached on July 3, 2008; since then, DBE has lost 64.9%.

• United States Gasoline (UGA) tries to match the percentage increase in the unleaded gasoline futures that trade on the New York Mercantile Exchange. In concept, this fund increases in value by the same amount that gas rises in price at the pump. UGA reached a high on July 2, 2008, but has fallen 64.9% since then.

• iShares Dow Jones U.S. Energy Sector Index Fund (IYE) is as pure a play on energy as you can get with 10 top holdings including: Chevron (CVX), ConocoPhillips (COP), Exxon Mobil (XOM) and Transocean (RIG). IYE has fallen 43.3% since its May 20, 2008, high.

IYE made a distribution on Dec. 23 that isn’t reflected in the chart above.

• iPath S&P GSCI Crude Oil Total Return Index ETN (OIL) is an unleveraged path to investment in Nymex West Texas intermediate crude oil futures. It takes a fixed-weight approach to determining asset allocation of its portfolio. OIL has lost 78.5% since its July 11, 2008, high.

• The SPDR Gold Shares Fund (GLD) and iShares COMEX Gold Trust (IAU) hold gold bullion. GLD and IAU have both lost 10.9% and 11.1% respectively since their highs on March 17, 2008.

• The PowerShares DB Gold Fund (DGL) is based on the Deutsche Bank Liquid Commodity Index and is composed of futures contracts on gold and is intended to reflect the performance of the yellow metal. DGL has lost 12.6% since its March 17, 2008, high.

• Market Vectors Steel (SLX), which launched in October 2006, holds companies involved in the production of steel. Among the top holdings are Rio Tinto (RTP), Arcelor Mittal (MT.AS) and Companhia Vale ADS (RIO). SLX reached a high on May 16, 2008, but has since dropped 69.9%. On the other hand, there are high hopes for steel if President Barack Obama’s stimulus plan goes through. In the last month, it’s advanced 5.4% and moved above its short-term trend line.

SLX made a dividend on Dec. 26 that is not reflected in this chart.

• The iShares Silver Trust (SLV) holds silver bullion. Silver has a wide range of industrial applications, making it particularly attractive when there’s a boom in construction activity, but sensitive to dowturns. SLV has lost 38.3% since its March 5, 2008, high.

• PowerShares DB Base Metals (DBB) is based on an index composed of futures contracts on some of the most liquid and widely used base metals — aluminum, zinc and copper (grade A). DBB has lost 56.8% since its May 4 , 2007, high.

• iShares S&P GSCI Commodity Indexed Trust (GSG) tracks a broad index of 24 commodities weighted according to the proportion of the commodity flowing through the economy. Almost half of the index reflects crude oil, and the balance is split between other energy products such as natural gas as well as agricultural commodities, industrial and precious metals, and livestock. It hit a high on July 2, 2008, and has fallen 66.4% since then.

• An even more diversified commodity play is the iPath Dow Jones-AIG Commodity Index Fund ETN (DJP), which tracks an index that comprises 30% energy, 30% agricultural, 20% industrial metals, 10% livestock and 10% precious metals. DJP’s high was reached on July 2, 2008, but has lost 53.4% since then.

• PowerShares DB Commodity Index Tracking Fund (DBC) tracks the futures for a simplified index of just six commodities: corn, crude oil, gold, heating oil, aluminum and wheat. It hit a high on July 2, 2008, and has fallen 56.5%.

DJP made a distribution on Dec. 15 that is not reflected in this chart.

For full disclosure, some of Tom Lydon’s clients own shares of SLX, SLV and GLD and is a board member of U.S. Global Investors.

Gold has been defying the fundamentals, ignoring its usual correlation with down markets. SPDR Gold Shares (GLD) is down 16.9% in the last month, while the S&P 500 is down 15.9%. Gold is generally seen as a safe haven, so investors run for cover with the metal in down markets. But a strengthening dollar has turned the tables on that thinking for the time being, as gold typically moves opposite the greenback.

Gold is continuing to decline today, as the dollar shows new vigor and oil prices slump, reports Moming Zhou for MarketWatch.

Copper prices are falling on lower demand. The metal is often used for electrical wiring and pipe, but the global decline in homebuilding has put a dent in the need for it for the time being, according to MarketWatch. Copper sales at one company, Newmonth (NEM), fell 84% in the third quarter.

Chile, the world’s largest copper producer, saw 10.3% less output in September from a year earlier. It’s the third consecutive month year-over-year that production declined, reports Reuters.

A platinum producer in South Africa has cut its annual output forecast for the third time. Lonmin Plc said the full-year platinum output from its concentrators has fallen 16% in the year ending Sept. 30. The company had expected production to improve going into 2009, says Ron Derby for Bloomberg.

South African mines have been plagued all year by production interruptions, caused by a failure of the state-owned power company to meet demand.

Platinum prices have fallen 46% this year, but has gained along with palladium in recent days as precious metals demand rises, says Halia Pavliva for Bloomberg. Until recently, palladium was down 51% for this year.

Car makers account for 60% of global platinum use, and a struggling auto industry is leading lower demand for the metal.

Among funds that migh be affected:

• PowerShares DB Base Metals (DBB), down 27.9% year-to-date

• PowerShares DB Precious Metals (DBP), down 15.1% year-to-date

The final tally for U.S. medals is 36 gold, 38 silver and 36 bronze. Not bad!

Sorry Michael Phelps, but those gold medals aren’t solid gold: the last ones that were were awarded in 1912. If they were made of solid gold, they’d weigh four pounds and be worth about $50,000. Instead, they are covered with six grams of gold, according to specifications. Both the gold and silver medals are made of 92.5% silver. Bronze medals are mostly copper.

The medals are designed for each Olympic Games by the host city’s organizing committee.

Despite the fact that the medals aren’t as pure as their name implies, they aren’t worthless: gold is worth about $570; silver is worth about $403 and bronze is worth about $11.

One winner in the Olympics might have been mining giant BHP Billiton, which had a big role in the Olympics and the Paralympics, as they provided the raw materials for the medals, the International Olympic Committee reports.

There are several ways to get access to metals (medals, however, are only for the most elite of us – unless hoisting a pint is classified as a sport), including through futures, mining companies or countries in which mining is a major industry:

• PowerShares DB Base Metals (DBB): up 3.2% year-to-date; holds 46.4% copper; down 0.4% during the Olympics
• SPDR Gold Shares (GLD): down 1.7% year-to-date; down 5.8% during the Olympics
• iShares Silver Trust (SLV): down 9.8% year-to-date; down 17.5% during the Olympics;
• iShares MSCI Australia (EWA): down 19.1% year-to-date; BHP Billiton is 16.8%

Someone who’s very pleased with their performance at the Olympics is NBC. A survey found that 76% of people stayed up late to watch the games, while more than half said they had sacrificed sleep. The games surpassed the 1996 Atlanta Olympics to capture more viewers than any other event in U.S. television history, reports David Bauder for the Associated Press. Michael Phelps’ bid for eight gold medals didn’t hurt.

NBC’s parent company, GE (GE), could find itself with a gold medal of its own.

• Vanguard Industrials (VIS): down 8.7% year-to-date; 21.3% of holdings
• PowerShares FTSE RAFI Industrials (PRFN): down 8% year-to-date; 15.4% of holdings
• iShares Dow Jones US Industrial (IYJ): down 8.1% year-to-date; 14.9% of holdings