BEYOND ELECTION uncertainty, regulatory risk and geopolitical upheaval now facing the markets, the macro question is whether the strong commodity/weak dollar plays that have benefited foreign stocks and bonds, gold and so many other trends over the past few years are reversing.

Oil has already corrected about 20% off its July highs, putting it officially in a bear market. The greenback has rallied sharply, with the U.S. dollar index climbing above its 50- and 200-day moving averages. This comes as both of those trends have become firmly rooted in the day-to-day coverage of the financial markets. In 2001 oil and the dollar were rarely discussed. As I've talked about in recent weeks, they've now been front-page news for the better part of a year.

If you look at the price action in many parts of the equity market, you can objectively conclude that the commodity trades, as I've previously pointed out with both gold and oil, are no longer the market leaders they were for much of 2002-06. Stocks tend to be the most forward-looking indicators we have. Witness gold stocks, which showed dramatic outperformance in 2001 and 2002, long before the metal itself (and accompanying public participation) took off.

The fact that so many of these previous leaders, names as varied as Stillwater Mining and Exxon Mobil, are at multimonth lows is undoubtedly a harbinger of a greater shift underway.

The Cards You're Dealt

My investment in Japan has been a wash thus far, with some exposures outperforming, showing a dichotomy of performance from one stock to the next. Shares of

Nippon Telegraph & Telephone

Hitachi

Toyota Motor

Mitsubishi UFJ Financial

iShares MSCI Japan ETF

Two-Faced in the Far East

3-month performance: HIT, NTT, MTU, TM

A trader must objectively assess the market as it is, not as he wishes it was. The weakness in large caps like

Sony

Nintendo

We should be open to the notion that there might be a move underway that, although unforeseen, can be beneficial. To that end, I'm certainly maintaining exposure to trades, such as NTT DoCoMo, that have shown positive price action. Perhaps there isn't a widespread bull move in the Nikkei underway, as I expected, but select names could potentially rise on company-specific news. Once your bet is made, the proper course of action is to play the cards you're dealt by cutting losers, letting winners run and listening to what the market is trying to say.

Gorging on Food Stocks

As the economy has slowed, so has consumer spending, which has punished stocks like

Starbucks

Whole Foods Market

Ruth's Hospitality

General Mills

Kellogg

Food Stocks for Thought

1-year performance: SLE, THS, TR, SJM

If you're hungry for food stocks, a few other names to consider would be Sara Lee, J.M. Smucker, TreeHouse Foods and Tootsie Roll, all of which are looking tasty even amid a highly volatile environment.

Jonathan Hoenig is managing member at Capitalispig Hedge Fund LLC. At the time of writing, Hoenig's fund held positions in many of the securities mentioned.

Also See:
How to Go Broke a Few Cents at a Time
Health-Care ETFs May Cure an Ailing Portfolio
Far East Banking Stocks Look Attractive