As we watch the market flirt with its lows of the day, I think it is worth discussing Petroleo Brasileiro SA (PBR) and Potash Corp. of Saskatchewan (POT). In a post two weeks ago, I argued they were good proxies for the willingness to take on risk as both of these commodity-related stocks had been hot-money crowd favorites.

The previous look into Petrobras and Potash revealed two things. The first was that both stocks were pulling back toward their recent lows. The second was that a breakdown might catch some optimists off-guard. A look to the charts below shows both PBR and POT have broken below their October bottoms.

To some degree, this action does just mirror what we have see in the broad market indices. As discussed earlier, the S&P 500 (SPX) is currently testing its October lows as resistance. The reason why I think it makes sense to watch Petrobras and Potash is that they tend to be more volatile. If we are going to see a major rejection, I would expect the selling to show up here first. And, of course, there is also the concern about the optimism. If many were betting on the lows to hold, that optimism now represents potential selling pressure.

Charts Courtesy of Thomson Financial