Right now I find myself extremely eager. I have a strong desire to trade but the markets just seem like their in a very weird position. There are very convincing arguments coming from two opposing views; the first swearing the rally will continue because of liquidity in stimulus and signs of "green shoots", the other stating the markets are overbought and a correction is due very soon. I've always found it easier to clear my head when I remove myself from the situation and do something else, maybe even take a weekend getaway to the beach. So this past weekend I took a trip to the Vineyard to enjoy the beaches and island quality of life. With a clear head I reviewed all the information I've gathered and came to the conclusion that the current markets are no place for my money. I believe that in the short term there will be a correction in the markets.
I am waiting for the right time to enter a short position. I think I will most likely short the financial sector because they have the worst underlying fundamentals. Right now alot of the wallstreet gurus are on leave, but since september and october are traditionally the worst months I believe their return will spur a stiff correction for the financials.
I do believe though that companies directly effected by the stimulus will do excellent in the longer term. The government has a few major changes that they will push no matter what, and the money will flow towards their ideals. The first one is healthcare, Obama has vowed to digitize all health records by 2012, thats as close to a guarantee as you'll ever get.
The second change will have to do with natural gas. The US has an abundance of natural gas and yet we continue to use foreign oil. We could save trillions if you were to use our own resources wisely, which Obama will most likely push.
Third is the fact that the US has always been known as the information and technology giant, and in order to maintain that crucial status we've got to push technology.. and hard! We can't let ourself slip behind in this field, so anything linked to new wave technology will most likely see serious gains in the future as the entire world evolves.
Fourth is the need for Cleantech. Alternative energy, water purification, recycling, etc. All of these fields and more will grow intensly as the world moves into a cleantech era.
Fifth is the oil shortage, its a guaranteed gainer. There is only so much and the price will only grow as the supply diminishes, especially with BRIC economies growing dependence.
Sixth is the Smart grid. Our nation electrical grid is still based in the early 1900's. We need a major overhaul in the way we produce and manage our electricity. And this new smartgrid push is no joke. It has to happen if we as a country are going to grow and evolve.
So those are my potential investment ideas for the longer term, but like I said Im going to sit tight until things make more sense.
Showing posts with label equities correction. Show all posts
Showing posts with label equities correction. Show all posts
Saturday, August 29, 2009
Friday, August 14, 2009
The Steam has run out.......
All data points to a market correction!
If you check the chart data for equites, gold, and the USD they all seem to fall right into line for a market correction. I'll show you what I mean....
On the DJIA chart below notice the areas that I've circled. Up top you'll see the relative strength Index(RSI) which has just begun its decent from a huge peak; a good sign that some weakness is to come. Also notice that the MACD lines at the bottom of the chart have just turned down from a serious peak as well, and they have crossed paths, usually a sign of a downturn in the chart. The Dow has been losing some momentum in the past few days and this is the first time in five weeks that it closes down at weeks end. All of this paired with some not so good retail sales and some scattered negative sentiments should point to a market correction.
Typically when the markets turn down, the Dollar becomes a safe haven and gains ground. So again if you look at the circled areas you'll notice the corresponding evidence in the RSI and the MACD. Looks like the dollar could have a rally; how big I dont know.
All of the inverse evidence can be seen in the gold chart below, as it moves opposite the dollar. The RSI still shows above average strength however the chart is for the 13th of august and doesnt include todays negative closing. I believe that the government is going to pull the country from this recession by any means necessary(increased gov. spending). Likewise inflation is bound to follow once the trend begins, so I think gold is a great asset to any portfolio however any purchases should be postponed until the price comes down a bit with this correction. Again I dont know how extensive the correction will be given that there is still a major mortgage crisis unfolding, and we all know how bad news can effect the markets.
I positioned myself in Proshares Short Dow 30 (DOG) to try and gain from the downturn. There is an ultrashort position named DXD and also there are financial short positions which are SEF and SKF. This fall we're going to see the first major spike in option Arm resets, so a real estate short could be in order as well. All though it must be timed very well, for minimal exposure.
If you check the chart data for equites, gold, and the USD they all seem to fall right into line for a market correction. I'll show you what I mean....
On the DJIA chart below notice the areas that I've circled. Up top you'll see the relative strength Index(RSI) which has just begun its decent from a huge peak; a good sign that some weakness is to come. Also notice that the MACD lines at the bottom of the chart have just turned down from a serious peak as well, and they have crossed paths, usually a sign of a downturn in the chart. The Dow has been losing some momentum in the past few days and this is the first time in five weeks that it closes down at weeks end. All of this paired with some not so good retail sales and some scattered negative sentiments should point to a market correction.
Typically when the markets turn down, the Dollar becomes a safe haven and gains ground. So again if you look at the circled areas you'll notice the corresponding evidence in the RSI and the MACD. Looks like the dollar could have a rally; how big I dont know.
All of the inverse evidence can be seen in the gold chart below, as it moves opposite the dollar. The RSI still shows above average strength however the chart is for the 13th of august and doesnt include todays negative closing. I believe that the government is going to pull the country from this recession by any means necessary(increased gov. spending). Likewise inflation is bound to follow once the trend begins, so I think gold is a great asset to any portfolio however any purchases should be postponed until the price comes down a bit with this correction. Again I dont know how extensive the correction will be given that there is still a major mortgage crisis unfolding, and we all know how bad news can effect the markets.
I positioned myself in Proshares Short Dow 30 (DOG) to try and gain from the downturn. There is an ultrashort position named DXD and also there are financial short positions which are SEF and SKF. This fall we're going to see the first major spike in option Arm resets, so a real estate short could be in order as well. All though it must be timed very well, for minimal exposure.
Subscribe to:
Posts (Atom)