My Crazy Investor is now at its lowest level since late 2007. This translates to showing investors are as confident as they’ve been since that time. Sounds good, right? If we were in a bull market, yes. But, we’re not. We’re still in a very tough market. Rallies are normal and we need to embrace them but don’t fall in love with those positions. The S&P 500 will likely reach 1388 which is the place its peaked the last 3 times in 2008. If we get through there, you’re probably looking at it going to its 200 day moving average of 1400-1410.
I bring these technical places up because many people watch this stuff. If I’m correct and we rally to these places, we need to continue to monitor volume, breadth, etc. Is it going up on higher volume? Is the upside volume very high? Are many sectors participating? Those answers in a few days will tell us if the character of the market is changing. I believe we’ll float up on weaker volume and it’ll be an opportunity to sell stocks you’ve been wanting to sell and to add to short positions.
Food Shortages
This is the 3rd day in the last week I’ve read or seen food shortages being reported. Today, it’s North Korea. Reports are suggesting we’re entering a “potential humanitarian crisis”. It takes a month’s salary to buy a few days worth of rice. Last week it was Egypt talking about riots regarding food.
This problem is starting to escalate. You combine shortages with developing nations demanding more because they are coming into the middle class and eating better on top of government mandates for ethanol, etc., you’ve got rising food prices.
The solution for you and I is to own companies benefiting from agricultural business. In addition, only simply the agricultural commodities. There are numerous companies and commodities to invest in. You can also use ETFs like Powershares DB Agriculture Fund (DBA) and/or the Market Vectors Agriculture Business ETF (MOO). Just remember you still have to have an exit strategy even the fundamentals look so good.
