Wait And See

The stock market stopped right at its 50-day average as we pulled back today.  The markets finished down across the board today on heavy volume.  But, the action was very mediocre.  I think this is in the range of where we should be pulling back.  That’s a good thing if you’re a bull.  The stock market needs to rest and exhale.  Overbought markets need to come down a bit.  And, even though the market is overbought, I would not be shorting at these levels.  I believe we’ll have a brief pullback that should be bought.  But, for now, let’s let it come back in.  We’ve seen a huge run in all kinds of stocks, especially the financials.  Some of those can actually be bought.  I purchased some Goldman Sachs recently and have enjoyed the run.  If you want to speculate on BAC & C, that’s fine.  I’d prefer to look to who’s leading.  Which companies are discussing paying back TARP money early.  Which ones aren’t nationalization candidates?  Those are the financials you can buy.  I believe you can buy Goldman Sachs (GS), JP Morgan (JPM), & Morgan Stanley (MS) on pullbacks.  But, continue to use them as trades (unless hedged properly).  In fact, treat everything as a trade.  Many traders are looking to scalp.  That means they don’t expect big things from the stock market over the next few months, so they are actively trading.  They use options, they short at the top of ranges, they buy when there’s a lot of fear and we’re near lows.  I think you should do the same.  Trade and make sure you’re getting compensated for renting out your income (a.k.a. income investing).  

A Few Ideas

The dollar continues to plummet and capturing that gain is very simple using the Powershares DB US Dollar Bearish Fund (UDN).  I mentioned this a few posts back and it’s exploded to the upside.  This ETF has broken out of a downtrend and I believe it’s heading higher A falling dollar helps gold quite a bit.  What a day for gold.  Up $70 an ounce!  I’m still bearish on gold but it has a lot of momentum to the upside and that can’t be denied right now.  We’ll see if it breaks through the old highs.  As far as my position in Freeport McMoran (FCX), I continue to hold that and I’m enjoying big gains.  It was a pretty looking picture when I bought it and still is but we’ll have to monitor it closely for profit taking by others.  If you’re looking for other new positions, commodities still seem the place to be for my money.  Whether it’s oil or agricultural commodities or metals, they all look good. Don’t overload the portfolio in these but they look to be in the 2nd inning as opposed to the general market which may be in the 9th inning for this round.

We’ll see what tomorrow brings.  At least there’s some positive energy coming back to the markets.  We’ll see how long it lasts.

Radio

I’ll finally be back on the air tomorrow morning.  So, make sure you tune in to Biz Radio 1110 AM in Houston or 1130 AM in San Antonio at 10:00 a.m. CST.  It’s good to be back.

This post published at www.karleggerss.com

None of the content on this page can be reproduced without the permission from Karl Eggerss and www.karleggerss.com

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4 Responses to “Wait And See”


  1. 1 Ajay March 20, 2009 at 2:37 pm

    Karl,

    New to your blog. What are the best ETFs to play the commodities (metals, ag, etc…)? Thanks.

  2. 3 Don in Dallas March 20, 2009 at 7:41 pm

    Hi Karl, first of all, I like to thank you for your
    excellent knowledge info on your blog. Please keep us
    little guys informs. Since I live in Arlington(Dallas)
    I can not listen to your radio show. Hopefully, your
    station can fix that soon. Finally, I like to ask you
    a question. In this Enviroment, we must TRADE with the
    flow (like you said). But I like to nibble on Reales-
    tate, such as (XHB)for long term. What do you think?
    or do you have any sugestion?

    Thank you much,
    God Bless

    • 4 keggerss March 20, 2009 at 7:56 pm

      Thank you for the nice comments. Unfortunately, my show doesn’t air in Dallas, only Houston & San Antonio. However, you can stream it at http://www.bizradio.com or listen to the podcasts. As far as XHB and real estate, I’d be nibbling on real real estate instead of XHB. If you like XHB for the long-term, nibbling on some right now is fine. Just make sure you can afford to lose some over the next few months because that’s certainly a possibility.


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