Saturday, September 13, 2008

Strategy for the next 7 days

The market is really at a turning point now. There are so many events happening like:
1. GS reporting earnings on Tuesday, if GS is adequately downgraded...then the stock price has priced in the negatives. Lets hope that GS beats estimates on Tuesday, Im neutral on this.
2. Lehman's problem is known. Keep an eye on MER.
3. The Dollar is at its turning point. Keep an eye on the EURO, don't go long unless it goes above 1.44
4. Options expiry is on next Friday.
i) A lot of traders shorting commodities have been trapped. Thats the whole idea of the rapid commodity price spike.
ii) You are not advised to go long commodities, a better play is to watch the EURO....the Dollar uptrend is still intact until it breaks the trend line. Wait for your selected commodity stock to roll over before getting any shorts. Though I admit making the same mistake of shorting CMP too early.

In Summary:
Sit back and Short Commodities on the slightest sign of weakness in EURO.

My picks: DBA, CMP, FWLT

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