Oil Bubble Popped
Back in June I talked about the oil bubble that was forming. That one turned out to be spot on, and as with most bubbles, the pop tends to push the oversold state to the extreme too. Once again, don’t buy oil against the trend since it could easily see $30 before it turns around. Demand is shrinking, but so is OPEC output and eventually they’ll find their sweet spot again. This is one industry where I wouldn’t mind trading against the general market direction, so at least it gives an interesting long that has potential to do something within the next couple years.
Triggers
- Breakout Above $80 - Long term buy
- Below $55 - Shift breakout points according to monthly trend line
Mosaic (MOS) - 10-17-2008
This is another one where I’m looking at a group of stocks and not just MOS. Include AGU, POT, TRA, and any of the other hot agricultural stocks from the past year here too. After starting out good in 2006, then bumping up the slope in 2007, and then just exploding into 2008, these stocks have all gotten beaten back down to the ground over the past month. Maybe the drop will continue and you’ll be able to get in to this one at 20 again. Or maybe it’s already too cheap so it will consolidate here. Either way, this is definitely a sector to watch closely over the next year.
Suntech Power (STP) 10-06-2008
STP is a decent one, but I really just mean to look at all solar stocks, e.g. FSLR, SOL, etc. These guys were super hot last year and most have burned off well over 50% from their peak so far. Alternative energy is still a sector with a bright future though, so look for these guys to jump back to the forefront when the market gets strong again. For STP, look at how well it can hold its previous support of $30 or if it goes back down to its lower level in the low $20s. The results of the presidential election may also influence this sector since the energy policy of the future administration could greatly hinder or aid the development of specific types of energy.
Google (GOOG) - 10-03-2008
Google continues their domination of the online search and targeted ad market, and it doesn’t seem like they’re going to get knocked off any time soon. With their recent forays into TV ads and mobile stuff amongst numerous other things, there’s still a lot of room for growth here. $500 has been a sticking point since 2006, probably largely due to the psychological resistance such a nice round number always produces.
There are two things you could watch for: a breakout over $500 as shown on the weekly chart or a break of the downward channel as shown on the daily chart. Currently that would mean breaking $460, but of course that will go down before the time to buy actually comes. Remember, patience is the key. Try to catch a falling knife and you’ll get hurt.
Apple (AAPL) - 10-03-2008
It’s probably time to start revisiting some stocks to update the trigger levels on the likely leaders for when the market reverses back upwards. AAPL has always been strong and seems to be a fan favorite, so I’ll start there. On the weekly chart there’s been some support/resistance around 115 that we’ve recently tumbled through. On the daily chart there’s been a big slide in September, followed by a couple of strong support days in the 120s, and culminating with the dive off the cliff, 18% loss day. To me, that currently means set an alert when the stock breaks 120, and start really looking hard as it fills the gap up to 130. Of course the broader market conditions should dictate what you do too. The next earnings call is at the end of October, so look to adjust these levels after that. If we’re lucky, there may be an extra 30% off sale in the near future.
Goldman Sachs (GS) - 10-01-2008
Goldman wins by default. All of the bulge-bracket investment banks failed, but Warren Buffett believed in GS and stepped in to keep them afloat. As the last man standing in this category, I think this is definitely one to watch when the slide reverses.