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The Stock Trading Advisor’s “From
the Trading Turret”
From: R. A. Christy
Editor, ‘From the Trading Turret’
President/CEO, Christy Investment Group
http://www.christyinvestments.com
Date: November 18, 2007
Current Field Position:
DEFENSE
Bullish Percent Indicators:
BP NYSE
Os @ 40%
BP
OTC Xs @ 33.8%
BP
Option Os @
38%
Favored Sectors: Gaming, Gas Utilities,
Non-Air Transports, Oil, Telephone, Oil Service, Precious Metals, Autos
and Parts, Waste Management, Semiconductors
This week’s diatribe …
The week ended on a high note after another wild and
wooly ride. Option expiration was responsible for most of the gyrations.
Thanksgiving is just a couple of days away and I’m
looking forward to a quiet week. Most of the major players will be out
this week and that’s good for all of us. I’m not expecting any major
surprises and I’m not putting much stock into any market moves this
week.
The Fed
A couple of Fed Governors came out this week and said
that further interest rate cuts are unlikely and that our economy can
weather any rough patches. Futures traders disagree and have fully
priced an interest rate cut into current prices. My money is with the
traders. I think a rate cut is in the offing and if we don’t get one, it
could get really ugly.
Subprime
The subprime woes continue as expected. The estimated
loss to date is hovering around $400 billion. What this means is that $2
trillion of future lending has been eliminated. The net impact is going
to be a future slowdown in spending and economic growth. No kidding.
Most banks have reported the bad news and others are looking for cover.
On Wall Street’s mind is how much will the year end
bonuses be.
Commodities
I’ve been doing some research into commodity cycles and
it looks as though we are in a “super-cycle”. This cycle started in 1999
and could go on for another 8 years.
The first half of the cycle centered on hard assets –
oil, gold, copper, steel, aluminum and lead.
The second half will be centered on the “soft”
commodities. The soft commodities are those from the agricultural (think
corn, wheat, oats, etc.) complex.
I’m thinking this way because …
(1) Food prices are experiencing their fastest increase
in the last 17 years. Milk and bread alone are up more than 25% in 2007.
(2) World population is growing faster than anyone ever
expected. Any idea what the net population of the world is this year?
The best census data that I’ve seen reveals that we’ll
add 80 million people to our population this year. That’s a lot of
mouths to feed and my number is likely to be on the low side.
(3) The world’s middle class is growing. This is
important because a growing middle class means more affluence and that
means more food on the table. It also means better food as well. More
food and better food leads to more calories per day being consumed.
(4) Clothing needs will also increase. More bodies
combined with a growing middle class means demand for cotton related
commodities will increase.
(5) Last, but not least is government intervention in the
free market process. When you need the freest and fairest markets the
most, just leave it to the central governments to ensure that the most
basic needs will never be met. Government intervention and an
inefficient distribution system will virtually guarantee that supply and
demand imbalances will lead to shortages around the world.
The best example right now is the shift to bio-fuels.
This isn’t new stuff. The world energy crisis has been looming for
decades. The current crisis is nonsense, but don’t tell the politicians
that. They have votes to buy.
Farmers are being forced to grow corn and the end result
will be major shortages in both soybeans and wheat.
So how do we play this?
A number of ways. The first is to use agricultural ETFs.
They’re new but they will be effective. I’m also looking for some names
in the fertilizer sector. I think producers of potash, nitrogen and
phosphates will be big winners.
I’ll be adding those names to the watch list along with
other names in the “soft commodity” arena. Once we’re given a buy
signal, we’ll add them to our portfolios.
That’s about it. I hope this week will be a quiet one.
Enjoy your holiday. We all have a lot to be thankful for.
If you have any questions or comments,
just send me an email and I’ll be happy to lend a hand.
RA Christy
The Stock Trading
Advisor
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R.A. Christy is a professional stock
trader, money manager and author. Mr. Christy is the President CEO of
Christy Investment Group, Ltd., a registered investment advisory firm.
He is also the Managing Partner and Portfolio Manager of Plato Advisors,
LLC. At the time of publication, Mr. Christy may from time to time write
about stocks in which he, Christy Investment Group Ltd or Plato Advisors
LLC has a position. In such cases, appropriate disclosure is made.
Under no circumstances does the information in this column represent a
specific recommendation to buy or sell stocks. Mr. Christy appreciates
your feedback and invites you to send it to
rac@christyinvestments.com.
The Stock Trading Advisor
c/o Christy Investment Group
P.O. Box 625
Alpharetta, GA 30009-0625
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© Copyright 2007 RA Christy
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