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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: December 4,
2007
Current Field Position:
DEFENSE but the
offense is getting ready
Bullish Percent Indicators:
BP NYSE
Os @ 34%
BP
OTC
Os @ 30%
BP
Option Os @
32%
BP S&P 500
Xs @ 46%
BP OEX
Xs @ 42%
Favored Sectors: Chemicals, Internet, Oil Service,
Telephone, Oil, Aerospace, Software, Gas Utilities, Electric Utilities
and Precious Metals
We started the final month of 2007 with:
DJIA 13, 371.72 +7.29%
NASDAQ 12,660.96 +10.17%
S&P 500 1,481.14 +4.43%
This past week was just another wild and wooly ride on
the Mr. Market, the world’s scariest roller coaster. The indicators have
shifted a bit and the S&P 500 has flashed a BUY signal. The NASDAQ 100
has done so as well.
This doesn’t mean that we jump back into the market head
first, but it does suggest that some action is in order.
The first order of business is to take note where we are
in the grand scheme of things.
For the year, our
Long/Short Portfolio is up 14.12% and
our Long Only Portfolio is up 27%. Our benchmark, the S&P 500, is up
only 4.43% for the year.
Next, we need to make sure that our Watch List is up to
date. We want to own these fundamentally sound companies when the time
is right.
Third, we need to review our current holdings. Weak names
should be replaced with stronger names. This is also a good time for you
to look at your overall tax situation. By harvesting tax losses now
before we head back onto OFFENSE will allow you maximize your upside
potential once the market heads up.
Also, it’s also a good time to take profits in sectors
that are currently out of favor.
The bottom line is that I want to have as much fresh cash
ready to go when the time is right. (Stock Trading Advisor subscribers
should be on the lookout for changes this week)
The rest of the story …
December is shaping up to be one of THOSE months. If we
can get off to a good start, then we should see some follow through.
Otherwise, it will be pretty brutal.
OPEC meets on the 5th and traders worldwide
are hoping that the oil ministers will boost production. I think is a
pretty safe assumption.
Bernanke’s comments last Thursday hinted of future rate
cuts. I happened to be on the trading desk when he started his speech.
His wording was pretty precise – “exceptionally alert and flexible”.
The Fed’s next meeting is December 11th and
the market has fully priced in a ¼ point rate cut. As of right now,
traders are gaming a 77% chance of a ½ point cut.
On the dollar front, not much has changed. Most of the
noise centers around whether a _____ (strong/weak – your choice) dollar
is good for our economy.
Strong dollar proponents see weakness as catastrophic for
our economy and a metaphor for our future. They say a weak dollar is a
sign that our worldwide influence is waning.
Since 2001, the US Dollar (USD) has fallen – 40% against
the Euro, 44% against the Pound Sterling and 13% against the Yen.
Over the past ten years, we’ve experienced several major
“flights to quality”. These fiascos caused the dollar’s supply/demand
balance to skew the price upward. When bond prices go up, interest
rates come down. This was due to the Mexican peso crisis, the Asian
Financial Crisis and the Russian Market meltdown (and Ruble collapse). A
couple of hedge funds (Amaranth and Long Term Capital) can also be
includes in this list.
So far this year, the Federal Reserve has slashed rates
by 75 basis points. The main driver in this has been the US housing
market which has shaken our banking system to the core. The Fed wants to
avoid a recession at all costs. Note: when US interest rates go down,
the US dollar also drops in value.
Not lost in all of this is that foreign central banks
have been re-balancing their dollar heavy reserve portfolios.
Weak dollar proponents see this as a boon to our economy.
It’s great for exports and if a weak dollar is the new trend, then our
$700 billion trade deficit will shrink as a result.
The direct beneficiary of a weak dollar is American
Manufacturing and US Factory Output is up 25% as proof.
Those in the weak dollar camp see our goods and services
becoming more competitive overseas and that “we are sowing the seeds of
future economic growth”. They also say that a weak dollar created more
domestic jobs and overseas investments in US Companies will increase.
Is this a cause for celebration or concern? For me, the
jury is out. For those aspiring to be President, they’re in both camps
as usual.
That’s about it. I have jury duty early in the week and
once I'm free and clear of the Fulton County judicial system, I'll be
back to you with Buy/Sell updates.
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
P.S. Please fee
free to forward this to your peers, friends and associates you think
would benefit from its contents. They will thank you for it - and so
will I!
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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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