Buy Stocks That Worked Before the Crash

My own opinion is that commodities such as oil, and copper, stocks that track those commodity prices, and select other stocks should be bought here. The market has impressively resisted further declines in the face of horrific economic news during the past week or two.

Governments around the world have unleashed a tidal wave of money, much of which has not yet washed into the stock markets. However, the combination of this money, along with money coming out of the bond markets, should push stocks much higher in the next year.

Volatility appears to have peaked, but remains at historic highs.

Short term, stocks are a tad over bought.

Financials have stopped going down for now. Is this a trade to the long side?

Stocks have stopped going down for now. Is this a trade to the long side?

Brazil continues to crash along with commodity prices.

The US Dollar is consolidating at higher levels.

Gold has been making lower highs and lower lows the past six months.

Oil prices have fallen over $100 per barrel from peak to trough in the past 5 months. Crazy.

Copper, the best economist, has collapsed in price in the past 6 months.

Freeport (FCX) collapses with the price of copper.

Disclosure: None.

Comments

[NOWHEREMAN:]

Dr. O: what color scheme did you use to get your charts. They are really crystal clear. I do not have to print them out and look at them with a magnifying glass to discern the details

Having said that, the USD might be forming the right shoulder of a mini H&S with a projected move to 82, MACD suggests this scenario. Meanwhile, Gold is not overbought but is reaching MACD levels from which it has retreated in the past.

Is it possible that both will retreat at the same time?
What do you think?

PS Duh might show up to laugh at me for my whatever and you for not offering specifics to buy.

2008 Dec 09 11:32 AM

[tipalia:]

no specifics to buy in black and white but if I can read between the lines he seems to like commodities like gold and copper . Maybe I am wrong and if I am please correct me.Thank you for your work of art.

2008 Dec 09 12:05 PM

[Dr. O:]

Good afternoon friends. Thank you for the compliments on the charts. I was looking to do something different, something easier on the eye. I believe I chose "mauve" as the background color, and selected area instead of lines or bars or candlesticks.

Looking at "horizontal" lines of support and resistance this seems like a good time to buy, as the market held the 2002 bear-market lows. It would seem that this is a good time to get into Brazil (EWZ), China (FXI), steel, infrastructure, oil (USO, OIH), etc.

However, that's predicated on some stabilization and upturn in the late spring or summer, given that the markets bottom before the news improves. Personally, I think reflation will work.

Long term, I think there will be serious problems with commodity prices, again, inflation, and a falling US Dollar.

I've been all in cash since June, but am thinking about getting back in. If I do, I'll want broad market exposure (SPY, QQQQ, etc), as well as the above mentioned countries and sectors.

2008 Dec 09 12:58 PM

[Socialism c...:]

Freeport popped 20% yesterday. And it's holding up today.

2008 Dec 09 01:13 PM

[NOWHEREMAN:]

There is a new triple you might consider, ERX. Just a thought.

2008 Dec 09 01:49 PM

[GMiki1:]

I like Freeport (don't hold it). Copper will go up with infrastructure, and China is buying copper (don't know from where). Actually, I like base metals for infrastructure. I also love gold and silver for hyperinflation. I'd buy ag stocks here--and certainly oil services and small oil and gas companies in the U.S. and Canada.

2008 Dec 09 03:30 PM

[GMiki1:]

But the only actual buying or selling I've done in a long time was to sell some NAK at a loss and buy some SLW. I still hold a glob of NAK, which is a fantastic stock that got clobbered, and have a bunch of other SLW, which I think will recover more quickly than NAK. I love them both.

2008 Dec 09 03:32 PM

[Dr. O:]

Silver has been conspicuously weak in this turmoil. Maybe because a lot of silver is used for industrial purposes. Only gold has held up.

I think this is a good chance to get back into the commodity theme. I have two concerns, one technical, and one fundamental.

Technically, although some of the friskier stocks are surmounting their 50-day moving averages, the direction of the moving averages is still down. You'd like the direction of the moving averages to flatten out a little, which takes some time.

Fundamentally, the problem I'm struggling with is that the world seems to be economically a worse place now than it was in 2002. So, should we expect the 2002 lows to hold?

2008 Dec 09 03:43 PM

[NOWHEREMAN:]

The 2002 lows have not held for many really good stocks, like DD and GE, to name just 2 of the Big Boys. GE I can understand, around 50% of the company is Toxic, but DD?

There are just too many people calling the bottom for me to venture in without a reservation or two. That's why I feel nibbling with the Triple ETFs is better than commiting to individual stocks presently. IMHO

2008 Dec 09 05:22 PM

[maedchen:]

I like FCX as well as TC, they both will have a great comeback in late 09.
Oil should be at 60 or 70, a price everybody could effort and very important would stabilize middle east etc., something in our own interest.

2008 Dec 09 08:28 PM