ETFs to Capture Byron Wien's 10 Surprises for 2009

Now that 2009 is off and rolling, many strategists have thrown in their two cents on what is going to happen with the markets, stocks and exchange traded funds (ETFs). Byron R. Wien, Chief Investment Strategist of Pequot Capital Management offers the following 10 surprises we could be seeing in 2009:

• In anticipation of a market rebound during the second half of 2009, the S&P 500 will rise to the $1,200 mark. The SPDR S&P 500 (SPY) is a possible play.

• As paper value decreases and the demand for precious metals increases, gold will jump to $1,200, SPDR Gold Shares (GLD) would be a good option.

• A jump in commodities sending oil to $80/barrel and natural gas to $9/mcf; United States Oil (USO) and Vanguard Energy ETF (VDE) are possible plays.

• The dollar plummets due to low Treasury interest rates, huge borrowing by the Treasury and continuous printing of money. As a result the yen goes to $0.75 and the Euro to $1.69; CurrencyShares Japanese Yen Trust (FXY) is one to watch.

• The 10-year U.S. Treasury Yield climbs to 4% on inflationary worries iShares Lehman 7-10 Year Treasury (IEF) could be influenced.

• China’s growth jumps to 7%, revamping their economy, iShares FTSE/Xinhua 25 Index (FXI).

• Falling tax revenues from the financial sector threaten to bankrupt the State of New York and corresponding municipalities.

• Housing prices stabilize, Obama’s stimulus plan sends third and fourth quarter real GDP in the positive, Dow Jones US Real Estate (IYR).

• U.S. savings rates diminish, consumer confidence is regained and 2009 sees the best Christmas ever, Retail HOLDRs (RTH) would benefit from this.

• Obama softens his bring the troops home slogan and threat of terrorism forces U.S. to keep strong presence in the Middle East, Dow Jones US Aerospace & Defense (ITA) would be a good option.

The mentioned surprises are all speculation, and on the tone of a broken record, no one can read through the all-mighty crystal ball. Always be cautious and do your research when choosing an investment option.

Comments

[AndrewBaker:]

Of all the options here, I go for gold and oil: at this time I am long gold and short oil. I expect to stay long gold for some time, and am watching oil right now. Whilst I think it will go lower and stay low for a while, the efforts to push the price up will in time come to fruition, so I'm not taking my eye off of it. There may even be opportunities for very short term ultra short trades for a profit. Merely my opinions, so DYOR.

Jan 19 09:46 AM

[Mac Slavo:]

It's quite difficult to time this market. Like andrewbaker i am long gold for the long-term. I am also long oil for the long-term via USO. if i see a price dip to $20-$25, i'll buy more! (DBO isn't too bad either).

Mac

Jan 19 10:14 AM

[bonderman:]

Perhaps you mean 75 yen/dollar rather than $0.75?

"The dollar plummets due to low Treasury interest rates, huge borrowing by the Treasury and continuous printing of money. As a result the yen goes to $0.75 and the Euro to $1.69; CurrencyShares Japanese Yen Trust (FXY) is one to watch."

Jan 19 12:27 PM

[Emerald:]

Wow! The Euro goes to $1.69 or 29% higher than today? Yes, too much printing and borrowing is bad for the dollar but Europe is behind us in terms of a recession. Given the lack of a true European central bank, the Euro will sink against the dollar over the next few months. There is still a flight to quality of the $USD, despite the weakness.

Jan 19 05:22 PM

[Jake2:]

Some good insights here but a lot of it sounds like fantasy land. Due diligence of course.

Jan 19 05:36 PM

[ETFexpert:]

Nice article, I will follow up on this.

Jan 19 07:43 PM

[adan:]

"...the best christmas ever...." -

wow

i don't expect it, but i sure as heck wouldn't reject it :-)

Jan 20 08:47 AM

[Dinger888:]

The bulls continue to fight to keep their foothold in the markets. The major indexes are all holding just above those key thresholds of support that we noted last week. As we explained and detailed last week, this remains a critical point for both the bulls and bears. Mid-week it appeared that the bears were taking control, but the bulls were able to fight to keep their position. It will be interesting to see if the bulls can get lift off from here. We believe that we will get an upward move from this point – as the market continues to demonstrate a consolidation pattern between the upper and lower ranges identified in last week’s report.

Again, in this market, we never really know what to expect until we see the market actually move. Therefore, if you agree that we are consolidating and should get an upward thrust in the next couple weeks ahead, be sure to hedge your positions. Plan your trades ahead of time and allow for a bit of error in direction by hedging with options or futures. In the days ahead, continue to invest with a bit more caution and plan your trades as if you were wrong.

Take a look at “Best and Worst Industry Groups” section for some insight into where the big money is flowing into – and flowing out. Also, take a look at “Trade of the Week” for a spread trade that has the potential of a 28% rate of return over the next 26 days even if it doesn’t move.

Looking at the major sectors, there are some interesting stories being told by the charts. Many of the sectors are in a consolidation mode, meaning that they are basically trading in a sideways trend without a lot of action. There is still money to be made by trading a consolidation pattern, but different investment strategies will be required to produce results. Some of the sectors noted to be in a consolidation pattern over the last several weeks have been the technology sector, the materials sector, and the utility sector.

There are (2) two sectors that are showing bullish strength and (2) two sectors that are showing continued deterioration to the downside. The sectors that show the greatest upward promise at this time are the health care sector and the energy sector. Within the energy sector, we particularly see huge potential with the natural gas and oil. Stocks like Anadarko (APC) is of particular interest. There is a trade here that has the potential of producing a 28% in the next 26 days without the stock even moving…check out the “Trade of the Week” section for details.

The (2) sectors showing the greatest strength to the downside (bearish) are the financial sector and the consumer staples sector. Those of you that like making money as stocks fall in value, you may want to consider investigating Caremark (CVS). We will look to see how it reacts in the next day or two and see what happens as it approaches its resistance at 28.85…if it doesn’t break through 28.85 with any force (which we don’t think it will) – then we will look to go short the stock or buy PUT options for a ride to the downside.

Trade Well,
Dinger
centerji.com

Jan 25 08:58 PM