Justin M. Hall's  Instablog

Market sentiment appears to be shifting. Many investors are becoming more pessimistic and anxious.  

The term "Double Dip" is being repeated and recycled every 15 minutes (and sometimes less) on CNBC.  This sentiment is shared by investors, both domestic and abroad. 

PLAYING THE DOUBLE DIP

1. Get Defensive: Drug makers and  consumer goods (not services).  Obviously, I like small cap drug makers best.  In 2009, I obliviously like SPPI and ARIA. Other potentially positive, near-term plays include: ENDP, ONXX, CELG, CEPH, IMGN, and OSIP.  During yesterday's pool of negativity: QCOR and APT closed in the green, and I like both.

2. When the stuff hits the fan (deflation pressure):  For whatever reason, the US Dollar (USD) is viewed as a safe haven.  So, buy some USDs via ETF (UUP).  See weekly chart below.  During a downturn (double dip) Oil should be sold or avoided.  Observe Gold from the sidelines.

3. When the USD advances: (1) Asian Tech stocks, namely Taiwan, are viewed more favorably and preferred over US Tech.  Find an ETF that tracks the Taiwan Composite Index.  China: (HEAT) closed up yesterday and hit an all-time new high of $14.20.  (HEAT): Bullish Weekly Chart..

4. On USD pullback / downturn: US Tech will be viewed more favorably again and will be preferred.  When USD becomes bearish: Look for a good entry in Gold.  Rather than investing in Gold, I prefer the more useful platinum and palladium via (SWC).

5. Historically: December is the best performing month for the NASDAQ Biotech Index (IBB), including small cap drug makers.  The best performing months for (IBB) are: 1. December, 2. September, and 3. August (ranked by average historical gains (%) during the underlying month).  Historically: Both Oil & US Tech tend to be better plays after the first of the new year (2010).


RELEVANT WEEKLY CHARTS








Disclosure: Long ARIA and SPPI.