Wednesday, January 6, 2010

Rally No One Believes Enters 11th Month

The rally no one has really believed in all along since March 2009 has now entered the 11th month, and it is showing the sign of further upside. I said here, here, and here on this blog that the rally might last longer than most people were expecting, and it did.

I've been long pretty much all the way, though I've been shaken out here and there (I'm a chicken little). The only reason I would be selling some of the positions would be to raise money to buy stocks that would likely to move faster than what I have.

There are so many technical breakouts on individual stocks almost every day since late December that it is impossible to be in them all. My most recent purchase was today, call options on North American Palladium (PAL). JASO went lower than what I would have liked, but bounced right back, making 50% gain on my options. CENX that I bought almost on a whim on the breakout continues to go higher. All I do on this stock is to keep raising my stop limit every day. I've heard about a new industrial metal ETF, which should be good for both CENX and PAL, and probably MTL. UCO is up further since I sold my call options. I switched to more liquid options on USO, out of money April calls (strike at USO $50; currently USO is about $40) just as a crisis hedge (Middle East is volatile). Even those are making money.

I don't have enough funds to play, but just from TA, financials seems to be ready to break out. Individual names in financials have already started to break out. Among too-big-to-fail banks, I like Morgan Stanley (MS) setup.

Since I cannot be in all and I don't have enough funds, I might as well throw out some names that I've been watching. Many of them have already broken out to the upside, but you could wait for backtesting. Just for your entertainment, and none of them is recommendation. Please do your own due diligence.

SQM (just about to break the resistance at $40)
BLL (right at $51-52 resistance)
TUP (resistance $50)
Canadian oil/gas trusts (I have PVX that I've had for long time for dividend, it spiked 6% today)

Good luck and good trade. For now, buying the breakout has been working, which I tend to take it as a sign of a bull market in stocks. Many people these days say that strategy is outdated, that it doesn't work when the market is this manipulated (whether by the Fed or Vampire Squid). I'm just saying it's been working, particularly these past 3 weeks or so. But remember, the stock market IS NOT the economy.