Thursday, April 16, 2009

Commodities versus financials

Like two ships passing in the night, financials and commodities seem to be caught in different currents.

Rummaging through the various sectoral charts, financials are the favoured candidates to lead the way on the expected pullback in XAO.  Have a look at MQG and WBC in particular...

With respect to MQG, the short squeeze has run its course and the lack of volume buyers above $30 doesn't bode well for the near term share price.  Like to see a pullback to ....

Compare and contrast to the commodities sector - at the macro level both the Australian and Canadian markets have turned a corner, similarly the CRB had a key reversal and oil continues to map out a rounded bottom.

Investment luminaries across the moonscape have been entering the commodity trade for a couple of months now (Soros buying potash and oil, Jim Rogers buying gold and agricultural, Harbinger Capital going substantial in Anglo Amercan, Gartman in copper, AUD, and gold to name but a few).  

More recently market talk has been about the Chinese buying physical commodities (copper etc) rather than US treasuries.  Seems plausible, but don't expect them to chase price higher.

Assuming we get a retracement in the broader indices, might be an opportunity to accumulate commodity exposures (eg. BHP under $30) and possibly re-enter the meantime, there's no reason to get out of the deckchair.  Another pina colada please...

No comments:

Post a Comment