Tuesday, June 23, 2009

The four trades I'm watching

Been distracted by other projects...but quickly the four trades I'm watching are:

1) Short banks (WBC, CBA)
2) Long utilities and defensives (TCL, CEU and TTS)
3) Long gold
4) Oil - is it breaking down or will it hold its uptrend?  (WPL and AWE)

I'll put some definitive thoughts on paper soon, but to spur some thinking:
1) USD - I'm suspicious that there will be a concerted effort from governments to build some strength - longer term the story that the IMF will sell 400 tonnes of gold is a positive, reading between the lines, China will be the buyer and its all part of the 'let's replace the USD as the world's reserve currency' movement
2) S&P500 - everyone is looking at 880 and asking whether it will hold.  I'm not expecting the big sell-off just yet, so am on balance expecting a bounce, but there are a plethora of stocks that look like they are ready to breakdown (so am not betting big until we have some clarity)
3) Base metals - also looking soft - there is a little nervousness emerging about the China growth assumption and whether they will continue to stockpile in the short-term.

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