Looking at the fundamentals underpinning the market,there is a perfect storm shaping up. Be prepared, be very prepared to make a ton o money fast.
Tech is breaking out all over. Even real-estate is starting to tick.
My step father, who reads this column everyday, asked me if he should sell his QQQQ’s. I told him to sell if he had a better place for the money. I hope he did not sell because I have a different response after looking at the market tonight……. KEEP your QQQQ’s. Only sell them after we get a double inversion in the LP followed by a double inversion in the Top 100. Since you read this column everyday, You will be among the first to know when that happens, and I will be sure to call you!
Secondly, because the fundamentals are so strong, let me update my goal on the DOW. I was calling for 14,355 if you remember. I am going to add 3% to that for a call of 14,785. It might not happen till the end of the year, but the fundamentals are really hot right now. I will also put some caveats in place here…. Baring any geopolitical risk or a melt down in the hot to trot Chinese market. A melt down in their market could spell short term trouble for our market.
What do I think is shaping up? I think that there is a ton of money that is going to be on shoring itself. I think that EUROPEAN money will start heading this way in droves. The US is on sale with the currency being so low and the rest of the world is standing up and taking notice. Believe it or not, but even huge world super powers like P and G could be in danger here. I look for strong inflows in middle eastern money here too. I think it is just a matter of time until more deals get announced. Nokia just announced it is buying NAVTEQ which gives this huge powerful European company all of our global positioning technology and while they paid up to land NAVTEQ, who cares? It was just $77 Us per share or $38.50 per share in their money.
With the US dollar so low, world demand for US goods is going to spike and the boating companies are going to not only have imports to haul but they will have large back hauls from the US too.
Us expansionism will be focused on low cost states and that will spell the next move up the rung for states like Tennessee. States where the business climate is inviting and the taxes are low. Forget places like Michigan. Michigan just raised its confiscatory taxes through the roof because the economy here is so bad. We just had the new MGM grand Detroit Casino open tonight at midnight and when I drove over the Ambassador Bridge on my way home here it was all lite up like a sparkling jewel in the middle of ciaos, tumult and despair. The average house prices in the city of Detroit has dropped somewhere near 16% in the past year, yet property taxes and garbage collection taxes have gone through the roof. Detroit is going to pin its hopes on casinos and tourists, as it probably should. In a few years there is going to be a downtown core and the neighborhoods will cease to function. That will give GM the opportunity to buy up huge chunks of land cheap for their new automated plants which employ a few hundred per shift..
It is a new order taking shape right before our eyes.
What can we do to take advantage? Expand your knowledge of stock picking and have a world scope. Even Alan Greenspan in his new book which I am really enjoying reading and would highly recommend, talks about the concept that the US is no longer the economic superpower and that events like 911 or the mortgage crisis are just small blips on the world economy because of the diffuse and diverse global economic steam engine.
To that end, it is clear to me that we are in a stock pickers market. I am going to adjust my ETF weightings down to take advantage of some of these blowing out stocks. I need to be in to take advantage of the run, and while ETF’s are an AWESOME way to run this ride, I am going to change my weighting to capture a few more percentage points. I have made some adjustments already in one of my retirement accounts and when the dust settles in their in a few days I am going to be buying stock. I have been accepting my runs in Chinese plays and taking the profits. Today I just sold China Financial the rest of the way. Yes, I am sitting out of this stock. It has had a great run from $20.50 to $42.50 and it can still run higher, but I am content to move on and look for a different play. I have a lot of China and I need to diversify. I have sold KONG and have a sell order in on YTEC if it gets to where I want out. The runs here have been great, but I need to lighten up in China a touch. I am going to be on shoring my funds to. The market fundamentals for US stocks are just too good to pass up.
The other thing I have been lightening up on is oil and oil service. I think the play here is considerably lower. I look for $60 by the end of the year. I know, I am just a stupid truck driver, but hey, I see what I see and I think there is downward pressure on oil. That puts downward pressure on inflation and downward pressure to change interest rates any more than where they are at right now