Next week outlook
- Industrial data expected to be positive
- Unemployment expected to decrease
- Euro zone scrutiny
Most likely scenario:
Commodities are in a bear trend, Gold, Copper, Silver are at major resistance level, they will most likely decline.
Commodities need to find their bottom, especially when the US index is going up due to the weak Euro.
Bearish on commodities sector.
Financials continue to be undervalued. Banks have taken a huge beating starting with the Volcker plan. However, it seems like they have been overdone. Concerns of the Greek bailout have hit US banks too. Financials are oversold and would be the first one to pick up steam for this upcoming rally.
Retails are also being sold furiously by investors as they are mostly overbought in the latest December rally. Correction is taking place.
Stock Picks:
Short
United States Steel X
Caterpillar CAT
Long
All large caps banks
Bank Of America Corp BAC
Citigroup C
JP Morgan JPM
Wells Fargo WFC
Goldman Sachs GS
Morgan Stanley MS
Best Pick for next week:
Bank Of America Corp BAC
In keeping my trading plan simple, I will only focus on 2 sectors for next week. Watching too many sectors would only be a distraction.
In general, short Materials, long Financials.
Last week trading plans went quite well.
Good trades:
Alcoa Inc (NYSE: AA)
AA Short $13.50 - $13.10
AA Long $13.10 - $13.55
Las Vegas Sands (NYSE: LVS) and WYNN resorts (NYSE: WYNN)
LVS Long $15.5 - $16.6
WYNN $61 - $61.5
Bad trades:
Bank Of America Corp (NYSE: BAC)
BAC Long $14.80 - $14.5 (-30cts) HOLD LONG
United States Steel (NYSE: X)
X Short $47 - $48 (-$1) HOLD SHORT
Bad News last week
- China tightening credit
- Greek bail out may cause the Euro zone to collapse
- Results in strengthening of USD – stocks, commodities weaken
- Dubai CDS increasing risk
Good News last week
- Unemployment data brightens
- Materials demand increasing
- Greek bail out aid
Disclaimer: All picks are solely based on my own opinions. Consult your own financial advisor for trading ideas.
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