Thursday, November 27, 2008

Dollar Rally Over??

We have seen strength in the dollar lately and I am wondering if the party is close to being over. As all of the monetary injections work their way through the system, it should weaken the dollar. I am considering selling UUP short. No doubt there has been a flight to quality in dollars, but as other Central Banks work do their share to revive their economies (and we are seeing unprecedented action) it will reduce the need for that flight.

The terrorist attacks in India could have a negative impact on oil prices, but only for the very very short term. History shows that terrorist attacks in oil importing nations has short term downward pressure on oil prices. I am still an oil and natural gas bull for the long term.

We are working on developing a system of trading quality stocks and will post our results here every night. Right now the futures are hanging in ahead of the abbreviated trading session tomorrow. I am surprised that we are still seeing strength. I personally can't see the S&P index getting over 950. If it gets close I will prepare to double down on my shorts. One really interesting play is Chicago Bridge and Iron CBI. This one is still under $10 and has made some good gains in the last few days after being hammered most of the year. I will look to buy it under $10 and stop out at $8.50 Target--Open

John Deere (DE) looks to have put in a bottom at $28.50 and rallied to its present level of just under $36. I like this as one right here with a stop with a close under $28.50. This is a larger range than I usually like to play, but I think the support is strong at that level and this is a good company that has been overdone to the downside. Target--Open

On the short side I like UTX (even though I really like this company) as a short at current levels $47.73 with a stop over $50. Target 41. This one could run into some weakness if the dollar falls.

We are paper trading these picks as we try to develop our system. Remember that we are not registered investment advisers and you should not make any trade/investment without consulting your investment adviser.

1 comments:

Pierre Pienaar said...

I don't think so. However,It will depend on how all the bailouts going to work out.
Pierre
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