July-26 Commodity

I think it is pretty much necessary to write something about commodities at this moment. It has been always a funny thing that people ask on the mailing list how they can do with their stocks under water, but no people ask me whether they should sell stocks when they are high, such as when RIO hit $45.

Stock market is always a cyclic business which means a single stocks never goes up in a mono tune without major correction. This principle also holds on the downside. Commodities have this correction led by OIL, now we have two different situations.

• The first one is, this financial crisis is completely over and the housing price is steady, Then the commodity price may go even a bit lower, then the another bull market begins.
• The second one is: we are heading more financial bail outs and more troubles on mortgate with housing price going down. Then the dollar may still go down, commodities will go up.

Please think about and look around by yourself, which one would be more likely to happen?

July-23 Is Airliners resistable?

We have seen the airliners have been boosted to rebound, then our question will be whether the rebound is a dead cat bounce, or still resistable?

 

The most important thing is still OIL price, and most people still think we are in the correction mode but not sell-off mode for OIL. I don't think it's smart to buy after one day gain of ~50% on airliner stocks.

 

However, what we can do is to bet a short-term rebound on Chinese airliners as well - we don't lost much if they don't.

July-19 Short term play - Chinese metal stocks

By inspecting Chinese metal sector, you will find they are at the level of long-term oversold and mid-term consolidation around low level, thus these stocks are heading for short-term rebound.

 

Taking 601600 for example, this stock is trading at 14.2 RMB, and this stock is heading to 17-18 RMB area in the short term.

 

Other stocks to watch, for A share market:

601600, 600497, 600489, 601899, 600362

 

for H share market:

0358, 2600, 2626, 1208

 

Please note: I am more confident on A share metal stocks.

 

July-17 The bottom

It's not possible to know the bottom until quarters later, and I don't think bottom fishing is such an important thing.

If you miss the airliners today, don't worry, there will be many other opportunities ahead.

GLD retreated a bit as we expected, and I think GLD could be a good hedging option if you want to go long for mid term.

I hope you pay attention to opportunities on A share and H share tonight.

July-15 Gold will be strong

Technically, the gold chart is very bullish, and I believe this uptrend will create a new high for GLD. It's no doubt to own good Gold stocks at this moment.

I think gold price may go to 1200 USD p/o this round and sending the GLD to 117 USD.

Buy on any pull back. Also consider October options play for ABX, GG and GLD.

Other metals, as I talked about Aluminum, it's better to play options on AA rather than ACH, due to size of spread.

July Stupid Mistake on Airliners

I have to apologize once again on Airliners. This is one of my biggest mistakes in 2008. I write this email is to remind you the following facts:

1. Are all airliners going to bailout at the end? Of course not, so we need to pick up ones that will survive, as they will be probably the best gainers in the following years.
2. I think you can easily name big airliners in US. Please choose 2-3 ones that you think might have better chance to survive, track them. This world can not live without big airliners, think about this. Also, for example, count the number of air planes owned by company like UAUA and NWA, and calculate there value. You will find they probably worth more than the stock price.
   
3. I won't be that stupid to suggest you to buy airliners NOW, however, watch them.
   

Good luck.

July-11 Time to talk about Aluminum stocks

I was 100% correct on the futures price of Aluminum, which just hit the all time high at LME. However, I was wrong about the stock price of Aluminum stocks, including ACH. We know that the stock price is determined by the company performance. The major reason of the downtrend of ACH is the ER of this company - profit halved. However, we know this problem was due to the low metal price in the first half and the snow storm in China, as well as the market environment. I think it is more important to consider the strategy from now on.

We see higher Aluminum price again and we also want to benefit from that. Major institutes dumped the stocks, fine, as we can predict the metal price will go up, there is a good opportunity to collect cheap stocks - the company performance will show up in the 2nd half and then it would be too late to catch up.

Do remember, by 2010, China will be the pure importer of Aluminum. It's time to strategically long Aluminum stocks.

July 9 Daily update

Given the condition that financials waked up. The market is due for rebound very soon.

Buy good stocks to hold, now it's time. Chinese stocks are good ones to have. Do remember this country still has 10% GDP increase in the first half and most major banks doubled profits in the first half compare to 2007. I recommend ICBC HK:1398 and most other Chinese bluechips.

A share and H share are targeting decent rebound in mid-term.

ETFs for clean energy and technologies such as PZD and PBW are worthwhile to watch.

Please pay attention to the market. This area is quite likely to be the big bottom, if a decent rebound is established.

July 8 Market comment

Vietnam rebounded 20% in past weeks. I believe A share will also do this.

Crisis is always a reason to stay on the short side, while it is also the best opportunity to start long position.

Long CAF, China bluechips and ETFs such as 150001.

In US, I find chocolate producers are good ones to have.