Wednesday, March 16, 2011

Five Sectors to Watch For Direction

Simple and straight forward, plus an excuse to play a video.
From SectorExchange:
The following five sectors are garnering most of the attention from investors and the media. We take a look at each and what opportunities if any they represent. Speculation is building in the broad markets with geopolitical and natural disasters stirring the emotions of investors. At times like this we all need to step back evaluate the risk and determine if it is worthy of our money. If so, approach it with a defined strategy, if not cash is still a sector that offers safety of principle.

Gold – The response to Japan was to fall 2.3% to $1392 an ounce? Silver fell 4.8% as well to $34.12 an ounce. The metals are generally considered an alternative investment when uncertainty grows from global events. Not the case currently, but why the shift? The general consensus seems to be the elevated price of gold brings equal risk for investing. Thus, money has rotated into Treasury bonds (see below). This may be a opportunity to buy gold on the pullback, it closed on the 30 day moving average and the trendline is just below near the $1350 mark. Look for the metal to hold one of these levels and bounce. GLD, SPDRs Gold Trust ETF is the simple way to play the metal.

Crude Oil - The black gold gapped lower, but managed to hold the support near $97. The speculation premium in oil remains in conjunction with the Mideast geopolitical issues. If Saudi Arabia’s issue continue or expand oil will react to the upside again. The supply/demand argument relative to Japan usage decline and other events will take a backseat if disruption is an option in the worlds largest supplier of crude. As the chart below shows the trend in oil is higher. However, it may have reached a short term peak and a test of the $92 support level could be the next move. I am leaning more towards a bounce off the $97 support and back towards a test of the $105 mark at the high. The speculation is high along with the risk short term for oil. The longer term play is USL, United States Crude Oil 12 month ETF, if you believe oil going higher longer term.

And from the Climax Blues Band: