09/17/10: While the currencies of the world hang in limbo ahead of the upcoming US congressional elections, the world stock markets are slowly working higher (this week saw the S&P 500 breakout) amid a world that is convinced rates are going to stay low for some while yet. Commodity prices are rising generally too with notable bullishness in the grains and metals. Regardless of the price action, I would be very reluctant to put on any new money of significance ahead of the November elections. Having said that, a coat-tail trade into the election isn't a bad idea but that is all that it should be seen as and nothing more. Gold looks especially appealing with its recent breakout through $1250. A move over the next couple weeks into the low $1400s wouldn't be a big surprise as it has been our target for 18 weeks now.
As per the most recent S&P 500 blog entry and previous posts here, many of the world's stock markets are moving higher. So much so that double bottoms have been regeistered and upside targets identified.
While I am cautiously optimistic for the market heading into the election (and the potential honey moon period into X-mass '10. I am rather pessimistic for the market after that event. If you are to be long then use the above listed reference points as a barometer for entry and keep stops tight!
For those that must be long something, I would take a serious look at the gold chart and associated options. While I don't have a specific trade in mind, I am looking at the November $1300 calls in earnest...
That's all for this issue of the CTS Spotlight,
Brian Beamish FCSI
the_rational_investor@yahoo.com
http://www.the-rational-investor.com
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