The Stock Whisperer

A September to Remember

2010-09-30T12:27:00.001-07:00

· A September rally taking the major indices into positive territory for the year

· Strong leadership: CRM, FFIV, AKAM, VMW

· Gold hits alltime highs, Silver hits new 30 year highs

· The US Dollar continuing its fall and growing concern over a US government credit downgrade… possibly even bankruptcy

· Oracle is this month’s stock to watch

What a month! After getting faked out multiple times in May and June, the market finally decided to get its act together and act more like its usual self. The September rally has taken the major indices into positive territory for the year, and has produced several leaders discussed in last month’s report. These are the cloud computing stocks Salesforce.com (CRM), F5 Networks (FFIV), Akamai Technologies (AKAM), and VMware Inc. (VMW), online video renter Netflix (NFLX), and precious metals GLD (SPDR gold trust ETF), Silver Trust ETF (SLV). At the point, the market, along with many leading stocks, have every right to rest, pullback, and possibly make its next move higher.

Since 1945, the US dollar served as the world’s reserve currency,which has given the greenback worldwide clout. But with a GDP of about $14 trillion and growing debt, this is likely to change. While the government reported US debt at $13.370 trillion, this did not include off-balance sheet items. Factoring this in, the Peter G Peterson Foundation and Dallas Federal Reserve came up with more likely estimates of $63 trillion and $100 trillion, respectively – a level the GDP simply can not support. This not only brings up the real possiblity of a credit downgrade for the US, but also backruptcy.

UDN (PowerShares DB US Dollar Bearish Fund) is the play on the falling dollar. The price gains on above average volume are cues of institutional accumulation as it forms the right side of its cup formation. For now, its best to wait until this formation complete before considering a purchase.

ORCL (Oracle Corp) is trading near a nine-year high and a 26.73 cup buy point after vaulting 8% on Sept. 17 following a strong quarterly report. The software giant is getting a boost from its acquisition of server maker Sun Microsystems, and announcements that it is looking to acquire chip makers. Oracle is following Apple’s model of creating custom hardware and software to create innovative products, and have the potential to become industry leaders in cloud computing and virtualization.

A fantastic day for the IBD 100!

2010-09-24T11:39:00.001-07:00

August 2010 Investor Report

2010-08-30T16:23:00.001-07:00

August 2010

The charts referred to below can be viewed at http://www.ibdinvestor.blogspot.com/

August 2010 Monthly Report

· Another Failed Rally

· Stocks to watch Salesforce.com (CRM), F5 Networks (FFIV), Akamai Technologies (AKAM), VMware Inc. (VMW), Netflix (NFLX), GLD (SPDR gold trust ETF), Silver Trust ETF (SLV)

· Risks of a double-dip recession, or the “d” word is on the rise

Figure 1

Another month, another failed rally as shown in figure 1. On the S&P 500, it is the fifth time since May this index has bounced off of the psychological “tax” or 1040 support line. A break below this may find the index down to 1000. Leadership did show up as cloud computing stocks Salesforce.com (CRM), F5 Networks (FFIV), Akamai Technologies (AKAM), and VMware Inc. (VMW), and online video renter Netflix (NFLX) posted double digit runs. Monitoring these through this correction will provide valuable clues to their strength on the next market rally. Look for signs of low volume selling and high volume buying, or for the weekly price action to be flat. Buying leading stocks in this wild market has been difficult as many breakouts have lead to break downs. Thus, the longer term approach for this portfolio has been GLD (SPDR gold trust ETF), which we have held since ???. An position in Silver Trust ETF (SLV) was also initiated. Both have made strong runs this month (figure 2).

Figure 2

Despite government efforts to stimulate the economy, unemployment remains high at 9.5%, with other estimates as high as the 1930’s depression level 25%. GDP growth also is reported at a disappointing 1.6%. Fed admitted that “the pace of recovery in output and employment has slowed in recent months.”. The country is getting fed up with current monetary policy of printing money, and the markets also showed disapproval with a near 3% drop on 8/11, on reaction to Bernanke’s QE2 announcement, which will dig the nation deeper into debt.

QE2 is a plan to prime the economy’s pump, by reinvesting principal payments from agency debt and agency mortgage- backed securities (from the stimulus and bailouts) into longer term Treasury securities. This money, which was created out of thin air, will earn 25-50 cents on the dollar, will then be used to help fund the nation’s budget deficits, now about $1 trillion a year. Add this to the $2 trillion pumped of stimulas, which only provided a temporary economic boost, and it appears the risk of a double-dip recession, or even the “d” word is growing.

Netflix (NFLX) is a good example of the “N” in CANSLIM. A new product or service to fuel company growth. Put another way, a better mouse trap. I took note of the company in my 1/2010 blog when it announced deals to make downloads available on TV’s, DVD players, Playstation 3, XBOX 360, Wii, iphone, and just recently the ipad. Since then, the stock has jump over 135% this year in anticipation of Blockbuster plans to file for bankruptcy protection in Sept. The movie studios are also jumping on the Netflix wagon as they see demise of video rental stores. The deal with Epix will allow timely showing movies from Lions Gate (LGF), Viacom's (VIA) Paramount, and MGM. That means Netflix could potentially stream some of the big summer hits, such as "Iron Man 2" and "Dinner for Schmucks," at the same time DVD retailers and premium cable channels show it. This agreement will fuel already stellar growth, with the company adding more than 1 million net new customers for third straight. The 15 million users it had at the end of June was up 7% from the first quarter and 42% from a year ago.

July 2010

2010-08-02T09:13:00.001-07:00

July 2010

The charts referred to below can be viewed at http://www.ibdinvestor.blogspot.com/

· The market is Follow-Thru’d on 7/13, but will this rally succeed after two previous failures?

· LED lighting is looking bright, Veeco Instruments (VECO) and CREE Inc. (CREE) are making it brighter

July started off with the market correcting down, then follow-thru’d on July 13, but after the two 2 previously failed FTD in June, cautious measures are being taken before entering this one. This rally has climbed back up to the 200 day moving line but has been met with some resistance, so a push above this will confirm this FTD. This attempt does has more stock leadership, which increases the odds of success. Leaders are Foreign Banks (Chile's Banco Santander (SAN), Bancolombia (CIB)), Cloud Computing (Salesforce (CRM), VM Ware (VMW), and LED lighting (Cree (CREE), Veeco Instruments (VECO)).

Semiconductor factory workers using Veeco equipment inspect wafers that will be turned into LED chips.

This month’s stock spotlight is Veeco Instruments (VECO) which provides manufacturing equipment for 80% of the world’s LED lighting makers. Their second quarter earnings more than tripled, which beat analyst expectations. The company also reported a backlog of orders and raised the company’s outlook. This will also be good news for CREE Inc. (CREE), a maker of LED lighting. LEDs are everywhere: computer screens, TVs, car lights, street lights, home and business lighting. More expensive than incandescent or fluorescent lights, VEECO’s equipment aims to “greatly decrease” its price, according to Veeco Chief Executive John Peeler. LED’s also have other advantages; less power consumption, up to 1/10^th that of an incandescent bulb and less maintenance. John Valero facilities director at the Hard Rock Café in Las Vegas, says the cost to light the outside of the Hard Rock has been cut to $1,900 a year from $18,000 after their LED conversion.

June 2010

2010-06-30T17:41:00.001-07:00

June 2010

*A wild roller coaster ride eventually took the markets down for poor showing 1^st half of 2010.

*If you think Greece is in bad financial shape, the US is actually in worse

*”Look ma, no hands” with Microsoft’s new Kinect for Xbox 360, or “Look ma, no glasses”, got Nintendo’s 3DS.

Figure 1

The market threw out a couple curve balls this month in the way two failed Follow-thru and two failed Correction signals (Figure 1). These signals came quickly which, in my personal studies, are failure prone. It was market volatility and short term profit taking which made June choppy and unpredictable. There was no sign of long term support from institutional buyers. This speaks to the uncertainty about the market. GLD (SPDR gold trust ETF) continued to be the bright spot of the portfolio this month as it climbed toward a all time record high. Technically, the indices have breached support and should be headed lower; BUT in this market, it could throw another head fake up as it did throughout June.

With all the news focused on Greece and the rest of the PIGS, it’s really the US in worst shape, according to Scotia Capital (Figure 2). The markets have given the US more “wiggle room” to bring in fiscal austerity. But that does not seem to be in Geithner game plan, as stated in a letter during June’s G20 conference.

Figure 2

In response, the G-20 as it writes up their position in a three-page communiqué:

Conclusion: the U.S. still doesn't get it. The rest of the world seems to be facing up to the source of the fiscal problems (other than public unions). The U.S. is in an incredibly huge dilemma. The debt levels of the European Union pale in comparison to those of the U.S. Will the New Normal be imposed on the U.S. by the rest of the world? Where does this end? Disaster or just a modest life and economy for the future by countries living within their means? The second might seem pretty nice if it follows the former!

This year’s E3 Conference may have been one of the best ever with revolutionary product introductions from each of the bigs: MSFT (Microsoft Corp), SNE (Sony Corp), and NTDOY.PK (Nintendo Co LTD ADR). Sony introduced their “Wii” controller, called Move (http://www.youtube.com/watch?v=s9ybHddDMgM). It does improve on the Wii with the addition of a camera to read body movements. The Playstation will also offer 3D gaming with through a software upgrade. Expect Wii and Xbox 360 to follow with their own 3D upgrades. Speaking of 3D, the 3DS handheld from Nintendo was introduced for portable 3D gaming without the glasses! (http://www.youtube.com/watch?v=pWYgM1RGixM&feature=related) . From Microsoft comes Kinect for Xbox 360, a high def 3D camera to detect precise body movements. In other words, your body becomes a controller. Perhaps the best way to understand this is to see this: http://www.youtube.com/watch?v=iH5d35qVirs&feature=related). With these products generating hardware upgrades and new software sales cycles, keep a watch on GME (Gamestop) at about $21-$22. GME (Gamestop) is the Street’s pure play when it comes to gaming, but be aware, as the market continues to throw out curve balls, individual stocks will follow suit.

Going out on a limb, my may be that the most important feature of the AAPL (Apple Corp) iphone 4 is Facetime, or video conferencing. While it technology has been around for over 30 years, it has yet to be easy and convenient. Initially, it will only be available on WiFi, but as Apple makes this viral, it may become the killer app and reason users will upgrade to 4G. They are off to a great start, check out this touching video http://www.viddler.com/explore/engadget/videos/1503/.

May 2010 Report

2010-06-02T21:08:00.001-07:00

May 2010

Many are beginning to doubt how much impact $1 Trillion will have on saving Greece and the other PIIGS. The market response to the bailout was a broad sell off of 3.7% on the NASDAQ and 3.9% on the NYSE. This day also signalled the beginning of a market downtrend. Positions in GLD (SPDR gold trust ETF), PSQ (Proshares Inverse QQQ), SH (SPDR Short S&P500), and SEF (Proshares Short Financials) have benefited from the worst May since 1940.

Market Analysis: Downtrend since 5/4 continues

May 4th signaled a correction in the markets and positions were initiated in GLD (SPDR gold trust ETF), PSQ (Proshares Inverse QQQ), SH (SPDR Short S&P500), and SEF (Proshares Short Financials). These shorts have since benefited from the worst May since1940, and have lifted the portfolio to over 5% for the month. The market has yet to show any signs of strength. May 27 could have marked a turnaround day with the NASDAQ up 3.7% and the NYSE up 3.9%, but this action came on below average volume, a sign that institutions continue to be reluctant to put money in the market. The major indices have been finding support at the 200 day moving average, an inflection point which could either see a continuation lower or a reversal into higher ground.

The Economy: $1 Trillion isn't worth what it used to be' at least for PIIGS

A $1 Trillion isn't worth what it used to be. This is evidenced with the widespread, 3% sell off response to the Eurozone's approval of the Greece bailout. The world is beginning to understand that it might not be enough. Even with the anticipated cuts in Greece, there would seem to be a cultural bias preventing changes to be implemented. The financial overseers have no real plan to solve the problem and the stop-gaps only put out a small fire. It very well may be a problem of insolvency rather than liquidity. Today, Greece is only the tip of a very large iceberg. Portugal, Spain, Italy and Ireland together owe $3.9 trillion in short- and medium-term debts, an amount larger than their combined GDP, estimated last year at $3.3 trillion. The problem directly hits US tax payers, as we are "required" to contribute 17% of the IMF's funding, or $48.6 billion to cover the debts of nations who spend more than they make.

A Vaccine for Cancer: Space age medicine finds its way back to Earth
Recently, an episode of Star Trek: Enterprise aired, called "Terra Nova". One of the inhabits of a lost colony of humans was diagnosed with lung cancer, which had spread to her lymphatic system. The good news is that she was cured...in one day! A vaccine was synthesized from her DNA to attack her specific cancer, kind of like a tailor made suit. More good news, this technology has recently been FDA approved. Provenge from DNDN (Dendreon Corp) is the first FDA approved cancer vaccine for prostate cancer. It will not cure cancer, but will prolong life in late stage cancers. The stock popped up 25% on over 3 times normal volume on April 29th and has since fallen back to it's 50 day moving average. Should a market rally resume, this is one to keep on your watchlist.

April 2010 Investment Report

2010-05-04T14:41:00.001-07:00

The market continued to climb, but have thrown many "head fakes" along the way. Attention has turned to Greece's bailout, but Spain is not far behind. The SEC investigation of Goldman Sachs will be a market game changer. GLD, PSQ, and SH are on the watchlist.

The March 1st follow through triggering a buy signal for the SPY (SPDR S&P 500 ETF) and QQQQ (Powershares QQQ Trust) would have led to gains of 6.4% and 8.25% respectively. This signal was confirmed on 4 reliable sources, but a decision was made to remain in cash. This market has particularly been characteristic of throwing "head fakes" and fooling the crowd, including me. But the rally is showing signs of fatigue, with 6 distribution days on the S&P500 and NYSE. SEC actions against Goldman Sachs also has the potential to drag the market down.

While everyone knows pigs can't fly, PIIGS countries are flying high in debt and are in the verge of taking financial nose dives. Greece saw its bond rating downgraded to junk and are weeks away from defaulting on loans. Yet, unions still may not accept EU and IMF terms of raising retirement age of 53 or give up bonuses equaling 2 months pay. Spain is not far behind as it reported 20% unemployment last month. But this crisis has far greater implications. Morgan Stanley has 69% Tier 1 PIIGS capital exposure and JP Morgan Chase 20%. In total, US banks have $238 billion of investments in these countries. The Euro is also threatened, as the currency shared by the 16 European nations is weakening. Which, also threatens global economic recovery.

A play on the PIIGS crisis is the flight to safety in GLD (SPDR gold trust ETF). The yellow metal broke out of a double bottom on April 9th, found support at the 20-day moving average and broke out a second time on nearly twice its average trading volume. This can be bought as it falls back to its pivot at 114.11, or preferably at 113.03 which is the 20-day moving average. With the current rally which started on March 1st showing signs of weakness, positions in PSQ (Proshares Inverse QQQ) and SH (SPDR Short S&P500) will be started when the market signals a Correction.

March Newsletter

2010-04-01T22:43:00.001-07:00

A follow-through was signaled on March 1^st, carrying the markets into positive territory for the year. But the rally may be fizzling. Default risks increased for Greece and Portugal. QQQQ, SPY, and UUP are being watched as potential buys

The NASDAQ staged a "cautious" follow-through on March 1st. The signal was questionable with only the NASDAQ meeting the absolute minimum 1.6% gain on higher volume. Nevertheless, the rally pushed the indices into positive territory for the year; in a cautious and tender way. To everyone’s surprise, the market held up the day after the healthcare bill passed. This would have been a good sign, but back to back distribution, or high sell off days weakened this rally. Semiconductor and Chinese internet stocks have led the way, but have also experienced recent selling pressure. Investing in this market remains difficult. Money managers are being pressured keep their portfolios on par with market performance, but their lack of volume equates to their lack of conviction.
In financial news, 2010 will mark the change of social security outflows exceeding tax inflows, six years earlier than government forecasted. The Congressional Budget Office estimates present value of unfunded social insurance expenditures at $46 trillion. The healthcare bill may add another $562 billion to this over the next decade, according to an ex-CBO director in the The New York Times. In the article "Fantasy In, fantasy out", the bill's claim of reducing the deficit by $138 billion is nothing but a"slight of hand", applying front-end loaded revenues and back-end loaded expenses. Abroad, the PIGS continue to make a lot a noise. Portugal was Fitch downgraded from AA to AA on increased default risk, and Greece’s auction of 5.9% bonds showed lackluster support with investors. Interestingly, this boosted US dollar; which is the "taller midget" among financially troubled countries.
With 4 recent distribution days, the rally may be fizzling out, or taking a rest before moving higher. Many of the market leaders have been under selling pressure, another negative for rallies. Buy opportunities may come from 20-day moving average pullbacks on the indices; 115.71 for the SPY (SPDR S&P 500 ETF) and 47.48 for the QQQQ (Powershares QQQ Trust). Another from the US dollar, which staged an impressive breakout on 3/27 but retraced back down. UUP (PowerShares DB US Dollar Bullish Fund ETF) looks buyable on a move above its previous high at 24.14. Just be careful as the dollar sometimes trades with wide intraday swings.

March Newsletter

2010-04-01T22:40:00.001-07:00

February 2010 Report

2010-03-01T13:35:00.001-08:00

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Mixed economic signals continue to feed investor uncertainty and apprehensiveness. While a follow through (the technical signal for a new rally) may occur, it will be failure prone. TJX (T J X), which operates off price TJ MAXX, Marshalls, and Homegoods is profiting and staged a nice breakout, but would still be a cautious buy given the overall market.

The markets started the month falling into a ditch, then turned around, eventually ending +1.4% for the S&P500, and +3.9% on the NASDAQ. Investors remained "wishy washy", even as the the month ended in a 14 day rally attempt. The technical signal, or follow through, to start a new market uptrend is a 1.7% up day on above average volume, on one of the major indices. Follow Through's are usually reliable with a 70-80% historical track record, but this may be failure prone with a high 14 day count. The declining volume and wide price swings are secondary indicators of a weak market and translates to investor confusion and a lack of conviction. On the other hand, the market is very good a fooling investors, and it would not surprise me to see this follow through work.

While the Fed's action to raise the discount rate could be seen as a sign of recovery, it's really the Fed funds rate that needs to be watched. The discount rate is used primarily for bank to banks business, and the Fed fund's rate loans to customers. Also known as the prime rate, it impacts everything from credit card, mortgages, business loans, CD's, savings accounts. There was other economic news which did not support a recovery:

Fitch Ratings reported that U.S, jumbo mortgages at least 60 days late reached 9.6% in January vs. 9.2% in December. It was the 32nd straight increase in "serious delinquencies."
Wal-Mart reported that sales in stores open for a year fell in the 4Q of 2009- the first decline in history.
The Fed reported that the year to year change in Commercial and Industrial loans is the lowest ever, since it started tracking this in 1948

Sovereign default may be more widespread than the PIGS countries (Portugal, Ireland, Greece, Spain) as Standard & Poor's is considering the credit rating of the UK

There are very few stocks showing on my screens, but my favorite this month is T J X (TJX), which operates TJ MAXX, Marshalls, and Homegoods. A recent article in Investor's Business Daily mentioned that their buyers are out 40 times a year looking for deals compared to other retailers' 4 times a year. The result is getting same name brand merchandise at a discount of 50% or more, and the same merchandise that may be currently available at a department stores or national retailer chain. In my store checks, I have noticed several store improvements. Customer Service on par with a department store, faster store checkout, organized and cleaner stores. All this has resulted in impressive earning and sales. Over the past 4 quarters, both have accelerated with earning at 20%, 30%, 42%, 71%; and sales at 1%, 4%, 10%, and 10%. While the stock did stage a healthy breakout on 2/25, it is still a somewhat risky buy given the current overall market environment.

January Report – New year, old action

2010-02-03T12:41:00.001-08:00

New year, same old wild action. Holdings in SPY (SPDR S&P 500 ETF), QQQQ (Powershares QQQ Trust), and DIG (Proshrs Ultra Oil & Gas) are swinging from profit to break even. The market is in a tug-a-war as bulls and bears are still uncertain about their convictions. On the one hand, investors are returning after missing out on last year's gains, BUT; news of high unemployment, bank closures, national debt, and mortgage defaults continue to be a drag, BUT; the rally of 2009, spurred by a $2 trillion plus injection of government "Red Bull", has brought some stability back to the economy, BUT; the government will ease off and the "Red Bull" effect will wind down, allowing a new economic cycle, "the New Normal", to birth painfully. All this uncertainty makes for a tough, risky investment environment. This is why, in addition to Gil Morales's newsletter, investment ideas will be tracked from Henry Ford's ETF Bully system and Fred Adrich's Strategic Investing newsletter. Henry uses a mechanical system to analyze the tick by tick transactions of the exchanges. It's a microscopic method of identifying true and stealth accumulation and distribution. Henry's SPY model gained 187% in 2009. A telescopic view will come from Fred, a 50 year wall street vet who turns the news of the day into actionable ideas, and the "street sense" of knowing institutional "must buys". Fred's Agressive portfolio gained 20.7% in 2009.

As a tech junkie and former Microsoft employee, I look forward to January with the Consumer Electronics Show (CES) in Las Vegas and Apple's annual conference. As the dust as settled, I see AAPL (Apple Inc), NFLX (Netflix Inc), and MSFT (Microsoft Corp) as the tech companies to watch for this year. Netflix hit a record high on 1/26 after it beat Q4 estimates. No other company can compete with $8.95/month unlimited movies. This includes mailed DVDs and thousands of on demand movies and tv shows. These shows can be watched instantly on Xbox 360 and Playstation 3 gaming consoles. The big news from CES is content availability on the Nintendo Wii and nearly every new Blu-ray player and new connected TV sold. While not as revolutionary as Steve Job's may state, the Apple iPad will be a hit. It is an oversized, and refined iphone and will ride of the coat tails of its success. The most revolutionary thing about the ipad is the price. It comes in at $499, half the cost of the lowest priced MacBook. This is the first Apple product to outprice a competing product, with Windows tablets starting at $1000. The iPad is essentially a new category of mobile device and will force Windows mobile manufacturers to catch up. So, be on the lookout for sub-$500 touch screen tablets with 10 hours of battery life. With the success of Windows 7, the best operating system in nearly a decade, and a new version of Office this year, Microsoft should do well this year. But the most exciting technology, and most likely the must have item for Christmas 2010, will be the new hands free controller for Xbox 360. It is the Wii on steriods. So instead of swinging around a wrist attached Wii remote, your entire body becomes a controller as a 3D camera captures movements for a whole new gaming experience. The camera, code named "Project Natel", premiered during Microsoft's CES keynote speech (http://www.youtube.com/watch?v=p2qlHoxPioM).

Follow me on twitter (http://twitter.com/IBDinvestor)

2009-06-23T10:29:00.001-07:00

I’m hooked on twitter and this is where you can find real time updates during market hours. I also post my summaries from the GilmoReport.com, GIl Morales be-weekly newsletter. This newsletter is great and full of CANSLIM and William O’Neil “secret sauce”.

A stock market gift?

2009-02-25T10:26:00.001-08:00

I believe the market gave me a gift yesterday as GLD, SLV, and the QID all pulled back to support areas. I took this opportunity to add on to GLD and SLV, and initiate a position in QID. Surges, like yesterday’s, are common in bear markets; and usually amount to “fakeouts” before continuing lower. BUT, one must always be on guard as new rally’s start when least expected.

Crash Alert!

2009-02-20T07:42:00.001-08:00

The markets went on crash alert yesterday as the DOW breached Nov lows. The NASDAQ seems to be tracking the same stair step pattern of the 2000-2002 dot com crash. Is this a guarantee that our current market will take the next step down? Absolutely not! Does this mean that the market is more likely to go down than up? it Absolutely!

My first trade in 7 months – GLD, SLV

2009-02-18T12:12:00.001-08:00

The nice thing about disciplined investing is that it protects you. Kudos to Investors Business Daily (www.investors.com) and the Gil Morales report (www.gilmoreport.com) for successfully navigating me away from the financial tsunami and keeping my investment ship in calm, peaceful waters.

The indices are toying with previous lows. In this environment of continued forced selling (deleveraging), the markets will likely break these lows and begin another leg down

The flight to safely buy is Gold and Silver. Either the real stuff, or GLD and SLV, which are their tracking ETF’s. I was able to get into each in the Jan 28th pullback and both have been on a tear! If you’re game, wait for pullbacks into their support zones .

Whipsaw Market- be careful!

2008-08-07T10:29:00.001-07:00

With wild volatility whipping stocks around, it is a very difficult environment to make any moves. The best bet for now is to wait for the market to settle down, establish a trend, and wait for leadership to strut its stuff. The charts above of failed breakouts illustrate this point well.

Emerging Leadership

2008-07-31T11:37:00.001-07:00

I’d like to see the rally prove itself before diving in, but am willing to nibble and nimble. Keep in mind if today ends as a distribution (lower close on higher volume than yesterday on the DOW, S&P500, New York, NAS), then this rally will have a high probability of failing. However, if this rally holds, look for leadership in the railroads, biotechs, solars (maybe).

CANSLIM guru Gil Morales likes the action in the computer services in recent newsletters, a group I missed in my scans. These include IBM, ACN, and IT.

Me in Investor’s Business Daily

2008-07-30T10:54:00.001-07:00

That’s me on page A4 of today’s IBD. The AP photographer was shooting these at the same time my SKF was tanking, so this was the best smile I could muster up. While I have my 5 minutes of fame, I like to thank some folks. God, mom, Susana, Rachel, Sarah. And the pros who help me keep an eye on the market: Covestor, IBD, Gil Morales and his newsletter service www.gilmoreport.com, Gary Kaltbaum’s Investor’s Edge radio show www.garyk.com.

Follow Through or fake out?

2008-07-30T10:40:00.001-07:00

The NASDAQ scored an 11th day follow through yesterday, a timing signal which IBD uses to determine a new market rally. For those not familiar with FT’s, here are a couple facts. No market rally has started without it, and it has a 70-80% success rate. But don’t stop reading yet, FT’s work best when it occurs on days 4 – 7 of a rally attempt, so an 11th day FT is failure prone. The market has also been going through wild swings lately, so I am mildly bullish at this point.

No Man’s Land

2008-07-22T10:01:00.001-07:00

Today is the 6th day of a rally attempt and the market can go either direction; even both ways if volatility picks up. Former leaders; oils, ferts, techs are breaking down and a new crop of leaders are just starting to emerge; biotechs, truckers, industrial machinery. Keep an eye on SNHY, FLS, ODFL, JBHT, OSIP, CELG.

SKF – A costly trade and profitable lesson

2008-07-18T12:21:00.001-07:00

OK, I really blew it with my SKF trade. I had two successful trades then let emotions kick in. Greed, pride, all the stuff that kills investors. The good news, I do know where I went wrong. I also successfully applied a CANSLIM day trading technique which worked and would have protected me had I followed the rules. Here’s a rundown on how it works:

1) Study a chart and get to know it daily price volume characteristics. I’ve used SKF. The financial's are under pressure, it trades very violently, but followed a buy on weakness sell on strength pattern. So my strategy was to buy off of support then sell as it came through resistance. See my SKF chart.

2) Monitor market conditions. We continued to be correcting. Financials, housing, were leading the market down. Accumulation was picking up on the SKF and it was about to complete the right side of a cup formed from 3/17.

Things I missed. SKF started going parabolic on 7/11, and was up 11 out of the last 13 days. The NASDAQ tested support on 7/15. The Put/Call equity ratio was approaching 1. These signs indicated an SKF top and increased chances of a market turnaround.

So what, I had my biggest one day loss ever. No one is prone to losses, and I’m in good company. Best of all, I learned a valuable lesson which will equate to future profits. There was way more important things in life than money.

Going Down!

2008-06-24T12:13:00.001-07:00

The last of our very thin leadership, ferts and oils, is breaking down today. One or the other has carried the market on certain days, but today, for the first time since earlier in the month, everything is down. Compound this with the fact that laggards are todays leaders, the home builders and banks, and this all adds up to a classic bear market. And this one could be huge!

MARKET IN CORRECTION

2008-05-22T09:39:00.001-07:00

6 distribution days on the DOW and S&P, with back to back days has changed the tone for this market. Also note the one day change leadership stocks. What a difference a day makes. Now is the time to get out and raise cash.

Solar 2.0

2008-05-14T09:36:00.001-07:00

Last Thursday, Energy Conversion Devices (ENER) busted out on its highest volume ever. The pictures can tell you why. Not only are these modules frameless, they are easier to install, and work in indirect sunlight. I loaded up on this today, but am am expecting pullbacks into the 50-52 range.

Sick Bay on the Enterprise?

2008-05-13T09:52:00.001-07:00

Nope. This is Accuray's (ARAY) Cyberknife, and this is now! THis is the world's first and only radiosurgery system to treat tumors ANYWHERE in the body. While the product is very cool, it's stock is yet to see any love from Wall Street, but it does look to have bottomed out. I would keep this one on the watchlist as it does have the qualities of a potential winner.

Following the smart Money - RIMM

2008-05-07T07:43:00.001-07:00

Investors Business Daily published their special mutual fund report and noted RIMM as one of the top buys by top performing managers, including my favorites CGM Focus, Fidelity Contrafund, and Janus Twenty. I tend to agree, and the reason is their upcoming Blackberry 9000 phone. While specs are yet to be announced, enthusiast sites such as www.crackberry.com and www.engadget.com are already getting excited about its features. It looks as if this is more than an update. Look for 3G, much improved graphics, and desktop like web browsing capabilities.

As for the stock, it has been trending up but on low-ish volume. The price has good support off the 20-day, but I would look to buy on a pullback.

Are the retailers for real?

2008-05-06T10:46:00.001-07:00

With unemployment, $4 gas, inflation on the rise, and everyone talking about recession, why would the retailers be in their own quiet bull market. The anwser? Because it is. That's the market, it's always right and people who try to make sense of it are usually wrong. So, go with the flow ... of the market. My favorites here are URBN on a breakout above 35.37 and BKE @50.50.

The Gilmoreport.com and 21% in 2 week!

2008-05-05T08:22:00.001-07:00

If you're a William O'Neil follower, then you probably also know Gil Morales. If not, brace yourself. Gil has audited returns are in 10,000% range, he was recruited by O'Neil himself to manage and his personal portfolio and provide consultating to top mutual fund managers. Recently, he started a newsletter service to the rest of us. I've been very busy culling over every issue sponging in as much as I can. This has resulted in a 21% gain in my portfolio in 2 weeks! Check it out at www.gilmoreport.com

Leadership is here!

2008-04-08T07:29:00.001-07:00

A weekly move from 3% to 39% of leadership stocks near buy points is huge! This leadership is carrying the market, now we just need to see the major indices follow the NAS is punching thru Feb highs. The commodies are leading the way with the fertilizers, oils, and steel stocks. But don't forget Mastercard, and keep Visa on the radar

Emerging Leadership

2008-04-04T07:45:00.001-07:00

This current rally is starting to show signs of strength as leadership is starting to take form. Today's scan shows the oils as the emerging industry group. With record crude prices increasing profit margins, oils stocks have double and triple digit earnings and sales. Technically, they have all held up and recovered well through the correction. The oils were also the top industry group in new mutual fund buys in Q1.

The 3/20 DOW Follow Through is holding, but near term testing is next

2008-04-01T14:54:00.001-07:00

Just returned back from my fist visit to Disneyworld and to my surprise, the DOW follows through! DOW follow through's typically are not good rally indicators, but combined with the Russell's FT, there is validity. BUT, a distribution day just 3 days after this FT is bad - almost a sure sign of a failed rally attempt, BUT price/volume action looks good. The action in the IBD100 is also improving, with stocks near buy points increasing from 4% to 16%. I think the market still needs to prove itself, and the indices will be going up against critical near term resistance (DOW 12756, NAS 2419). In the meantime, I have one position in MA.

Failed Rally Attempt

2008-03-18T11:12:00.001-07:00

Yesterday's lows ended a rally attempt started on 3/10, but the market does appear to be turning around. Volume on up days has been higher than down days within the past month, a sign that the bulls are starting to wake up. Still, the market has yet to prove itself before it is safe to buy.

IBD's 3/6 "Correction" call was right on

2008-03-11T11:25:00.001-07:00

The heat map from the day before the 3/6 correction thru yesterday shows a lot of damage to the IBD 100. Also troubling is a lack of leadership to drive the markets back up. On the upside, today should end up being day 1 of an attempted rally - not a signal that the markets are turning up.

Shorting ETF's breaking out

2008-03-10T12:47:00.001-07:00

As the major indices break down below Jan 23rd levels, their shorting counterparts are nearing buy points, with the QID is breaking out today. The SKF, has also been busting out on strong volume and looks to punch through its 147.03 buy point.

Like history, markets repeats itself

2008-03-10T10:11:00.001-07:00

IBD has been noting the similarities between today's market movement and the 1920's - 1930's. Bill O'Neil also mentioned this on 2/12 on the Tom O'Brien radio show. It's a common practice IBD, O'Neil, and his portfolio managers to look for tandem charts. As an example, O'Neil saw the potential in Crocs by looking at the past winners LA Gear and Rebok. It should be interesting to see is Visa will tandem itself with Mastercard

Market In Correction

2008-03-07T06:39:00.001-08:00

Less than 3 weeks into the current rally, IBD called the correction in today's paper. This comes to no surprise as 90% of rallies will fail when a distribution day comes hits 1-3 days after a follow through. Surprising is IBD's call after only 2 distribution days, when it usually takes 6-7.

Oil Stock Setups

2008-03-06T09:14:00.001-08:00

4 IBD 100 oil stocks (3 from the Oil/Gas Exploration group) are setting up nicely, but with the rally under pressure, and the markets wild volatility, buy with caution.

The Smart Money - Top Mutual Fund Picks for Q1

2008-03-06T06:45:00.001-08:00

From Wednesday 3/5's IBD. This is the quarterly listing of new buys from the top 15% performing mutual funds (over the past 6 months). There are my notables:

AUY SWN RIG BVN BBD WFR HES APA ITU ECA CNQ ABX XTO SU

Rally Under Pressure

2008-03-03T10:36:00.001-08:00

IBD changed the market status to "Rally Under Pressure" after Friday's distribution day. It usually takes 4-6 distribution days to see pressure, but this rally is doomed to fail. One day after this rally started on 2/15, the indices marked its first distribution day - a bad sign!

Finally, some leadership

2008-02-28T09:54:00.001-08:00

Leadership makes or breaks the market, and my indicator of market health is the IBD 100, which has started to show some strength. The percentage of stocks near buy points increased from 16 - 23%, and the heat map is showing better coloring (less red) since last Friday.

Reading recession in the S&P 500

2008-02-27T12:41:00.001-08:00

News, economists, personal opinions are rarely in sync with markets. So it should be no surprise how the market can trend up when recession fears are at its worst. The S&P charts from today's IBD illustrate this well.

My 5 minutes of Fame

2008-02-27T12:25:00.001-08:00

Had a nice chat with the Associated Press which turned into an news story about commodities investments. Thanks to KSDK channel 5 in St Louis for picking it up!

Rise In Many Commodities Draws Some Investors Looking For Short Or Long-Term Gains

Created: 2/26/2008 7:47:17 PM

Last updated: 2/26/2008 7:48:44 PM

NEW YORK (AP) -- With oil prices touching record highs in February, it's natural that some investors would want to jump into energy investments and others would recoil out of fear of a bubble.

Peter Kurata, an investor in Cypress, Calif., doesn't care which theory wins out; he relies on technical indicators to move in and out of investments and for now oil has an appealing sheen.

"It's very much in favor. I can't estimate how long it's going to run for but at least in the short-term it looks pretty good," he said. "I just follow where the leadership is and right now the commodity-related stocks are showing the leadership."

For investors looking to diversify their portfolios amid a pullback in stocks this year and who don't want to miss out on the ride in commodities, the answer might be to ease into some corners of the commodity market while keeping in mind that not everyone has to the stomach to be an oil prospector. The commodity markets are known for their volatility.

Kurata in mid-February invested in the PowerShares DB Commodity Index Tracking Fund, a Deutsche Bank index fund that lets investors draw returns from the commodity and currency markets. He's seen more than a 6 percent return.

He said he's not concerned that such sharp gains signal a bubble is building. Individual commodities investments make up 20 percent of his portfolio -- a larger percentage than many investment advisers might recommend -- and his style of investing is also more aggressive than that of many people. But his enthusiasm right now

for commodities such as gold, wheat and oil is shared by others.

"I'm pretty fluid with my investments. I can get in and get out once I see it's not working," Kurata said.

But even for investors who might shy from such a sizable commitment to commodities and the rigors of having to make fast-paced investment decisions as Kurata does, commodities can

maintain a reasonable portion of one's portfolio. But investors who might be fearful that some prices have gone too far, too fast

should be cautious.

Thomas Winmill, president of Midas Funds, said investors should consider an investment in a commodity like gold because of low interest rates and increases in inflation. He said investors should try to envision where demand might be in the coming months, not where it stands now.

"It's the old Wayne Gretzky move to try to figure out where the puck is going to go. I think in six months from now people are going to be talking about inflation and saying 'Gee, inflation is taking a whack out of my ability to buy stuff,"' Winmill said.

But investors should be ready for gyrations and, in most cases, have a long-term perspective. Winmill noted that while oil prices jumped 60 percent last year amid surging demand, zinc prices lost 40 percent.

Because many commodities are priced in dollars, a flagging greenback can also drive prices higher because it requires a greater number of weak dollars to buy a single barrel of oil, for

example.

"Take a diversified approach or a basket approach," he said, referring to investments that hold positions in several areas at once. "It's a volatile sector."

Winmill suggests most investors have about 5 percent of their holdings in commodities investments.

While some observers say demand for commodities will likely rise thanks in part to growth in countries like China and India, others are worried that a global economic slowdown could dampen demand.

Frank Holmes, chief executive and chief investment officer for U.S. Global Investors Inc., said the enormous growth in the world's

developing countries and what he described as a paltry investment in the infrastructure needed to obtain more resources makes it likely that many commodities will show long-term gains in prices.

To illustrate what he sees as seismic shifts taking place in the demand, he noted that in China and India, each person consumes an

average of two barrels of oil per year compared with an average of 25 barrels per person a year in the United States.

"And they're growing at 10 percent," Holmes said, referring to places like China.

Holmes notes that decisions by managers of big pensions and similar investments support a notion that long-term bets on commodities are not unwise even if prices soon recede.

The California Public Employees' Retirement System has said in recent months, for example, that it would step up its investments into areas including commodities.

"You're seeing each year pension fund groups are putting money into commodities but the average investor is not," Holmes said.

AP

Hornbeck Offshore Services (HOS)

2008-02-25T17:14:00.001-08:00

After failing to breakout in January, HOS has built a new leg of its double bottom and regained the 50-day last week on huge volume. Another notable technical cue is the 4 tight weeks - a sign of support.

The market has yet to make up its mind

2008-02-25T16:56:00.001-08:00

The major indices ended up 1% on higher volume then seen in recent weeks, but still below average. Volume on up days has been edging up down volume, so this may suggest that the bears are wearing down and the bull are starting to wake up. Look for above average on the upside to confirm this. Glancing a the IBD100 heatmap shows that few stocks near buy points, and many that are still damaged.

This rally likely to fail

2008-02-20T09:25:00.001-08:00

A distribution day 1 day after a confirmed rally spells trouble. Pages 10 and 11 of O'Neil's "How to Sell Stocks Short" talks about this, and in fact, discusses how this could be a possible shorting point. IBD's on studies confirm this as well.

Follow Through failure rate studies (presented at CANSLIM Masters Semimar). Distribution Day occurrences:

1-3 days after FT on sames index- High failure rate
4-5 days after FT on sames index- 50% failurerate
> 5 days after FT on sames index- decreases with more days

Gary Kautbaum's radio show, "Investor's Edge" mentioned that a 1 day dist day could be as high as 90%.

A new rally begins

2008-02-14T05:45:00.001-08:00

Volume was a bit light, but the 2.2% gain on the NAS did trigger a follow through signal. Tread with caution. Although FT's work 70-80% of the time, scale into positions and be on the look out for distribution days within the 5-8 next week to gauge this rally's strength.

My Latest Creation: The IBD 100 Heat Map

2008-02-13T14:17:00.001-08:00

Read a couple books by John Boik last week; "Monster Stocks" and "How Legendary Traders Made Millions". A reoccurring theme was following the action of leading stocks. Jesse Livermore, Jack Bernard Baruch started this in the 1900's and O'Neil has carried this on. This inspired me to create a heat map of the IBD 100. This is a 20 week price chart. Colorings show a stocks price relative to new high, 50 and 200 day lines. Blue is good and red bad. Today's map is looking pretty good, and with the NAS up 2% on good volume, IBD may just call today a Follow Through!!

DBC- Worth a Look

2008-02-11T09:18:00.001-08:00

O'Neil and his research team has not officially released how ETF's trade with CANSLIM rules, today's IBD featured DBC in the Exchange Traded Funds section, because it had all the great qualities of a CANSLIM stock. Flat base breakout on 2x average volume, record demand and price levels for wheat and other commodities, and great relative strength compared to the major indices. In fact, according to the article, commodities are not directly correlated with the market, which makes DBC an attractive buy during this choppy, correcting environment. Here's DBC breakdown:

Crude oil 31.8%

Heating oil (18.69%)

Wheat (14.88%)

Corn (12.76%)

Aluminum (11.84%)

Gold (10%)

Things To Do During A correction: Golf, Golf, Look for future Winners

2008-02-07T06:40:00.001-08:00

Today marks the 11th day of a rally attempt. The most successful attempts occur within 4-7 days and the longer the attempt, the longer this drags on, the less likely a follow through will hold. On the other hand, one never knows when the market will turn, so always be ready with a good list of picks. My "cream of the crop" scan came up with a few notables; Intuitive Surgical (ISRG), Hologic (HOLX), and China Medical (CMED) - all from the Medical Devices group. This confirms IBD's Industry Snapshot article "Good Medicine For Investors" from 2/4. We are an aging country, 12% over 65 and growing to 21% by 2050, and we're living longer. Medical equipment is rapidly advancing, entering into Star Trek type therapies. Using robots, high energy laser and ultrasound, and organ cloning. These new products bring value to what is currently on the market will help hospitals bring down skyrocketing costs. Confidence is evident by the rising level of venture capital money which is up 78% from 2005

When is a Follow-Through is not a Follow-Through?

2008-02-01T11:53:00.001-08:00

Yesterday was a great day on the markets with the NAS, DOW, and NYSE all up over 1.7% on great volume. This should have been IBD's technical signal to begin a new market rally, BUT their stand remains unchanged. Here's why:

A 1.7% gain is usually a big gain relative to usual market action, but relative to today's volatility, we would need to see something more. Take a look a how January's price range measures up against past months.

Day 3 of Rally Attempt

2008-01-28T13:37:00.001-08:00

Today marked day 3 of a rally attempt which started last Wednesday. When counting rally days, note the first up day is not counted. If one of the indices closes up 1.7% on above average volume (a follow through day), this rally attempt will be confirmed, and it will be time to look at getting back in the market.

A case for IBD tops and bottoms

2008-01-24T00:58:00.001-08:00

Investor's Business Daily has a 70-80% track record for calling tops and bottoms. The chart above shows when when "The Big Picture" section stated market corrections in red and market rally's in blue. Check out the article "Look For Follow-Through Day To Start Uptrend" in the Investor's Corner section of investors.com for more info.

A Bottom- NOT!!!!

2008-01-23T17:33:00.001-08:00

Today's reversal was impressive, volume was the highest its been in weeks, and the indices ended strong with 2% gains. Does this marked the bottom? Or an oversold rally? Only the market knows, so why risk it with IBD 80% track record. Your best bet is to wait for IBD to end this correction and call the new rally. This could be the start of a rally attempt.

Attempted rally intact- waiting for confirmation day

2008-01-14T13:34:00.001-08:00

Today was the 4^th day of a rally attempt (see blue highlighted area) and while the major indices all closed with a better than 1% gain, volume was at or below average, suggesting big institutional buyers are not ready to get back in. The Today’s leading groups are Machinery-Farm (CNH, ), Fertilizers (CF, POT, MOS, AGU), Machinery Mining (BUCY), Oil Service (NOV,ATW, DWSN).

See saw action ended with slight gains on the major indices

2008-01-10T18:18:00.001-08:00

This is the second day of a rally attempt, so still too early to get into the market.

Wednesday's bounce was nice, but. . .

2008-01-10T07:40:00.000-08:00

Greater than 1% gains on the S&P, NYSE, and DOW, on solid volume make for a great day, but digging deeper reveals some flaws to yesterdays bounce. Most importantly, this is only one day. An upward trend of at least 4 days need to be established from yesterday's rally. Then another "big day" (what IBD calls a Follow-Thruough) is will be needed to validate the upward trend.

Other flaws to yesterdays action include declining issues outnumbering advancing on both the NYSE and NASDAQ, and weak action among market leaders, as measured by the IBD 100.

Allegheney Energy Inc (AYE)

2008-01-09T15:14:00.000-08:00

During corrections, it's a good practice to scan for stocks holding up against the markets slide. AYE came up on today's scan. Note the above average volume (blue bars ) during the up weeks against the below average volume on the down. This is one to keep an eye on.

Q4 New Buys Of Top Performing Mutual Funds

2008-01-07T13:48:00.001-08:00

Following New buys from top funds is following the "smart money". Institutional buying makes up 80% of the market, so following on the dovetails of top performing picks pinpoints stocks in demand. Here are notables with good fundys and technicals:

ISRG BIDU VMW AMZN GOOG RIG YGE

Market In Correction

2008-01-07T13:47:00.001-08:00

With Friday's action, the major indices are well below their 200-day lines. More importantly, down days have been on higher volume, suggesting institutional selling. Now is the time to cut losses and stay on the sidelines until buyers come back.

What does this mean? The currect market trend points is down. Recent weeks have shown higher volume selling and a lack of buying. CANSLIM defines these are Distribution Days. This is a time to cut losses and be on the sidelines. Expect mini rallies from bottom fishers, but don't be fooled. No rally in the 50 year history has started without a "Confirmation Day", and IBD has a 70% track record of picking bottoms. Stay tuned. . .

Nice writeup on CYBS in today's New America. This is a play on the growing trend toward online shopping and fraud detection.

Keep an eye on the Electrical Equipment Industry. Currently 3 years into a 5-7 year buying cycle with surging demand from emerging and

The Stock Whisperer

A September to Remember

A fantastic day for the IBD 100!

August 2010 Investor Report

July 2010

June 2010

May 2010 Report

April 2010 Investment Report

March Newsletter

March Newsletter

February 2010 Report

January Report – New year, old action

Follow me on twitter (http://twitter.com/IBDinvestor)

A stock market gift?

Crash Alert!

My first trade in 7 months – GLD, SLV

Whipsaw Market- be careful!

Emerging Leadership

Me in Investor’s Business Daily

Follow Through or fake out?

No Man’s Land

SKF – A costly trade and profitable lesson

Going Down!

MARKET IN CORRECTION

Solar 2.0

Sick Bay on the Enterprise?

Following the smart Money - RIMM

Are the retailers for real?

The Gilmoreport.com and 21% in 2 week!

Leadership is here!

Emerging Leadership

The 3/20 DOW Follow Through is holding, but near term testing is next

Failed Rally Attempt

IBD's 3/6 "Correction" call was right on

Shorting ETF's breaking out

Like history, markets repeats itself

Market In Correction

Oil Stock Setups

The Smart Money - Top Mutual Fund Picks for Q1

Rally Under Pressure

Finally, some leadership

Reading recession in the S&P 500

My 5 minutes of Fame

Rise In Many Commodities Draws Some Investors Looking For Short Or Long-Term Gains

Created: 2/26/2008 7:47:17 PM

Last updated: 2/26/2008 7:48:44 PM

NEW YORK (AP) -- With oil prices touching record highs in February, it's natural that some investors would want to jump into energy investments and others would recoil out of fear of a bubble.

Peter Kurata, an investor in Cypress, Calif., doesn't care which theory wins out; he relies on technical indicators to move in and out of investments and for now oil has an appealing sheen.

"It's very much in favor. I can't estimate how long it's going to run for but at least in the short-term it looks pretty good," he said. "I just follow where the leadership is and right now the commodity-related stocks are showing the leadership."

Kurata in mid-February invested in the PowerShares DB Commodity Index Tracking Fund, a Deutsche Bank index fund that lets investors draw returns from the commodity and currency markets. He's seen more than a 6 percent return.

for commodities such as gold, wheat and oil is shared by others.

"I'm pretty fluid with my investments. I can get in and get out once I see it's not working," Kurata said.

But even for investors who might shy from such a sizable commitment to commodities and the rigors of having to make fast-paced investment decisions as Kurata does, commodities can

maintain a reasonable portion of one's portfolio. But investors who might be fearful that some prices have gone too far, too fast

should be cautious.

Thomas Winmill, president of Midas Funds, said investors should consider an investment in a commodity like gold because of low interest rates and increases in inflation. He said investors should try to envision where demand might be in the coming months, not where it stands now.

"It's the old Wayne Gretzky move to try to figure out where the puck is going to go. I think in six months from now people are going to be talking about inflation and saying 'Gee, inflation is taking a whack out of my ability to buy stuff,"' Winmill said.

But investors should be ready for gyrations and, in most cases, have a long-term perspective. Winmill noted that while oil prices jumped 60 percent last year amid surging demand, zinc prices lost 40 percent.

Because many commodities are priced in dollars, a flagging greenback can also drive prices higher because it requires a greater number of weak dollars to buy a single barrel of oil, for

example.

"Take a diversified approach or a basket approach," he said, referring to investments that hold positions in several areas at once. "It's a volatile sector."

Winmill suggests most investors have about 5 percent of their holdings in commodities investments.

While some observers say demand for commodities will likely rise thanks in part to growth in countries like China and India, others are worried that a global economic slowdown could dampen demand.

Frank Holmes, chief executive and chief investment officer for U.S. Global Investors Inc., said the enormous growth in the world's

developing countries and what he described as a paltry investment in the infrastructure needed to obtain more resources makes it likely that many commodities will show long-term gains in prices.

To illustrate what he sees as seismic shifts taking place in the demand, he noted that in China and India, each person consumes an

average of two barrels of oil per year compared with an average of 25 barrels per person a year in the United States.

"And they're growing at 10 percent," Holmes said, referring to places like China.

Holmes notes that decisions by managers of big pensions and similar investments support a notion that long-term bets on commodities are not unwise even if prices soon recede.

The California Public Employees' Retirement System has said in recent months, for example, that it would step up its investments into areas including commodities.

"You're seeing each year pension fund groups are putting money into commodities but the average investor is not," Holmes said.

(Copyright 2008 by The Associated Press. All Rights Reserved.)

AP

Hornbeck Offshore Services (HOS)

The market has yet to make up its mind

This rally likely to fail

A new rally begins

My Latest Creation: The IBD 100 Heat Map

DBC- Worth a Look

Things To Do During A correction: Golf, Golf, Look for future Winners