2008 Review and 2009 Forecast (2)

My 2cents opinion for 2009  --- by Ding129



1. DXO: how can you not like the chances of crude oil going up. theprice of oil has been savaged by "pricing in" a big recession, opec issort of cutting back. good chance DXO (double long crude oil) hasbottomed. If you would like the oil / gas sector stocks DIG is a doublelong on these.

2. TBT: panic has caused a big and unsustainable long bond (UST 30 yearbond) bubble. Any bit of good news will hammer this bubble as peoplesell out of bonds to get back into stocks. There will be a LOT ofmotivation to do this as the interest on the bonds is nearly ziltch. Wecould see a panic to sell out of bonds once the trend gets going. TBTis double leverage against the long bond. Now is probably the time tostart building a position in TBT.

3. GDX: PM (precious metals) stocks: major rally already running. willprobably keep going as long as the OAR (Obama appreciation rally) keepsgoing. The unthinkably big bailouts are unthinkably inflationary. thePM sector will benefit from the fear (? reality) of hyper inflalation.
Fair chance that the PM sector will continue to prosper when the OARfades, but be ready to exit to protect your gains. Many individualstock in this group that could do VERY well. (like SLW, CDE, KGC, LIHR,AUY, GG, BVN)

4. SSO: run with the rally: double the gains of the S and P. But readyto dump this as the rally fades. maybe a trailing stop? Infrastructurestocks should do well, like AA (alcoa) or X (steel), many to pick fromin this catagory.

5: SRS and SKF: (double short on commercial RE and financial stocks)these are now very, very cheap. They could even be less expensive ifthey are hammered in the rally. At some point they will be Majoropportunities if / when the real economy gets sick enough to dampen theOAR. If you have the stomach for a volitile ride, the potential to makea windfall profit on these is not to be missed.

Note: the stock market and the real economy are connected but in an oddand elastic way. the stock markets usually start to rally way ahead ofimprovments in the real economy. Many times the market will rally onwhat looks like bad news. In order for the inverse EFTs to do well(like SRS, SKF etc), the real economy has to be doing poorly enough tocause a panic in the stock markets. the general felling of panic is nowpassed. You can watch the panic level by following the VIX index.

It is my personal take on things that the economic problems are far,far from over and that the real economy is going to get much worse inthe coming year. so I will be watching for the OAR to collapse at somepoint.