Saturday, December 5, 2009

A big day -- unemployment down, dollar up, gold down

It was a big day yesterday, I watched the US markets till mid-night before I switched off. Unemployment trend is peaking and there is an obvious sign of turning down. Good news on the US economic data translated to stronger dollar. You can see from the obvious hockey stick chart. The dollar bears got squeezed hard yesterday. I have closed out my gold related shares yesterday and looking to re-enter later on.

Dow Jones Transportation index which has been stubornly lagging behind the Dow Jones Industrial index started to move strongly. Banking, small caps, semiconductor, and etc started to move. Commodity producing countries like Brazil, Canada, Australia got hit. Export oriented countries like Japan, Taiwan, Hong Kong(China linked) got a boost. However, I would accumulate on weakness on commodity stocks after the guys exited their dollar hedging trades. At some point, the market will change their mind saying, hey stronger US economy = stronger global economy = stronger demand for commodity, let's start buying commodity again. Let's see how people going to react on Monday. Plantation stocks and defensive/dividend yield stocks may come under a bit of pressure. Will keep an eye on finance, small cap, consumer, semiconductor, O & G, airline and even automotive related stocks.

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