6 replies to this topic

[Cirrus]

I mentioned this last week. I think it breaks out here for a big run after a year and a half rectangular base. There are scores of small and mid caps (Canadian exchanges mostly) whose weekly charts look spectacular and are now breaking out of long bases or consolidation. FCX, AAUK, RIO, BHP and RTP sort of track this group. I only own FCX and RIO for the large caps.


http://stockcharts.com/c-sc/sc?s=$DJUSMD&i=p94895614517&a=101531903&r=983.png

[SilentOne]

hi cirrus, Can you overlay $BPMATE on that chart? Wouldn't it be better to buy on a pullback in $BPMATE? I'd say retest of the high and then lights out for many miners if the BPI for the sector corrects. cheers, john

[Cirrus]

$BPMATE? I've never seen that index....what is it?

[SilentOne]

cirrus, $BPMATE = S&P Materials Sector Bullish Percent Index. cheers, john

[PorkLoin]

Bullish percent for the Materials sector on top. John, buying the upturns from the lows on the $BPMATE has been a good deal. Never know, though -- it could just mess arouund in that 60 - 90 area while most stocks trend higher and higher, too.

Best,

Doug

[Cirrus]

KISS--- This weekly chart has had a very long basing period. Many mid and small caps have balance sheets loaded with net cash and are trading at forward PEs of less than 6. Of course PEs in traditional cycles in this sector are always low at the top. However, US demand is not the driver--it's world demand. World demand is growing and prices are rising DESPITE the bad news in the US housing and auto sectors and Fed rate hikes which are likely over IMO. It's about world demand as 3.5 billion people now live in the worlds fastest growing economies. For me, the energy and materials sector are the biggest bull market no brainers I've seen since I've know what the markets are. There is skepticism (these are cyclical stocks and everyone knows the cycle has 'peaked'), great LT charts and a powerful fundamental backdrop. I won't even mention ridiculous valuations. The next major stage of the advance will be driven by managers such as Bill Miller and his very popular LMVTX fund. I like to use his top 25 holdings as a gauge in secular sentiment. Miller is competent. His fund currently has ZERO energy or basic materials holdings in his top 25 holdings. His fund is supposedly a "Value" fund. He still owns PHM, GOOG, AMZN and a few other 'interesting' names in his top 25. They say the 2nd upwave of a major secular group run is made up of the institutions getting in after the smart money is in. The final wave is retail money. It's my thesis that the Bill Miller's of the world are about to admit defeat and begin buying the COP, NE, VLO, FCX, AEM, NXY and CNQ of the market as they reckognize just how global commodities now are and how closely our market is tied to the global economy in many cases. Watch Miller's fund over the next 18 months and I bet you'll finally see some materials/energy holdings appear.

[SilentOne]

hi cirrus,

KISS---

I like that moto.

I won't make the bear case here. But I would suggest you watch the precious metal space very closely. If a major reversal comes in this week sometime, I would tighten stops and be very vigilant on material stocks.

The other key is the USD. If it decides to rally hard, the multi-year downtrend line is just above, a little more than a point on the US Index. A break above that would bring a fairly strong reaction IMO.

Just my thoughts. This is a great board and I love the technical work here.

cheers,

john

Edited by SilentOne, 27 March 2007 - 05:07 AM.