Words for the wise from Bill Cara:
Rodney and others,
After the G-7 meeting, it became apparent to me that HB&B and central bankers would continue on their present track of debt expansion under gradually tightening conditions for new loans. I reported that.
This situation, as I see it, extends the bull cycle another month or two, maybe three. I still think the best time to sell most stocks, ie, the early rotators like financials is already happening, and the next one will be the techs and US economically-sensitive stocks where traders fear slowing earnings growth or the impact of stagflation. The final move to the upside and then to roll over to follow the rest of the market down will likely be the metals and precious metals. Usually, it would be base metals first, but this cycle they have (i) oligopoly pricing by the four big ones, and (ii) demand from still huge econ growth rates in the BRIC countries, as well as the falling $USD, going for them.
So this cycle, I believe the final groups to fall will be the base/precious metals. There may be a final price spike (which I expect) as Gold hits 730-770 before dropping back after (i) central banks and HB&B starts supporting the $USD, and (ii) traders start to see that the speculative junior hype (presently over-done) zooms into the I CANT BELIEVE IT territory.
Every cycle at the very top, promoters of the juniors get absolutely psychotic in their beliefs that the cycle will not end and that they personally have the world-class asset and best story to tell. Typically, from cycle top to bottom, its a drop of -75 pct to over -90 pct for these speculations. So, I advise being extra careful in the final few months as even turkeys will be flying like eagles. The way to best tell is when the news releases become more frequent and more spectacular but the price stalls out amid very heavy volume days.
The biggest gains are made by nimble and reality-based day traders in the final couple months of the stock cycle for these junior miners. Typically, a trader used to trading in and out of a favorite stock over say a quarter or half year will start to do that over a month and then a week and then days and even intra-day periods as markets become even more nervous at the top. Everybody knows the Musical Chairs game; this is it with real money on the line.
I can only do so much to help; the rest is up to the individual. You all have different situations, so I cannot be more explicit than I have been.
The RSI-7 always works, usually in combo with MACD. As we get really nervous, it pays to switch to Stochastics-based decisions. Again, I am only a blogger; not a trainer.
If, as and when I think the commodity-price sensitive end of the market is headed south, I'll tell you. Please don't expect too much.
You may find this difficult to believe, but my wife spends more time travelling to and from work than I put into this blog Monday to Friday, which is to say I am lucky to be working at home and to have the time to do this.
I type as fast as I think -- sometimes with regrets. :-)
Posted by: Bill Cara at April 18, 2007 1:31 PM |
