So this week will have some big impact on United States and world economies. With elections today, the Fed talking QE tomorrow and the Bank of Japan, European Central Bank, and Bank of England's policy committee all concluding meetings at some point this week, we could be facing a rather large fundamental shift in the world economies. Of course currencies have been impacting the markets quite a bit lately, and most if not all of these meetings will relate directly to currency valuation. All of this is coming just a couple of weeks after the G20 leaders agreed to not devalue their currency intentionally, well three of the biggest players will be doing exactly that this week. We will have to wait and see the impact this will have on world politics as well as economy. However, the impact of this on the economy may not be as drastic as you might expect, as the market has had a little time to factor all of this in to some extent. This applies to policy and elections, but lets not forget that the outcome of both of these are still unknown and the expectations may or may not be accurate. I personally am ready for a slightly more volatile week than normal, though I don't see any immediate market changers coming from this.
Current Positions:
Overall, I still feel very bullish on my larger holdings. I am particularly interested in the prospects of Kraft (KFT), Macys (M), and Ford (F). I really like all of their long term potentials, though I expect Macys to be the first of the three to start feeling a pullback. I feel very confident (as many other analysts) that Ford will be trading in a higher range in 2011 and really want to build up my position as well as a possible option for Mid 2011.
I am making a more short-term play on Intel (INTC) this week. I feel it is trading at a great value at this point and hope to get a decent holding (relative to my very small available funds) established in the $20 - 22 range. I would put a price target of about $26 by late 2011. The reason for my short term interest in Intel is the fact that they will be in all the new Macs, which is coming out with a new operating system Summer 2011 which could increase hardware purchases as well. This is a relatively new, and growing, market for Intel that hasn't been factored into their price in the past. In addition to this, businesses in the US are sitting on very large amounts of capital and I think IT spending would be a great place for some companies to spend this money.
In small caps, I am still happy with my USAT trade, though it seems to have settled into the $1.25 to $1.50 range for now. I am very happy and still willing to buy up more of OCZ as I have a strong bullish sentiment to the solid state drive industry and having recently been in the market for one, I feel OCZ is the best quality to price in the industry. And finally it appears I missed the best buying opportunity on KSP as they came out with earnings yesterday and rose 25%.
My options are still up, though less than a week ago. AKAM is still my largest bet at this point. Yesterday it took a hit for what appeared to be profit taking. My option is for January 2011, so I will be holding onto this option until I get a more favorable return. DEER is still solidly up and appears to be locked into a new range for the time being. I am undecided on what move to make here, but I must move DEER or AKAM to get back some capital. And finally AKS is still down significantly. A break even at this point would be a best case scenario and still seems possible.
Future Moves:
As I mentioned above, I am interested in an option on Ford, though I am not sure I will get the return I want yet so I am holding out for a possible lower price point. As far as options are concerned I will be waiting at the very least until next week, but also will need to decide to move DEER and/or AKAM before I will have the funds to make another options move. For my long positions, I am in the market for an energy company and some early leaders on my board are Total (TOT) and Exxon (XOM). I will certainly be looking for a high yielder in this sector and I am unsure if now is the time to get into oil as green energy seems to be gaining some momentum finally. In light of that I will also consider a solar company.
Final Notes:
In short I don't think the market will make any very large moves this week, but I think the potential for a large, unpredictable shift is large enough for me to stay on the sidelines this week. All of this news will have a larger impact on the long term than the short term and so I am waiting out this week to get the information I need and try to draw what conclusions I can from there. And finally, I am still very much torn over China. I feel the market has a huge upside that I would hate to miss, but the unpredictable nature of their government, economy, and political agendas leaves you open to a blind side at any point. For now I am just feeling out the water, but the more time I'm out, the more upside I am missing.
*Note that these are all purely opinions of a very amature investor. In no way do I endorse or work for any of the mentioned companies. I do hold positions in all of the mentioned stocks except KSP, TOT, and XOM.
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