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Week ending September 7, 2001

IN SUMMARY STOCKS COMMODITIES
BUYS... GX, MOT, MON Coffee, Cotton
SELLS...   Corn, Soybeans, Palladium, Feeder Cattle, Lean Hogs, Euroyen
HOLDS... GTNR  
WATCH CLOSELY...   Note/Bond Spread

          STOCKS
 
NASDAQ-  Ho Hum.  That is the best way to describe the market recently.

I have a theory.  Economic analysts are no more than people off the street that may or may not have a degree whom suddenly become experts when they put on a suit jacket.  In fact, I wrote down several companies that "experts" recommended were strong buys over the last several months, and about 90% of them plummeted within a month after they were recommended.  Here's my quote from last month:  "With some positive news on the economy lately, analysts are finally saying we saw the low in April, and the economy is slowly recovering."  Wall Street's reaction:  Down Down Down.  Now, there is no positive news about the economy and analysts are saying we have only just begun to see the effects of the "recession".  Market psychology says now is a good time to buy.

"A giraffe is a horse put together by experts."

 
MOT- Motorola may appear quite discouraging right now.  They recently announced that their 3rd quarter earnings will not be as good as anticipated, and you can see the reaction on Wall Street.  I don't anticipate the price staying down here though.  Motorola is a solid company with a bright future, and they are gaining market share against Nokia and other companies.

 

 

GX- Global Crossing is still my favorite stock pick right now given the market conditions.  GX has the only intercontinental fiber-optic cable lines, which incidentally are faster than satellite for continent-to-continent communications.  This company has incredible potential, so I recommend keep buying more shares if the stock price keeps going down, because they will not declare Chapter 11.  One downside that may be influencing the market right now is a few minor court cases against GX.  Based on trend lines, I anticipate GX making a move very soon!
 

GTNR- Gentner is in a narrowing channel right now.  If the price breaks through the line of resistance, I say buy.  If it breaks below the two support lines that cross at 10.25, sell.  Until then, just hold patiently.
 

MON- Monsanto is a good solid company that has market share in the agricultural industry.  They have superior products in seed and chemicals, both items farmers rely on for a crop.  Don't expect to get rich quick with Monsanto, but it is a slow and steady climber and may be very profitable in a year's time.  There's a strong support line at 33, and a couple resistance lines at 37 and 40.

 

 

COMMODITY LOWS

 COMMENTS
chart COFFEE This last month, coffee made new 25 year lows.  The channel appears to be narrowing, so I am anticipating a move approaching within about a month or so.  One positive aspect with this decline is that coffee has been slowly declining for the last 18 months with little volatility.  Therefore, options are cheap!  Using the 50% retracement rule, December coffee should at least hit 80 if it makes its move by then.  I recommend buying a December Call at 80 or lower, and if you have the money, buy a December futures contract.  When the futures reaches 80, sell futures and keep the call just in case the price keeps climbing.  I'm predicting that once the price does start to climb, it will move quite rapidly based on historical charts.
chart CORN The news on corn has been fairly bullish lately.  Yet, the price has not broken through the upper side of the pennant, which is a bearish sign.  In the last couple of days, it appears as though the lower line was penetrated.  Therefore, I will not be surprised if we see corn drop at least to 220 and possibly lower.
chart SOYBEANS Soybeans appear to most likely be heading south.  There's a possible head and shoulders in July and August which indicates it could drop to 450.  A downward support line had just been broken through a couple days ago.  If the price breaks through the upward support line, I say it is a strong sell.
chart OJ Watch.  If anything, buy a call because orange juice prices are very low right now.
chart COTTON Cotton has been dropping for the last several months.  It is near 30 year lows.  Historically cotton isn't as volatile as coffee, but I think a 52 call or lower is a wise choice based on the 50% retracement rule.  If cotton drops to 30-35 range, buy futures because they ARE 30 year lows.
chart OATS Appear to be oversold based on stochastic.  I project oats to drop at least 10 cents in the near future.
chart WHEAT Watch.  
chart LUMBER Watch.  
chart LIVE CATTLE Watch.  The FC-LC spread indicates a possible buy.  The stochastic indicates a possible buy.  However, traditionally, October LC usually is lower in price than its other months.  Therefore, I'm not sure which direction LC is going.  
chart LIVE CATTLE/ PORK BELLIES SPREAD Well, my prediction from last month was dead on.  Luck?  Perhaps, but this spread in the last month had the potential to net approximately $6000.  Not bad for a couple minutes of work.  Until it widens once again, I recommend staying out of this spread now.
chart 10-YEAR T-NOTE/ 30-YEAR T-BOND SPREAD If hits 0 again, Buy 10-Yr T-Note, Sell 30-Yr T-Bond because we know that it will not remain at 0.  It has to be in positive ground due to economics.
chart HEATING OIL/ UNLEADED GAS SPREAD Hopefully the spread will widen in the negative direction again before winter.  If it does, it will be another great opportunity.  However, with Labor Day passed, I doubt it will widen in the negative direction again.

 

 

COMMODITY HIGHS

 COMMENTS
chart PALLADIUM It is currently on its way south, but it has a long way to go.  It would be a good selling opportunity.
chart FEEDER CATTLE It appears to me that Feeder Cattle are going down.  Selling 92 calls may be a good option because options lose a lot of their value in the last 30 days of their period.  Also, the spread between LC and FC indicates that FC could keep going down.
chart LEAN HOGS Hogs appear to be oversold.  If October Hogs continue to climb to at least 61, I recommend buying 58 or 59 puts.
chart PORK BELLIES If you get in PB, I recommend options since it is very volatile and unpredictable.
chart EUROYEN The Euroyen may be an excellent purchase.  Currently the price of the Euroyen is 99.940.  It cannot climb higher than 100, so you know the maximum you can lose if you buy futures, except for the fact that the Euroyen is based on the Japanese Yen.  One contract only costs about $300 and each tick is about a $20 yield.  Since the EY has been in a sideways channel for the last 6 months, options will be cheap if you choose to go that route.
chart 10-YEAR T-NOTE Watch