Click chart to enlargeWe just sold the remainder of our Ultralong index positions, which we've been holding for just over a year now. The market is still in a Stage 2 uptrend, trading above an uptrending moving average, so there is no clear sell signal. Still, we see this end-of-year window dressing rally as an opportunity to exit the market and begin a new year. One of our New Year's resolutions is to use the S&P500 index (above) as our default index instead of using the Dow.
We feel that the market cannot go up forever at this pace (67% in under a year), especially in the face of rising oil prices. We just feel it's time to not get greedy and instead start to focus on our next adventure... LED lighting.
8 comments:
Yeah I have been looking at the LED lighting sector and it is undergoing a boom phase. I am wondering if the cat is already out of the bag on this one since some LED stocks are trading at 52- week highs.
They have definitely been discovered. But after the "cat was out of the bag" with DELL, AMZN, AOL, YHOO, GOOG, APPL, they still went up for another several years. The point being that it all depends on how large a market is and how long it takes to penetrate it. The 2008 energy bill is forcing homeowners to change all of their incandescent bulbs to CFL or LED bulbs by 2014. The phase-out begins is 2012. The overwhelming majority of people are still buying incandescent bulbs, so the industry is still in its infancy.
It's a good thing that these stocks have caught on, because much of the market is a popularity contest. The stock of an undiscovered company with the same numbers may not do much of anything. Stocks need fundamentals, but they also need a good story, a catchy name, and publicity. The fundamentals alone only take it so far because "multiple compression" allows analysts to rationalize enormous ranges for valuations when there is no other explanation than that the company wasn't the winner of this year's popularity contest. The fact that LED's are winning the popularity contest bodes well for them going forward. We're waiting for a pullback on which to load up on them. Current P/E's are too rich for us to back up the truck, and unfortunately there's no guarantee they'll improve much.
Best and worst leveraged ETFs for the year. FAZ and SRS were the worst (hmmmmm). ROM and UYM were the best. Some interesting things in there. Silver was twice as good as gold. Lots of 2x ETFs beat out some 3x ETFs.
http://seekingalpha.com/article/180220-best-and-worst-leveraged-inverse-etfs-of-2009?source=yahoo
Could you tell us some of these LED companies?
Yes, LED is the way to go. CREE is my top pick in that space. It's been on a run, but it's a true growth company!
seeer, we will make a seperate post about LED and its future and how we're going to play it, but for now...
CREE is the largest one in the space that is purely LED. Other large players in the space include Phillips (PHG) and AMAT, but they are not pure plays. When we choose a sector, we gravitate towards the pure plays, but that's just a matter of investing style. Other pure plays in the space, although smaller companies, are Aixtron (AIXG) and Veeco (VECO).
As the sector develops, others are sure to emerge. Now is a good time to start understanding the technology so we can find parts suppliers and such. This is a huge research effort, but well worth it. We're looking into how all of the parts come together, and still studying what role flourescents will play in all of this. Any help would be greatly appreciated.
Thanx.
Nice charts, but they're overextended, but that doesn't really mean a thing, I know.
not a pure play in LED but what do you all think of VSH?
Post a Comment