Before you can make any decision about what to invest in you need to obtain the world view of the market and also the North American Market. Which sector is growing and which one has difficulties. Is the overall economy growing or flattening? The greatest tool I am using is the MSI and the NMI. It predicts the future about 3-6 months ahead, depending on the industry. It not only tells you if the economy is growing but also their sectors, which ones to short and which ones to long. A very useful tool and publicly available.
The MSI industry comments give you a real feel on each sector. A piece to study hard for the fundamental trader.
https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/
The second tool I am using is the Consumer Sentiment. It is always accurate and comes out ones a month from the University of Michigan, UMCSI.
And then there are the GDP numbers, which are following the S&P500 by about 6-12 months and the S&P500 follows for the most part the MSI by 3-6 months. Employment numbers and Durable Goods are only the confirmation of what is already known long before.
The Outlook
The economy is improving all over all. New Orders are up. The next in line is production, up. Employment slightly up, but suppliers cannot keep up with demand. Trucking is still a problem and prices are increasing. Export and Imports growing.
The following commodities are in short supply.
Copper; Corrugate; Corrugated Boxes since 3 months
Electrical and Electronic Components since 3 months
Steel — Cold Rolled; Steel — Fabricated; since 3 months
Companies in these industries will make increased money. Good candidates for LONG Positions
The Service Sector also sees improvement.
The Consumer Sentiment Index is showing a little setback but still very optimistic for the future.
Authorized Building Permits (1700 in DEC) are improving since June 2020 and indicating activity improvement.
Long Home Depot or Lowes? Construction companies?
Chinas economy depends 17% on that of Europe's and 17% of that of the US. The Australian Dollar is very closely correlated to the China economy. 50% of their export goes there.
This has an impact on Australian companies traded on the NYSE. The AUD is improving too. No companies to short.
Long winemakers and sheep producers?
GDP as predicted 6 months ago is increasing slowly but surely. The S&P500 as The Market Indicator is improving and hence we will stay bullish for the next 1-3 months
My take on Sectors and Industries are bullish for the next 1-3 months
Fabricated Metal Products are growing big times
Primary Metals are growing big times, copper and basic material and mining
Wood Products are growing big times in the Manufacturing Sector
Management of Companies and Support Services are growing big times
So is Finance and Insurance, and Transportation and Warehousing
Sectors to look for Short positions are Arts, Entertainment and Recreation; Other Services and also Agriculture, Fishing and Hunting.
In a growing economy there is always the opportunity to short Utilities and Consumer Defensives, i.e. Dollarama, Walmart
No comments:
Post a Comment