Tuesday, January 12, 2010

Use Pullback To Add To Positions

The driver of the global recovery continues to be China. News that China increased exports in December and imports in the world's largest country by population surged to a record, fueling speculation that a global economic recovery is underway. China's customs bureau reported that exports rose nearly 18% in December 2009 compared to the year earlier period, the first increase in 14 months. While imports climbed nearly 56%.
However, to power this export economy China continues to be heavily dependant on fuel and commodities, crude oil, coal and copper.
Alcoa reported earnings yesterday and they wwere a penny, which somewhat disappointed those expecting 5 cents. Alcoa CEO Klaus Kleinfeld said on the company's conference call that Alcoa is expecting aluminum demand to rise by 10% in 2010. That number includes expected demand from China, but taking China out of the equation, Alcoa still expects a 5% uptick in demand fueled by orders from other BRIC constituents like Brazil and India.

The selling today is in part a combination of the AA news, crude oil hitting resistance (technical selling) and the fact we've had S&P rise steadily for 7 days and some profit taking is expected.
Taking every thing into context, the global recovery is occuring and I continue to believe that sticking with the metal, energy, financial & technology sectors is going to prove profitable in 2010.

Note on JPMorgan Chase (Itz Pix stock) Bill Miller, chairman, chief investment officer and portfolio manager at Legg Mason Capital Management recommended it as one of his top 5 stock picks for 2010. >>READ

PDE & RIG hit resistance:

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