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Recap of Calls: The Good, the Bad, and the Future


What a year it's been for the markets.

Time flies when you're having fun, and 2009 has certainly been an interesting year for the markets! Who would have thought at the beginning of this year (other than maybe David Tepper) that by the end of 2009, the S&P 500 would be up 25% and the NASDAQ would be pushing to a 45% gain? Let's take a quick look back at our good and bad calls for the past year and figure out what markets will provide the best money-making opportunities in 2010.

The Good Calls of 2009

1. Soybeans

This agricultural commodity worked out great for my readers in 2009. At the end of 2008, I said to buy soybeans in the mid to low 800s, and the actual low ended up being 838.5 in early March. My target was 50% upside into the 1200 level, and soybeans rallied strongly into the summer making a high of 1291 in mid June. I told my readers to get back in soybeans on September 30 in the low 900s, and they've rallied back nicely to about 1045. While I think that longer term, soybeans will definitely trade higher back to the 1200 level, I'd raise stops to 985 to protect profits because there's a head-and-shoulders topping pattern forming on the weekly chart. Hopefully you were able to take advantage of these calls as the soybean market worked out pretty well for us in 2009!

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2. TBT

I got a lucky on this one when I said at the end of 2008 you could try to bottom-fish the TBT in the mid $30s, as I thought the bond bubble at the end of last year was unsustainable. Even if you waited for confirmation of an upturn like I said with a buy around $40, you still make a nice profit on TBT when we got stopped out at $47.50, which I suggested on June 30. Yields are on the rise again as bonds sell off and I'd be adding back to TBT positions in the high $40s as I think we'll have to deal with significantly higher rates in 2010.

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3. SPX

As I said at the end of June, "I wouldn't be surprised to see the S&P 500 defy gravity and rally through the 1100 level." While I still think this is a bear market rally, the SPX got so oversold in early March with positive divergence that it made sense to trade rallies back into the Fibonacci retracement levels, and 1100 was just below the 50% retracement. The exact level happens to be 1121, which we just happen to be a couple points above as I write this. Risk reward is much more balanced now and if anything has shifted back in favor of downside for equities at current levels. I'd watch 1225 on the upside as that is the 61.8% retracement and near the 200-week moving average, which should provide heavy resistance on any rally above 1200. Downside levels are the 38.2% retracement around 1000 and the 50-week moving average around 950. So as you can see, equities are kind of in no man's land here, and rallies should be used to reduce underperforming equities as risk favors the downside.

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4. Gold

I have a great track record of trading gold, and 2009 was no exception. After nailing the gold market in 2008 much like I did this year in soybeans, gold was relatively quiet in the first half of the year as it consolidated below the $1000 resistance level. At the end of June, I advised readers to buy gold in the low 900s as the inverse head-and-shoulders pattern was complete. After hitting a low of 904.8 in early July, gold rallied straight up to above 1200 at the beginning of December. While obviously gold has had a sharp correction recently, I still think this is a clear bull market, and I'd be adding to gold positions on any pullbacks below 1075. I still think gold will reach my 1300 target, although recent US Dollar strength will make that take a little longer. Watch this market closely next year because I think this could again be a great commodity to trade and hopefully we can capitalize on the volatility in Gold to make some money!

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5. Corn

While I did give up some profits in corn earlier in the year as we got stopped out at breakeven, I did get my readers back in corn below 350 at the end of September. Corn has rallied nicely back above 400 and the chart still looks great. I would add to Corn long positions around 400 and raise stops to the 375 level. Interestingly, corn has started to outperform some of the other ags while earlier in the year it was a laggard. I still think longer term, corn should be able to rally into the 500 level.

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Positions in TBT, GLD, Corn Futures
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