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Calls of 2007 and Ideas for 2008


One year winds down to a close and another one begins anew.


The Good Calls of 2007:

1) Long Street Sense for the KY Derby!

2) BKX underperformance.

3) Small Cap underperformance.

4) Upside for the VIX.

5) Upside for Gold (although my $750 target was conservative).

6) The TLT head and shoulders short term call.

7) The Semiconductor HOLDRs (SMH) head and shoulders short term call.

8) Upside for the Yen.

The Bad Calls of 2007:

1) Head and shoulders downside for Crude Oil.

2) Early negative divergence calls on the stock indexes.

3) Potential low in the housing index/S&P 500 ratio chart.

4) The long dollar/yen call early in the year.

5) NDX broadening top early in the year.

2008 Ideas

PowerShares Water Resource Portfolio (PHO) Long: We've all heard the stories about how the world is facing a severe water shortage in the near future. I think this is a great diversified vehicle to play this theme. I'd look to buy in the low $20's as I think it could easily hit $25 in 2008. The 200 day moving average support at $20.50 provides good risk reward.

Click here to enlarge.

Long Yen:
The Japanese Yen continues to be my favorite trade to hedge against the continuing credit crisis and unwinding of the carry trade. Short term, this pullback to the 50 day moving average looks like a good place to add to long positions, while the weekly chart below shows 200 week moving average support at 0.89. I think Yen futures could trade all the way to 1.00 in 2008.

Click here to enlarge.

Long Gold:
Even after a great 2007, I continue to believe Gold will remain well bid in 2008. As you can see in the below chart, the triangle pattern forming bodes well for Gold as this continuation pattern projects to $900, which also happens to coincide with my longer term price target of $1000. Of course, Gold is a great hedge for dollar weakness as well.

Click here to enlarge.

Happy Holidays to all and best wishes for a happy, healthy, and prosperous 2008.


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Position in PHO.
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