micro (out) look 02/26/2008

I think, backed up by the logic of the only Guru I listen to, we are soon to see a period of rising stock prices.

The guru has a record of having over 95% profitable positions, since 1977. I have been following, though not investing according to his advice for about a decade. His advice is based strictly on a statistical model.

His current recommendation is to be 125% invested in very high quality stocks: financial's, home builders, insurance, retail, industrial. Of course there is no way AVII would make his list.

One of the things I have done for the past few years is to track the market using charts of indexes and some of the derivative information about those indexes. My charts show that we are in a pattern, that is very typical of bottoms. And likely a bottom is in. I will not be surprised by a retest of the bottom. My chart give no indication of whether a rally will last for 1 month or 1 year. And what the bottom will look like after that rally.

I would guess a rally may follow of 2-4 months and then a bottom, close to the recent bottom. If this happens we could see a longer rally.

If my guru is correct and we match his historical record we will see things like: AIG 76, BSC 160, C 34, DHI 25, HOG 41, COF 83, KIM 38, LOW 35!

Switching to commodities .... If you read Jim Rogers book, "Hot Commodities" which was published in 2004, he makes the point that commodity cycles last for about 15 years, if I recall correctly. The reason for this, is it takes time to build the infrastructure to increase the supply of the commodity.

IMO, this may not apply to commodities increases built almost strictly on speculation. Because in those cases you don't have to wait for more supply. You just have to wait for the speculators to zig when they should have zagged. An example of this is the Hunt Brothers and their attempt to manipulate the silver market.

Therefore, it is quite possible we will have rising commodity prices as long as the Federal Reserve has to ease to counteract their poisoning of the economy.

Also we have two of the most massive population centers on the earth raising their standard of livings. They will both require commodities.

Blend this with the concept of peak oil and generally commodities will be in a long term up trend. This doesn't mean there won't be corrections along the way.

**** These are my comments. Please do not construe them as investment advice. I may change my mind 1 microsecond later. And I have no obligation to notify anybody of such a change. I have been wrong sometimes and right sometimes. Other times just pain irrelevant. You are solely responsible for your own decisions. Best of luck. ****