Michael Evans
12/25/2005, 10:35 PM
Basically, the market will be flat in 2006. I plan to make money with the following moves:
1. Shorting energy stocks
2. Going long on airline stocks
3. Shorting GOOG
Energy prices are too high. As the economy slows down, a worldwide glut of oil will start to appear. It won't only be in oil, either. Qatar has aggressive plans to ship natural gas from their giant offshore fields, which will also bring natural gas prices down. Indeed, as those prices decline, utilities with dual-firing capabilities will switch, which will also reduce the demand for oil.
Airline stocks have already risen fairly sharply in anticipation of this development. So, buying airline stocks three months ago would have been an even better call. But they still have plenty of room to grow.
Google is overpriced. By the way, I have no idea when it will suddenly start to plunge. You have to watch it every day; or to be more precise, I have to watch it every day. Right now the technicals are neutral. I'll post a message here as soon as I think they will turn negative.
Later in the year, the huge runup in building-related stocks because of hurricane repair will start to wind down, and those stocks will also fall. I'm talking cement, lumber, roofing materials, plus heavy construction machinery. But we're still several months away.
For those who don't like to go short, what will be up -- besides airlines? Other heavy energy users, which includes trucking lines. Here again, there has already been some rally. In general, health care stocks will also do well although that is a very broad-based category, which I'll discuss in future reports. Retail probably won't do that well; it won't fall off the table, but gains are likely to be limited and consumers will remain strapped even after energy prices decline.
1. Shorting energy stocks
2. Going long on airline stocks
3. Shorting GOOG
Energy prices are too high. As the economy slows down, a worldwide glut of oil will start to appear. It won't only be in oil, either. Qatar has aggressive plans to ship natural gas from their giant offshore fields, which will also bring natural gas prices down. Indeed, as those prices decline, utilities with dual-firing capabilities will switch, which will also reduce the demand for oil.
Airline stocks have already risen fairly sharply in anticipation of this development. So, buying airline stocks three months ago would have been an even better call. But they still have plenty of room to grow.
Google is overpriced. By the way, I have no idea when it will suddenly start to plunge. You have to watch it every day; or to be more precise, I have to watch it every day. Right now the technicals are neutral. I'll post a message here as soon as I think they will turn negative.
Later in the year, the huge runup in building-related stocks because of hurricane repair will start to wind down, and those stocks will also fall. I'm talking cement, lumber, roofing materials, plus heavy construction machinery. But we're still several months away.
For those who don't like to go short, what will be up -- besides airlines? Other heavy energy users, which includes trucking lines. Here again, there has already been some rally. In general, health care stocks will also do well although that is a very broad-based category, which I'll discuss in future reports. Retail probably won't do that well; it won't fall off the table, but gains are likely to be limited and consumers will remain strapped even after energy prices decline.