Themes pay off than trades. I am seeking topics in areas of healthcare and telecommunication. Those areas have shown early sings of recovery.
Task #1 finding a positive healthcare theme, with less volatility and more sustainability. In other words, more equipment based than biotech. Medtech can offer that sustainability theme but other emerging areas as well. Of course large cap pharma is another space which is relatively known and highly discussed on the street.
Task #2: Communication related technology:
It is a global theme many can understand but applying ideas to the right group/stock is not simple. Looking internationally for attractive momentum, growth potential. Fired up to convert on the theme.
Task #3 - Similarly, media themes specifically US based. Also, other areas of upside potential. Media can range from, internet to tv or even both. Regardless, I continue to like this theme and will continue to follow up.
Looking for names with core business advantage and upside move. Even conglomerates appear attractive despite a positive performance in 2006. In this case two steps await 1. Differentiating the leading group and 2. Finding areas of high investor demand. - These steps can maximize gains.
Task #4: Macro Trades
Pending corrections are difficult and at times not worth betting on timeframe.
Two appealing trades are worth noting for the appropriate time.
Somehow rates and commodities are interlinked and will be monitoring on a weekly basis. First, sub prime and housing stocks, might offer a shorting opportunity. Mainly a fed and 10 year yield cal. Second, select commodity run up can be tested, inflicting pain on commodity bulls. Therefore, one more correction in commodities waits, but wiser to focus on unripe places.
All that said, looking to short housing and oil on next correction. Following a multi-year run these names are at risk and would play them at signs of first correction. Select housing shorts might have longer downside duration.
Finally, something new. Would like to find a "cool" theme ahead of the street. Let's just call it desert. And once found it will be posted.
Start of 2007 looking for select behaviors but letting the market react before implementing any game plan.
For example, HGX (Homebuilder Index) 240 remains a key resistance level. With rate and consumer concern that would be a key indicator. This observation is to creating a shorting opportunity of sub prime lending related names or a recovery in the 10 year yield. Perhaps, making this correlation is not too sharp but at least it’s a view. Previous charts of us 10 year illustrate that point of a recovery odds becoming attractive. At least, on the near-term charts.
Finally, a theme in tech and media will continue to offer some rewarding stock picks.
Technology and Media themes are attractive and TIVO, DTV along with GTW. But new names like SVVS and other Telco groups are worth noting.
Similarly, in Healthcare the early Q4 recovery should have some follow through even outside of biotech.
Commodity related – not the same juice but plenty to trade.
Happy New Year! Let’s do it again with Health for a fruitful year.
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