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Commodities on a Wild Ride UP, UP, UP (BULLISH)
In 2010, I foresee Copper sales and earnings to rebound after falling in 2009. This is backed by the forecasts that the price of metals will rise in 2010 due to both the recovery in the global economy and basic supply and demand. With advancements in infrastructure across the globe from the U.S., U.K. and Europe to emerging markets such as China, Brazil, Middle East, India and Africa we are seeing commodity levels stabilizing and overall demand is growing. With capital and financial markets easing we are seeing increased spending and lending for new capital projects. This has been a huge bull market in emerging markets like China, India and Africa.
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In 2008 and 2009, the lending dropped off freezing up capital markets and stalling all infrastructure projects leading to a fall in demand for commodities, which crashed the overall prices. Though as you can see now these projects are back on and lending has come back especially in China where the lending policies are very liberal. Other indicators will also push up the price of commodities. In 2010, it is expected for GDP growth to increase 1.2% after falling 2.2% in 2009. More cash in hand increases demand therefore making commodities more desired again.
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I think that most of us would agree with the above. The 2000 pound unseen elephant in the room is when to enter the trade. Is this a continuing rally right into 2010 or W shaped recovery? L shape? square root? double bottom? What is your advice on that?
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I think this is just a retracement higher and the real move is another dive lower sometime between late Sept and early Nov.
Think Oct '29, Oct '87, Oct '07 highs, and Sept '08 plunge
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L shape? square root? double bottom? What is your advice on that?
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