The political events in Egypt can signal two possible market directions. Usually it would indicate that things calm down and energy and precious metal stocks fall back on the reassuring news while other sectors including financial, industrial and consumer move forward.. However, unique to this event is the possible spillover effect on other neighbouring countries which could only result in the opposite outcome if only temporarily. Monday should be a pivotal day in providing us with a better picture of the direction.
Market guru Jim Cramer of CNBC’s Mad Money predicted on Friday that gold will go much higher and should represent up to 20% of an individual portfolio. His top three picks in this area are Agnico Eagle (AEM), Barrick (ABX) & Eldorado (ELD). Agnico Eagle represents his (and my) favourite as it has lots of potential reserves coming to market from politically safe countries.
Hot Stocks usually remain hot: the following stocks hit 52 week highs on more than one occasion this past week. This would indicate their momentum strength going forward: Agrium (AGU), Scotia Bank (BNS), Iamgold (IMG), Lululemon (LLL), National Bank (NA), Potash (POT), and TSX Group (X). However, both Iamgold and TSX Group dropped over 6% after hitting the last high so take heed.
Possible Value Plays include: Nexen (NXY) closed down 7.18% this past week, while Teck Resources (TCK.B) closed -6.12%. The telecoms were also down in weakness. Of particular note are BCE & Telus (T). Other stocks closing at the weekly low include: Canadian Natural Resources (CNQ), Eldorado (ELD), Kinross (K) & Talisman (TLM). Stocks closing near their weekly low include: Agnico Eagle (AEM), Barrick (ABX), & Iamgold (IMG). Best to wait for political events to decide which direction to take on energy and precious metal stocks.
Trades I made this Week include: I bought and sold Potash (POT) twice and Agrium (AGU) once for profit. I purchased Teck Resources (TCK.B) on weakness at $58.75 and $57.90 in two separate accounts. I sold a very large position in Research in Motion (RIM) at $66.75 after holding it since December and January for an average purchase price of $62.95. I bought and sold it again on Friday for profit and repurchased a small amount at $65.99. It closed at $65.88.
Keep an eye on the unfolding world political scenario before moving forward. Have a great week ahead and good luck.
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