STOCK MARKET Resources

Gold Mining Stocks To Watch

2010-03-06T00:00:00-05:00

Commentary: With the recent strength in the U.S. dollar, gold and the companies that mine it have been mired in a correction. While these stocks have been correcting their move to recovery highs since late last fall, from a broader perspective it's clear that these stocks have technically been in a wide-trading range. The mining stocks recently tested the bottom of the range and turned higher, hinting that an end to the correction could be near. Currently, the gold miners are in a critical area on their charts, with a break above near-term resistance hinting at a resumption of the uptrend, and a move lower hinting at a larger topping process.

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In examining the chart of the Market Vectors Gold Miners ETF (NYSE:GDX), you can see the move to new highs in November and the failure to hold the breakout. GDX then proceeded to correct in three waves lower into the February low. Stepping back, you can see that this is all part of a larger trading range taking place from September to the present. GDX dipped under support in February, which could have shaken out some longs. It quickly snapped back into the base and is on its way to testing a resistance level near $47.50. GDX has cleared the 50-day moving average and a recent high. These are bullish clues, and could hint at an upside breakout.

Source: StockCharts.com

Newmont Mining Corporation (NYSE:NEM) is an individual miner that is leading the charge. NEM has endured a very similar pattern to GDX, but was able to successfully break free of the channel that was framing the recent correction. NEM is probably too extended to be in a good buying position, but the recent strength is hinting toward a test of the November highs. (For more, see 8 Reasons To Own Gold.)

Source: StockCharts.com

IAMGOLD Corp. (NYSE:IAG) is another gold miner that has been following a similar pattern to GDX. IAG recently tested the $13 level as support and there was an increase in volume as buyers stepped in. This level held on several occasions last year in September through November. This level remains a critical area to watch on the downside. Looking higher, IAG is in the process of testing the upper bounds of the channel it has been trading. If it can clear this area it could follow in NEM's tracks.

Source: StockCharts.com

Yamana Gold, Inc. (NYSE:AUY) is a gold miner that has been lagging the other miners, but has managed to hold critical support near $10. AUY has also been unable to close back above its 50-day moving average. With $10 holding as support, it would appear that AUY is headed toward a test of the upper boundary of the channel. If AUY can’t make it to the top of the channel before heading back lower, this would be a valuable clue that the $10 area might give way.

Source: StockCharts.com

Bottom Line
The miners are definitely painting a mixed picture right now. The large trading ranges being formed have the appearance of large topping patterns. While we can’t discount this possibility, the shakeout in GDX followed by the strength in NEM hints at underlying strength in the group. The miners are at a critical area here because a failure at these levels would put the topping thesis back in play. Much will depend on how the U.S. dollar and gold perform moving forward, but the miners have often moved ahead of the base metal. How these miners fare in the next week could have serious implications for their overall trend. (For more, see Using Technical Analysis In The Gold Markets.)

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Have a Great Day!

By Joey Fundora

Joey Fundora is an independent trader located in South Florida. Joey focuses on using technical analysis techniques to uncover supply and demand imbalances in equities. To see more of his work, visit his site on Stock Chart Analysis.

At the time of writing Joey Fundora did not own shares in any of the companies mentioned in this article.

Posted March 03 2010

DISCLAIMER
ChartAdvisor is not a registered Investment Adviser or a Broker/Dealer. The trading of securities may not be suitable for all potential users of the Service. You should be aware of the risks inherent in the stock market. Past performance does not guarantee or imply future success. You cannot assume that profits or gains will be realized. The purchase of securities discussed by the Service may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities, or making any investment decisions. You assume the entire cost and risk of any investing and/or trading you choose to undertake.

Disclaimer…The subject matters expressed above is based purely on technical analysis and personal opinions of the writer. it is not a solicitation to buy or sell.

Understanding Stock Splits

2010-03-04T00:00:00-05:00

A stock split is a corporate action that increases the number of the corporation's outstanding shares by dividing each share, which in turn diminishes its price. The stock's market capitalization, however, remains the same, just like the value of the $100 bill does not change if it is exchanged for two $50s. For example, with a 2-for-1 stock split, each stockholder receives an additional share for each share held, but the value of each share is reduced by half: two shares now equal the original value of one share before the split.

Let's say stock A is trading at $40 and has 10 million shares issued, which gives it a market capitalization of $400 million ($40 x 10 million shares). The company then decides to implement a 2-for-1 stock split. For each share shareholders currently own, they receive one share, deposited directly into their brokerage account. They now have two shares for each one previously held, but the price of the stock is split by 50%, from $40 to $20. Notice that the market capitalization stays the same - it has doubled the amount of stocks outstanding to 20 million while simultaneously reducing the stock price by 50% to $20 for a capitalization of $400 million. The true value of the company hasn't changed one bit.

The most common stock splits are, 2-for-1, 3-for-2 and 3-for-1. An easy way to determine the new stock price is to divide the previous stock price by the split ratio. In the case of our example, divide $40 by 2 and we get the new trading price of $20. If a stock were to split 3-for-2, we'd do the same thing: 40/(3/2) = 40/1.5 = $26.6.

It is also possible to have a reverse stock split: a 1-for-10 means that for every ten shares you own, you get one share. Below we illustrate exactly what happens with the most popular splits in regards to number of shares, share price and market cap of the company splitting its shares.

What's the Point of a Stock Split?

So, if the value of the stock doesn't change, what motivates a company to split its stock? Good question. There are several reasons companies consider carrying out this corporate action.

The first reason is psychology. As the price of a stock gets higher and higher, some investors may feel the price is too high for them to buy, or small investors may feel it is unaffordable. Splitting the stock brings the share price down to a more "attractive" level. The effect here is purely psychological. The actual value of the stock doesn't change one bit, but the lower stock price may affect the way the stock is perceived and therefore entice new investors. Splitting the stock also gives existing shareholders the feeling that they suddenly have more shares than they did before, and of course, if the prices rises, they have more stock to trade.

Another reason, and arguably a more logical one, for splitting a stock is to increase a stock's liquidity, which increases with the stock's number of outstanding shares. You see, when stocks get into the hundreds of dollars per share, very large bid/ask spreads can result (see Why the Bid/Ask Spread Is So Important.). A perfect example is Warren Buffett's Berkshire Hathaway, which has never had a stock split. At times, Berkshire stock has traded at nearly $100,000 and its bid/ask spread can often be over $1,000. By splitting shares a lower bid/ask spread is often achieved, thereby increasing liquidity.

None of these reasons or potential effects that we've mentioned agree with financial theory, however. If you ask a finance professor, he or she will likely tell you that splits are totally irrelevant - yet companies still do it. Splits are a good demonstration of how the actions of companies and the behaviors of investors do not always fall into line with financial theory. This very fact has opened up a wide and relatively new area of financial study called behavioral finance (see Taking A Chance On Behavorial Finance.).

Advantages for Investors
There are plenty of arguments over whether a stock split is an advantage or disadvantage to investors. One side says a stock split is a good buying indicator, signaling that the company's share price is increasing and therefore doing very well. This may be true, but on the other hand, you can't get around the fact that a stock split has no affect on the fundamental value of the stock and therefore poses no real advantage to investors. Despite this fact the investment newsletter business has taken note of the often positive sentiment surrounding a stock split. There are entire publications devoted to tracking stocks that split and attempting to profit from the bullish nature of the splits. Critics would say that this strategy is by no means a time-tested one and questionably successful at best.

Factoring in Commissions
Historically, buying before the split was a good strategy because of commissions that were weighted by the number of shares you bought. It was advantageous only because it saved you money on commissions. This isn't such an advantage today because most brokers offer a flat fee for commissions, so you pay the same amount whether you buy 10 shares or 1,000 shares. Some online brokers have a limit of 2,000 or 5,000 shares for that flat rate, but most investors don't buy that many shares at once. The flat rate therefore covers most trades, so it does not matter if you buy pre-split or post-split.

Conclusion
The most important thing to know about stock splits is that there is no effect on the worth (as measured by market capitalization) of the company. A stock split should not be the deciding factor that entices you into buying a stock. While there are some psychological reasons why companies will split their stock, the split doesn't change any of the business fundamentals. In the end, whether you have two $50 bills or one $100 bill, you have the same amount in the bank.

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Disclaimer…The subject matters expressed above is based purely on technical analysis and personal opinions of the writer. it is not a solicitation to buy or sell.

What is a stock split

2010-03-04T00:00:00-05:00

All publicly-traded companies have a set number of shares that are outstanding on the stock market. A stock split is a decision by the company's board of directors to increase the number of shares that are outstanding by issuing more shares to current shareholders. For example, in a 2-for-1 stock split, every shareholder with one stock is given an additional share. So, if a company had 10 million shares outstanding before the split, it will have 20 million shares outstanding after a 2-for-1 split.

A stock's price is also affected by a stock split. After a split, the stock price will be reduced since the number of shares outstanding has increased. In the example of a 2-for-1 split, the share price will be halved. Thus, although the number of outstanding shares and the stock price change, the market capitalization remains constant.

A stock split is usually done by companies that have seen their share price increase to levels that are either too high or are beyond the price levels of similar companies in their sector. The primary motive is to make shares seem more affordable to small investors even though the underlying value of the company has not changed.

A stock split can also result in a stock price increase following the decrease immediately after the split. Since many small investors think the stock is now more affordable and buy the stock, they end up boosting demand and drive up prices. Another reason for the price increase is that a stock split provides a signal to the market that the company's share price has been increasing and people assume this growth will continue in the future, and again, lift demand and prices.

Another version of a stock split is the reverse split. This procedure is typically used by companies with low share prices that would like to increase these prices to either gain more respectability in the market or to prevent the company from being delisted (many stock exchanges will delist stocks if they fall below a certain price per share). For example, in a reverse 5-for-1 split, 10 million outstanding shares at 50 cents each would now become two million shares outstanding at $2.50 per share. In both cases, the company is worth $50 million.

The bottom line is a stock split is used primarily by companies that have seen their share prices increase substantially and although the number of outstanding shares increases and price per share decreases, the market capitalization (and the value of the company) does not change. As a result, stock splits help make shares more affordable to small investors and provides greater marketability and liquidity in the market.

extract from : www.investopedia.com/ask/answers/113.asp

Disclaimer…The subject matters expressed above is based purely on technical analysis and personal opinions of the writer. it is not a solicitation to buy or sell.

Channel Stuffing - Painted Fundamentals

2010-03-02T00:00:00-05:00

Channel stuffing, also known as trade loading, is an illegal business practice used by companies to blow up their sales and earnings figures. It is the ponzi practice of sending more products through its distribution channel than the distributors/retailers can sell. When the products are shipped from the company, they may be considered as sold and may be used to boost the figures.

Companies can do channel stuffing for various reasons like,

Painting the fundamentals like sales and earnings figures; to get better stock prices and media attention.
To meet up with competitors' (or its own previous) performances or targets.
To highlight/paint its performance over a specific channel like international trades or a specific product.
Poor sales force management can also be a cause; trying to meet-up the long-term target in a short-term.

Channel stuffing can be regarded as a short-term practice with long-term consequences.

As more products are shipped, the distributors tend to return the unsold ones or stop giving further orders; thus the future figures get worse.
Creating more products for channel stuffing can demand factory overtimes, and returning unsold products or lack of orders can result in factory shutdowns.
The fundamentals can become less and less attractive and can adversely affect stock prices.
The marketing and selling of products become more and more complex and unmanageable.

Many companies regardless of their size have been identified and criticized for their channel stuffing activities. In the U.S., the Securities and Exchange Commission has litigated some companies for these activities.

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Disclaimer…The subject matters expressed above is based purely on technical analysis and personal opinions of the writer. it is not a solicitation to buy or sell.

The Truth About Oil

2010-02-18T00:00:00-05:00

What does this chart from the U.S. Energy Information Administration (EIA) tell you?

Exactly. There has been a dramatic decline in U.S. oil production.

The amount of crude oil produced per day per well went up in the 1960s. It reached a peak of 18.6 barrels per day per well in 1972. After 1972, productivity generally declined. The 2008 rate of 9.4 barrels per day per well was 49% below the peak – the lowest since the EIA began reporting oil well productivity.

Now, what does this chart tell you?

Right again. World crude oil production has basically flat-lined since 2005. And production is not going to increase anytime soon. Consider the words of Andrew Hall. (He’s the Chairman of Phibro LLC and a phenomenally successful oil trader.) He recently said that “oil production in many parts of the world has already peaked and entered a terminal decline.”

What About New Discoveries?

It’s true. Oil companies have found new sources. Last September, BP announced a giant oil discovery in the Gulf of Mexico. Estimated size? 3 billion barrels. Woohoo! The problem is, the field is six miles beneath the surface of the Gulf. So, like many new sources, it’s going to be expensive to get to it. And only 500 million barrels are recoverable with today’s technology.

To put this discovery in perspective, 500 million barrels would supply the world for a scant six days. In the end, this new oil will simply offset diminished production in existing oilfields.

Whether or not the world is running out of oil is open to debate. But, it most assuredly is running out of cheap oil.

Demand

According to the EIA, the world oil market should gradually tighten in 2010 and 2011. Demand will begin to grow again as the global economic recovery continues.

So now let me ask you to look at another chart.

World Population Growth

We’re in the midst of a population explosion. The world’s population currently stands at 6.6 billion. We are projected to reach 7 billion by 2012 and 8 billion by 2025. An undeniable long-term trend.

Will 1.4 billion more people on the planet in the next 15 years create any additional demand for energy?

What does this final chart tell you?

Yup. There’s no way to stop it. Global energy demand is rising.

And despite the U.S.’s EIA saying that nuclear energy consumption in America could increase from 8 quadrillion BTU to 16 quadrillion BTU by 2030, the world will still be dependent on oil for years to come.

Where to Invest

There are many ways to profit from this trend. One option is to invest in energy ETFs – and there are lots to choose from. Or you could invest in the large vertically integrated oil companies. That gives you exposure to oil and natural gas as well as to refining and distribution.

If you’re looking for more upside, try investing in the small and medium-sized oil exploration and development companies. To expand their reserves, the bigger companies will be swallowing many of them up in the next year or two.

It’s really simple. All you need to know about oil is that supply is flat and declining. And demand is increasing. For more specific energy investments, see Sound Profits.

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Disclaimer…The subject matters expressed above is based purely on technical analysis and personal opinions of the writer. it is not a solicitation to buy or sell.

Gloden Agri

2010-02-16T00:00:00-05:00

I have lately cleared most of my counters invested in China Stocks, at a loss and moved my funds to Gloden Agri. (SGX)

I have calculated if Golden Agri moves upward to 0.72 cents i would have covered my losses.

My target for Golden Agri $1.50 cents to either hold or sell half my lots.

China Stocks not sure what is going to happen after the chinese new year, Govt. in China is very determine to control inflation and Banks mostly likely would be ask to increase their reserves.

However i am still keeping an eye on stocks like China Sports , Chinaoilfield, ChinaTechfibre waiting for this counters to dip further

What is Contrarian Investing

2010-02-13T00:00:00-05:00

Contrarian investing is an investing strategy that simply means going against the market. Contrarian investors go against current market views, indicators and trends to outperform the market. For example, they may sell stocks on high and buy at low even when the trends are strong. They may also prefer to buy stocks which are ignored by investors and may sell those ones which are hot favorites. The basic idea is to get into a good deal even before others realize it.

Contrarian is a strategy which can be followed in both bull market and bear market. The strategy works best when the markets are wrong; like in bubbles and bursts. The most similar strategies to contrarian investing are value investing strategy and deep value investing strategy. Like value investors, contrarian investors look for mispriced stocks using indicators like book value and P/E ratio. But contrarian investors also consider the market sentiment using indicators like volume indicators, earning forecasts, industry performances, analyst and media commentaries, etc before making decisions.

Contrarian investing involves very high risks and it demands high levels of market knowledge, intelligence, trading experience, market research and trading data. There are some contrarians who just like go against the market all the time; which can't be a good strategy as the market is right most of the time. The right strategy can be to look for opportunities where the market 'can' be wrong.

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What to Do When the Stock Market Tumbles

2010-02-05T00:00:00-05:00

Stock market investing is difficult and dangerous in the best of times. When times turn bad and the stock market begins to tumble, the danger levels increase exponentially. Make the wrong move under these circumstances and your entire net worth could be wiped out in no time at all. Years and years of careful savings and investment can dissolve in moments, leaving you stranded and your retirement unsecured.

Of course, there are things you can do when the market starts to turn downwards to protect yourself and your investment portfolio from being ravished and destroyed. That is exactly what I want to talk about in this article today.

Determining that the stock market has turned is almost an art form in itself. Sometimes it's hard to tell exactly when the stock market has turned because stock market volatility is perfectly normal. The stock market might go down today but jump right back up tomorrow. In fact the stock market may go down for several days or even several weeks only to rebound to a higher level than it was before. Determining that the stock market is in a new semi-permanent trending downturn or bear market as they call it is difficult to do.

But if you have determined that the stock market is in a bear downturn here are some things that you can do to protect your portfolio.

The first thing you can do is lighten your holdings as soon as you determine that the market is about to turn down. Don't panic because the market generally won't crash overnight. The bear markets trend downwards for weeks, even months... so you don't have to feel like you should go out and sell all your stocks tomorrow. During this time, though, you should be sure to pay off any margin debt that you have and start to hoard cash if at all possible. Maintaining a strong cash position during these times can become essential.

The next thing to do is identify stocks that you own in your portfolio that are no longer rising. Some people suggest that you sell these stocks immediately, but I prefer to place stop-orders on them instead. When you do this, you continue to own the stocks but if the market starts to trend further downward your broker will automatically sell the stocks at prearranged prices spelled out in your stop order. This way if the market turns up unexpectedly and the stock starts to rise again you'll be able to take advantage of it.

Next if you have excess cash to invest during the beginning of the market downturn be sure to only invest in cash equivalents and highly fungible items such as money market funds and treasury bills... which are short-term treasury bonds. The last thing you want to do is to be investing in stocks as the market is turning downwards.

Finally sell any mutual funds whose net asset value has dropped 5% or more. Many times it's important to get out of mutual funds that have aggressive growth at their core because these are some of the first to turn down in a bear market.

The most important part of a market downturn is getting liquid, or at least as liquid as possible so that you have a strong cash reserve available. Why is this important? Because eventually the market will bottom out at which time you will be able to find incredibly cheap deals for the same stock you used to own, which is now selling at bargain prices. Having cash handy allows you to swoop in and grab a steal of a deal.

Jason Markum has been writing articles online for over thirteen years. When not writing about investing, Jason runs a portable work bench web site where he reviews the best industrial work bench for your shop.

Article Source: http://EzineArticles.com/?expert=Jason_Markum

Disclaimer…The subject matters expressed above is based purely on technical analysis and personal opinions of the writer. it is not a solicitation to buy or sell.

Are you the person for FOREX trading

2010-01-29T00:00:00-05:00

I am going to explian to you in a short sweet way what FOREX is how you can improve and make more money, or if your a completely new you can start from scratch. I will suggest a program that i think will benefit the most (I can only say so much in one article) and give you some information on FOREX trading

First of all i would like to start of saying FOREX trading is a HUGE leap. FOREX trading can be very exciting, and it can also be very rewarding. If you know what you are doing. Please notice the BIG word "IF". When ever you are investing your money you should do as much research as you can.

This program can save you lots of time with it step by step guie on FOREX trading. If you want to make your own business hours, or start making more money with in the next month or so with some effort.

The following is going to explain some info on FOREX. FOREX stands for (Foreign Exchange Currency Trading). It is by far the largest trading market in the world today in the year 2010. On Average $1.9 trillion is traded everday in the foreign exchange market. Some people trade $200million to $500million at one time. Obviously that is a HUGE amount and you ont have to have nearly that much money to get started.

WHY? Why does this market have such a big risk? The risk is because the market fluctuates every 3 seconds, THATS 20 times a minute, and over or up to 18,000 times a day. If you stay on top of it and really do your research FOREX can benefit you and help you make money or help you start making money.

There really is so much stuff to learn about this type of trading, you really need to invest in a guide that will help you along the way.

My advice do your research if your still really interested in FOREX then definitely give this program a look.

htt://www.thegreenmoneymachine.com/

Thanks,

Travis

submitted 2010-01-26

Disclaimer…The subject matters expressed above is based purely on technical analysis and personal opinions of the writer. it is not a solicitation to buy or sell.

Confuse where to Invest

2010-01-24T00:00:00-05:00

I have recently clearly my lots at sinotechfibre at 0.18 cents and bought ChinaOilfield. (SGX)

Guess it is still to early to cleared my lots in sinotechfib the chart line is still moving up. However i have already made my margin when it dip at 0.145cents.It is still a good chance this counter will move up to 0.195 cent further and there might be a resistance at 0.195 cents.

Why than China Oilfield Technolog crazy me those who bought it few weeks back at 0.155cents to 0.16cents congratulation there are the dare devils,there could easily dispose it for 018 cents now. Myself i am entering a little late at 018 cents on this counter.

Presently their audit accounts shows negative or revenues decreased. However if we look at China as a whole She is hungry for commodities to fuel its growing economy sectors in oil, coal, iron ore,gold are few examples.

Chinaoilfield also have equipment and products that are used in oil recovery There also have book value orders (according to their website) once their technical issues are resolved.

China Companies has recently invested in oil-sands projects in Canada , kazakhstan, Iraq etc.

Looks like even if crude oil dips below 80USD it is a good chance there would invest in oil field equipments.

My target sell at 0.25 to 0.29 cents or hold a while longer. My concern Chinaoilfield might consolidate the shares even with their strong reserves since there also have a business plan to expand their manufacturing plants which is on hold.

Good luck in your trade

ezy

A recent article i picked up

extract :

if you like China, you should also like...

Brazil. Its massive amounts of mineral resources, fertile farmland, and oil are perfect complements to what China needs to grow. There’s a reason why Jim Rogers has been flogging Brazilian farmland as one of the best investments for the next couple of decades.
Australia. This is one of Ted Peroulakis’s (Options Power Trader) favorite bets for 2010. He says that "Australia is a natural resource powerhouse with large deposits of coal, iron ore, and uranium. On China’s doorstep, it’s perfectly positioned to benefit from its huge neighbor’s modernization efforts."
Oil. Imagine how high oil prices will go as the Chinese start buying cars. Ted says they’re moving rapidly in that direction. As a matter of fact, China recently surpassed the United States as the world’s largest passenger vehicle market.
Taiwan. If you marry Taiwan’s technology to China’s enormous customer base, you get a breakout market waiting to happen. Once every couple of years, these two countries sign an agreement that gives Taiwan more access to China than it had before. The next one (the signing of an Economic Cooperation Framework Agreement) is expected later this year.
Canada. I shared my thoughts about Canada with you late last year. Canada exports oil, coal, and minerals to China. It has also attracted a ton of Chinese money. Just last month, PetroChina won approval from the Canadian government to buy a stake worth $1.8 billion in two of Alberta’s oil-sands projects.And If You Don’t Like China?

If you don’t like China, it’s probably because its market has been subject to big swings in the last few years...

Last year, China’s market was up 74%.
In 2008, its market declined 64%.
In 2007, it rose 97%.

One way to take advantage of the economy’s growth spurts while sidestepping the fallout when growth stalls is to invest in the dividend globals that have aggressively moved into China.

In Sound Profits’ portfolio of dividend companies, there are five companies rapidly increasing sales in China...

The integrated energy company I recommended last month is up 3.7%.
The consumer company I recommended last month is up 9.5%.
The food company recommended last August is up 13%.
The oil company added last July is up 36.2%.
And the industrial conglomerate recommended last June is up 23%.

These companies have sales all over the world. If China’s economy goes into a deep freeze, they could feel some of the chilling effects – but just a fraction of the effects investing directly in a China fund or Chinese companies would have on your portfolio.

Invest Safely

Andrew Gordon

Investor's Daily Edge
Email us at: feedback@investorsdailyedge.com

Disclaimer…The subject matters expressed above is based purely on technical analysis and personal opinions of the writer. it is not a solicitation to buy or sell.

Where to Invest in 2010

2010-01-24T00:00:00-05:00

Commodities

I’m extremely bullish on the commodities sector. I expect commodity prices to head higher for two main reasons:

(1) Increasing demand due to a rise in economic activity. Economies around the world are doing much better. The U.S. reported positive GDP growth for the third quarter, so we could be out of the recession. Germany and France could also be coming out of the recession. And the economies of China, Brazil, and India are once again running strong. This will lead to an increase in demand for commodities like oil, copper, grains, etc. A steady supply of commodities is needed to keep the engine of economic growth running.

(2) The prospect of higher inflation. America has a national debt of over $12 trillion. And deficit spending is out of control. I agree with Bob Irish and Andrew Gordon that the government’s policy will be to inflate their way out of this problem. Washington can simply fire up the printing presses and print their financial obligations away. All that extra money in circulation should lead to higher inflation down the road.

Keep in mind that America was not the only country to dump money into its economy in order to save it. Many countries did it. Because of this, many major world currencies are destined to see high levels of inflation. The explosion in global money supply could lead to a decline in the value of all paper money around the globe. Investors everywhere are having less and less confidence in fiat paper money that’s not backed by anything. As a result, they are jumping into commodity investments to protect themselves.

To protect against inflation rearing its ugly head in 2010, you want a portion of your portfolio allocated in commodities.

I suggest you look at energy, agriculture, metals, and even commodity-rich foreign markets.

Oil is certainly the lifeblood of our society. Gasoline made from crude oil is still the cheapest and most efficient fuel for our vehicles, and demand for gasoline is not going away any time soon. Oil is now an alternative currency to paper money and will rise as the fiat currencies lose their luster. Oil demand is increasing in emerging markets like China and India. Plus, the worldwide supply of oil is running thin and it’s getting harder and more costly to get oil to the consumer. I expect oil prices to head over $100 per barrel in 2010.

I like the prospects for clean energy. This industry includes wind farms, nuclear power plant operators, and solar stocks. Governments around the world are offering tax breaks and other incentives to encourage clean energy use. This opens up significant potential for investors to profit.

Agriculture prices are poised to blast higher. The world’s population continues to explode and food demand is constantly increasing. The standard of living in developing nations is rising – and that will push food prices even higher. I expect higher prices for food. There will be plenty of opportunities to profit by investing in raw food commodities and the fertilizer producers.

Prices for metals are poised to head higher due to growing demand. The industrial metals (copper, aluminum, and silver) will see strong demand as economic activity picks up. And gold will head higher as people lose faith in paper currencies and turn to gold as an alternative currency. (Remember, gold can’t be produced out of thin air on a printing press.) I expect gold to continue to hit new highs in 2010. I predict that gold will head well over $1,500 and silver will head over $20 per ounce.

There is also an opportunity to take gains in select commodity-rich economies. I like Brazil and Australia. These are just two of the countries that will benefit from a continued bull market in commodities.

Yes, I’m bullish on commodities. But in case the economy weakens or the dollar strengthens, it’s important to diversify your portfolio with other asset classes. That said, utilities, technology, and health care are three additional sectors that I expect to perform extremely well in 2010.

* Utilities

This sector includes companies that deal with the delivery of electricity, gas, and water to customers.

Utilities need considerable infrastructure to operate. So they often hold high levels of debt. Interest rates should remain low well into 2010, and utilities will benefit from the lower borrowing cost.

Investing in the utility sector is considered a non-cyclical defense play because it’s less susceptible to a market selloff. I recommend that you hold utilities in your portfolio because of that and for added diversification.

* Technology

The companies in this space include those that make computers and cell phones as well as those that create software.

Tech was one of the best performing sectors in 2009, and should do exceptionally well into next year too. It will benefit from economic growth, which will boost orders and profit margins.

People are still spending money on technology, even in this difficult economic environment. Tech companies have been cutting costs and building up large cash reserves. The tech sector is quite healthy, indeed.

I expect some of the best plays to involve cutting-edge technology that can change the world. This includes cloud computing, smart phones, and military technology.

* Health Care

This sector includes hospitals, drug manufacturers, and producers of medical products.

Some kind of health care reform is coming soon, and you can profit from it. There will be many winners as a result of this new legislation, like hospitals and pharma companies.

With more Americans getting health insurance coverage, health care use will go up – and so will drug sales. That means higher revenues for the drug makers.

In Conclusion …

So there you have it. In 2010, put your money in commodities, utilities, technology, and health care. I’ll be recommending highly leveraged plays on these sectors in Options Power Trader. My goal is to continue to show my readers 100% or more winners with my options plays.

Best Wishes,

Ted Peroulakis

Email: feedback@investorsdailyedge.com

Disclaimer…The subject matters expressed above is based purely on technical analysis and personal opinions of the writer. it is not a solicitation to buy or sell.