I'm at the stage of my trading career where I'm just not all that interested in trading individual stocks anymore. There is already so much risk and uncertainty in markets, I really have no desire to ramp up my risk exponentially by trying to game individual stocks: Especially illiquid little small caps where manipulative Seeking Alpha articles have the power to make or break them. I will however game macro markets and sectors as a whole. When you look at the big picture, perhaps it becomes a little easier to see which tides are rising and falling...
The micro components that compose a sector bounce around a lot. Gaming any one piece can be difficult but by examining what they are doing we can begin to see trends emerge. Money is never static, it is always moving. Money constantly flows from one area to another. This market is a zero sum game. Money never leaves, it just sloshes around. There is always a buyer and a seller, a winner and a loser. When you take from something, something else gains. The task of a trader is to dig deep, examine the puzzle, attempt to determine how the money is flowing, properly position, capitalize on the rotation, and re-position when the tide begins to shift.
I have this thesis.. I have been focusing so hard on where money will be flowing out of (namely stocks and bonds) I was certainly early in my thinking, I was trying to beat the crowds, but I was too early. Timing is everything in this business. It is good to be ahead of the herd, but being too early and you may find yourself under the hooves of a thousand raging bulls... It's finally happening though. As this chart illustrates, money is beginning to trickle out of stocks and bonds...
The thing is, just like stocks, not all commodities are created equal. They each have their own individual driving factors and unique supply/demand paradigms. I am not bullish on oil for instance because of how closely tied to the dollar it is and how the oversupply issue seems to be increasing every week.
In my previous post I have shown you the leader of the pack: Cocoa:A Hot Commodity . Already in an established uptrend Cocoa is looking great!