Friday, March 03, 2006

Update

Sorry for the lack of posts lately, but I have been extremely busy.

I thought the general markets were in a very healty consolidation over the past 2 weeks, meaning it is poised to break out in a big way. I also liked the consolidation by the resources stocks. They have gone down quite a bit lately amid fears that the commodity cycle is over. But how could it be over if demand is still far greater than supply, and demand will continue to grow much faster than the supply?

I was watching ROBTV (Report on Business Television) the other day, and a guest on that show said he had sold most of his Cameco holdings, and will sell the rest once Cameco pops up. I couldn't stop laughing on that comment. Cameco has been super strong after an initial fall, and if he was selling during this time, it must mean Cameco will go up like crazy once he finishes selling.



If you look at the intraday graph of Cameco, it formed an ascending triangle pattern, and just broke out. In fact, I like it so much that I just bought call options on Cameco when it was trading at 37.6 US. I also added International Uranium (TSX: IUC) to my RRSP account at 6.53. As far as my long term holdings go, right now, I have Baytex Energy (TSX: BTE.UN), Fording COal (TSX: FDG.UN) and International Uranium (IUC). The awesome thing is that I didn't spend a penny of my own money for these long term holdings; they were all paid for by my options trading activity. So options trading does work, contrary to what a lot of people say.



Copper has really gone up strong after a short consolidation. This makes candidates like Phelps Dodge(PD) really enticing. I contemplated buying it today, but didn't because I already had a large exposure in commodity stocks. But I do think PD will go up, past 150 very soon. The reason why copper is so strong is because the copper reserves are very small, meaning the people who use copper must continually replenish their supplies through the open market.



Meanwhile, oil continues to impress me. Although it might stay rangebound for a while (not go past 70), I don't think it will fall that much on this consolidation. As an added bonus, there are so many terrorist activites, that there is always the "risk" that oil will go up big at any given time.

Right now, I have Haliburton (HAL). I bought call options when it was around 70.5. HAL is currently at heavy resistance on the intraday chart, but looking at the daily chart, it seems like HAL will break through this resistance very soon. However, I am keeping a close eye on it because if it fails to break it, it might go down big.