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Monday, September 11, 2006

More Irregularities

More irregularities, or divergences, courtesy of Marc Faber at www.gloomboomdoom.com. The charts show that despite the upmove in the markets, key sectors which are vital signs of the economy (transports and commodities), are showing weakness. Thus both long and short trades are plausible at this moment, as long as these trends continue. This is specifically what COL fund is executing right now in the US market. Another divergence is in the brokerage sector which has lost its leadership status. Watch closely for further developments. Mr. Faber recommends shorting retailers, sub-prime lenders, brokerages, cyclical stocks (including resource stocks and oil). While he expects precious metals to go down with industrial metals, he is still bullish on gold and silver long-term.



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