Build Some Positions

It’s time to build positions for a winter rally in the stock market. The election is behind us, the expected relief rally happened on schedule at the end of last week, and we look set to open lower this morning in New York.

The relief rally was good to the positions I recommended here recently. My purchase of Maxtor at $3.25 is up 8% to $3.51. You could have gotten in below $3 just a week ago, which would have you already up 17%. Still, the stock is cheap and you should look to build a position. It would not be shocking to see Maxtor at $7 sometime next year. If that happens, you won’t regret having waited to see an uptrend before buying. Forget the first 50 cents that you already missed. Think of what’s ahead.

UTStarcom, which I bought at $16.59, closed Friday at $17.87, which happens also to be an 8% gain so far for me. It has a lot higher to rise as well, so look to get in where you can.

Another good idea is ProFunds Ultra Semiconductor, which closed at $18.14 on Friday. It’s already up some 17% from the $15.50 target I set last month. However, it’s still a far cry below its January price of $33.

Sun, at $4.79, is already too expensive. I doubt it’ll get below $4 again before a big rally, but if it does, buy. Meanwhile, my ever-present and trusty Dow portfolios are right around flat for the year. Sounds dull, but consider that just two weeks ago, Double The Dow was down 13.7% for the year. If the Dow follows its long-term habit of rising substantially in winter, we could end this year in pretty good stead.

If we get a consolidating or lower-trending market in the next few days, you’ll be able to shave a few percentage points off your buy prices. That seems likely.

Don’t wait too long, though. The market wants to rise. The winter rally is upon is. We’re going higher and we’re going to be led by tech. That’s the intermediate-term outlook.

Looking out a little longer gets frightening. Read my previous two posts for information on the falling dollar. While it may not be upon us yet, it will become a factor as Big Spender Bush lives up to his name and runs the U.S. Treasury into the ground.

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