Mkt Update-2007 View

US mkts moved slightly higher on thin volume-The Dow Jones Industrial Average (DJIA – 12,407.6) added 64 points, or 0.52 percent, as it bounced off support at its 20-day moving average The S&P 500 Index (SPX – 1,416.9) jumped 0.44 percent, bounding off its 20-day trendline. However, the broad-market barometer remains below its 10-day trendline. Meanwhile, the tech-laden Nasdaq Composite (COMP – 2,413.5) increased 0.51 percent, but remains below both its short-term trendlines.

Nothing really much is happening and it is unlikely to in the short term-Friday may show some wild swings as there is some manouvering for Yr end-I am still big next year on Commodities and Energy.I have attached some commentary giving some background to this rational.

In 2007 I think crude oil will move upwards again and above $70-$75 a barrel there is a strong possibility it could consolidate most of the year north of $80.Natural gas, still in a downtrend since the beginning of the years highs, will also perk up and start to trend higher. I believe that exposure to commodities especially energy is the place to be. I am considering the iShares GSCI Commodity-Indexed Trust (NYSE-GSG) for 2007. GSG now trades right at its 52-week low, down 17.4% in 2006 and off around 22% from its high if I am right in my expectations then this could be a great medium term hold.
The GSCI currently holds 69.2% in energy futures, 13.1% in agricultural commodities 10.8% in base metals, 4.6% in livestock and 2.3% in precious metals.If you are looking for an index that has good diversified exposure to the commodity sector then this may be one worth researching.


Best Wishes and Good Trading


RT