Ten Bold Predictions and Big Trades for 2010

Nobody can see the future but I’ll take my best stab at it -- here’s hoping I’m not just sticking my foot in my mouth. Well, it wouldn’t be the first time.

The following predictions should hopefully be very controversial -- just like many of the predictions in my book Discover the Upside of Down.

All of my contrarian predictions are based on how I see things setting up the weekly charts in stocks, oil, gold, currencies, commodities, foreign markets, and bonds. I’ll also throw in some specific possible catalysts that could ignite these very powerful setups as they appear now.

For Grail ETF & Equity Investor subscribers I’ll be sending this out again in a couple weeks with Grail Charts attached showing past and present grail signals. Some of the current grail signals will confirm and others will contrast my predictions for now, but may confirm later.

Prediction Number One: The US Dollar won’t crash before it makes a giant double bottom on the weekly charts in 2010.

The weekly chart today look a lot like it did in March of 2008. The dollar hit lows in March 2008 then went sideways until it broke out in August 2008 at 75.60 -- when our indicator gave us a buy signal.

The dollar continued to rally all the way up to 91.47 in March 2009 before giving us a sell signal.

It seems the dollar is setting up now for a powerful short-covering rally accelerating into the first quarter of 2010 before it resumes its downtrend once again.

With both individual investors and professional traders raging bears, why wouldn’t the dollar rally?

Everyone and their mother is short the dollar, so we look for the unwinding of this Federal Reserve-created carry trade to take the dollar higher. (See also, The Decoder: Carry Trade)

Intermediate and long-term, by the way, I’m very bearish on the prospects of the US Dollar. In fact, I can see the dollar getting cut in half after the short covering rally ends. (See also, Ben: It's All Part of My Master Plan)

Prediction Number Two: Gold in 2010 will be looked upon like the 1999-2000 NASDAQ.

When Alan Greenspan flooded the economy with easy money in the late 1990s, the world went into a wild frenzy buying US technology stocks in 1999.

Gold and gold stocks will make a blow off explosive final run in 2010 from “helicopter Bens” flooding the globe with liquidity. The final move up in Gold and Gold stocks will look just like the NASDAQ run from October 1999 until the March 2000 blow off top.

Today’s weekly chart on Gold looks a lot like 1999 NASDAQ. Gold is also set up just like when Gold crossed 1000 in March of 2008, so Gold could have a similar nasty correction before that giant dot-com move up.

By October 2008 Gold got trounced to a low of 692 an ounce. We believe the next big correction in Gold will also prove to be a wonderful buying opportunity. The likely catalyst for a move down in Gold could be a powerful short-covering rally in the US Dollar as the dollar carry trade unwinds. When there’s 99% bears on the dollar there’s an inverse correlation with more than 90% bulls on the gold.

I have a whole chapter on gold in my John Wiley & Sons-published book as I’m very bullish on the long-term outlook for Gold.

Prediction Number Three: The Dow Jones Industrial Average (DJIA) will have completed the right shoulder of a giant head-and-shoulders top on the weekly chart and start to head south.

Hopefully the DJIA will stop repeating the 1929-1932 sequence of event where 2008 was 1929 in slow motion and the 2009 rally was similar to the early-1930 rally.

After the 1930 rally, the DJIA collapsed 86% -- which lasted two more years. If history repeats, that puts us at around 5000 in 2010 and 1400 by January 2012, and it will feel like the end of the world-- just like the Mayans predicted. (See also, Finding the Upside of the Approaching Down Markets)

Prediction Number Four: Natural Gas will put in a historic bottom in 2010.

The weekly charts on natural gas looks like they did in December of 2007. Natural Gas made a run from $11.16 to $17.41 in July of 2008. Seasonally Natural Gas is setting up well right now for just such a repeat.

Nobody is bullish on Natural Gas as the fundamentals have never looked worse. Of course, that’s how bottoms are made.

Prediction Number Five: Oil will crash to $40 to $50 a barrel and then explode to over $100 in 2010.

As many of you know, oil has been on a sell on the Grail daily charts. (Subscribers to our ETF timing program know this as we put out a timely buy of the anti-oil ETF UltraShort DJ-AIG Crude Oil ProShares (SCO) when oil was around $80.00 a barrel. SCO is +25% since then).

The catalyst for the move up will likely be fears of a coming surprise attack on Iran’s nuclear facilities by Israel in late 2010. (See also: ETF Picks: Consider This Diversified Partial Portfolio and Rising Oil Prices May Be the Forerunner to War)

Prediction Number Six: Bonds will become bombs in 2010.

Bonds are now entering a seasonally weak period and the story on bonds is very simple: supply, supply, supply.

The general public is dumping a record amount of money into bond funds in 2009, so from a contrarian’s perspective bonds should be bombs away in 2010. (See also, Get Out of Bonds -- Fast!)

Prediction Number Seven: NASDAQ starts the slow-motion process of retesting the March 2009 lows on its way to finishing its long secular bear market that started in 2000.

NASDAQ 2000 to 2009 has been a near-perfect repeat of the 1929-1939 DJIA. 2010 should start down for the final retest of the March 2009 lows before we start a new bull market like the DJIA did in 1942. Because information flows so swiftly and hot money floods the globe, NASDAQ could complete its retest in less time than the DJIA did from 1939 to 1942.

2010 NASDAQ should be equal to DJIA 1939 after the Dow rallied from 97 to 158 in 1938. The DJIA tested that low on April 30, 1942, and that preceded a new powerful secular bull market that lasted until 1966.

If NASDAQ continues to follow the 1929 to 1942 script perfectly, then NASDAQ will basically go nowhere in 2010. (See also, Something Bulls and Bears Can All Look Forward To)

Prediction Number Eight: Several selected commodities have giant bull market runs even as others crash and burn.

In the Softs category we have orange juice looking like a Buy on the weekly charts and I expect it will continue in 2010. Coffee and cotton also look like Buys on the weekly charts and should continue up as well.

You can’t trade commodities using the weekly charts or you’re just begging to lose all of your money. We don’t advise individual investors to trade commodities on their own. Investors will most likely lose their money because they don’t understand the power of leverage using futures.

The point is: These weekly charts look to be bottom-picking opportunities when the shorter-term charts confirm with a signal. Even with risk corridors tight and leverage well understood, you can wipe out in a lock up or down trade in commodities.

Grains, rice, and wheat are setting up beautifully on the charts.

Finally, lumber is another buy low opportunity sometime in 2010 after a long Depression-like collapse in the price of lumber.

Prediction Number Nine: China.com in 2010 will put in a high, then a severe reversal and crash will follow for another big leg down in Chinese stocks.

Everyone is once again bullish on China, but building giant cities that sit empty doesn’t sound bullish to us.

How about the unconfirmed reports of the Chinese government sending out refrigerators to farmers who don’t even have electricity? If the government is just marking up economic activity then it sure seems like a giant dot-com shorting opportunity.

This time it won’t be pets.com but instead China.com.

Prediction Number Ten: My final prediction. Those that sign up for the Grail ETF & Equity investor timing program will help put our tiny no name company (Coby Lamson) on the map.

So let me thank you in advance for that!

In summary, my partner Denny and I would like to wish everyone great success and good health in 2010. If you think these are reasonable predictions and would like help with catching these turns and riding some of these predicted trends, please sign up for a free trial to the Grail Equity and ETF investor program today.

Don’t wait because some of these trends have already begun and many are set to begin!

For more from Ron Coby, check out Minyanvill'es newly launched Grail ETF & Equity Investor newsletter written by Ron Coby and Denny Lamson using their proprietary Lamson Grail Timing Indicator. Sign up today for a FREE 14-day trial. Learn more.


Note: This is for illustrative purposes only and is not an offer to buy or sell securities. Past performance is no guarantee of future performance.