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Saturday, January 8, 2011

Aerospace boom?

In late November I posted about the potential 'aerospace' boom, and indicated ATI was my favorite play on it. Since then, ATI saw a new high for the year, and upon its consolidation I entered a position.

If a boom is measured via equity performance, a long-term look at the aerospace ETF (PPA) indicates this boom just started. (At least from an equity perspective.)

The equity performance is still trading within a consolidated base. This is not what we should be seeing from a 'boom'. A boom should suggest a rallying market. Albeit, the weekly DMI is suggesting very bullish action and via the daily chart the PPA appears to be rallying, but from a long-term perspective, it should be breaking from this base.

The fundamental knowledge that I know (stated in the previous posts), tells me this could mean the so called 'boom' is still in the very early stages.

If this assertion is correct, ATI looks good here.

ATI was consolidating for about a year before it broke out a few weeks ago. This recent break only adds to the argument of the so called 'boom in aerospace'.

On the short-term, ATI is roughly where I purchased it, but has tested one of its SMA supports. It looks good here for an initial position, and an additional position if it tests its 62 SMA.

Update - 01/11/2011, 1050am eastern: Alcoa's earnings report adds to the thesis of Aerospace, and other ATI related markets doing well.


  1. By now, I guess, you're familiar with Philip Davis's bearish theses and general cynicism, but I feel that today's (1/10) article is especially meaty, with evidence to give one reasonable pause as well as the usual citation of opinion.

    Again, per usual, I'd be most interested in your own reactions.

    And best wishes, as always.

  2. This go around, it was tough reading the article after the first paragraph. I don't know what type of violent action he has been watching, but the SP 500 is very stable, and have not broken its 14sma.

    Then he mentions GS, and its Alpha 2, as the reason the market is up. (Once I hear stuff like that I tune out because it is bullshit, and a lazy assessment to fix 'his' thesis of the world.)

    Also, he should not be using the BDI as a gauge for anything anymore. BDI is measured by a market of its own, and its market is being ravaged by too much supply of ships. His assessment is completely wrong and misleading.

    I don't know, the end of the world can happen, there is always a possibility of anything. But there are a lot of smart people working very hard for that out-come not to take place.