Signs of a Slowdown? - 15 June 2011

"Cyclical" stocks are topping out...

HERE'S ANOTHER reason to stay cautious toward "cyclical" assets, writes Brian Hunt in Steve Sjuggerud's Daily Wealth. 

Last week, shares of Cummins hit six-month low in. As the world's largest independent manufacturer of high-horsepower diesel engines (the kind that go in bulldozers and heavy trucks), Cummins' share price rises and falls with the pace of global economic activity. This makes Cummins a "cyclical" stock.

Another "cyclical" idea is the big S&P metals and mining investment fund (XME). This fund consists of copper producers, steel makers, and various other companies responsible for mining and smelting vital building materials. If folks aren't building and manufacturing at full speed, this fund suffers.

Like most assets, the XME has enjoyed the huge easy credit "goosing" provided by governments in the US and China. But now that the latest data shows a slowing global economy, the XME has "topped out" and just hit its lowest low in six months. Another red flag flies...

Looking to protect your wealth with a Gold Investment?

Steve Sjuggerud, 15 Jun '11
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Former stock-broker, mutual-fund vice-president and hedge-fund advisor Dr. Steve Sjuggerud is the founder and editor of True Wealth. Launched in 2001 and now one of America's best-followed newsletters for private investors, True Wealth also provides free analysis and ideas in the Daily Wealth email service.

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