As you know, we have a unique view into the stock markets- what people are really buying, selling, and holding.  We have created a rating system- the Cake Take- that automatically measures how people feel about nearly 3,000 stocks, mutual funds, and ETF’s.  We have found the positions that show a dramatic movement from an “F” to an “A” in one month tend to do well the following month.  And, we have seen the inverse as well- “A” to “F” movements tend to underperform.

Here are the 12 holdings that went from an “F” to an “A” in January.

Symbol    Name
A    AGILENT TECH INC
ATPG    ATP Oil & Gas Corporation
CLNE    Clean Energy Fuels Corp.
COF    CAPITAL ONE FINANCIA
DBA    PowerShares DB Agriculture Fund
DGP    DB GOLD DOUBLE LONG
LMT    LOCKHEED MARTIN CP
NOK    NOKIA CP ADS
SAY    SATYAM COMPUTER SERV
VEU    Vanguard FTSE All-World ex-US ETF
VLO    VALERO ENERGY CP
XLF    Select Sector SPDR-Financial

So, what conclusions can be drawn from the above and what does this signal about how to play the current market environmnt?

First, commodities look to be an attractive place in the long-term as crude oil prices have plummeted from their highs last summer.  This will be an interesting trend to watch as the counterbalance of a recession may curtail consumption in the short-term.  Gold, energy, agriculture look to be areas with signficant upside.

Second, certain pockets of the technology sector appear to offer attractive prospects.  Agilent, Nokia and the reeling Satyam, whose stock price is down 90% in the last 3 months due to the fraudulent financials scandal.

Third, broad-based indicies, both domestic and international, signal that there is much more upside in the markets than downside risk.  These will be nice plays to dollar-cost average.

Now, how about the 20 holdings that look like they are falling out of favor?

Symbol    Name
AMX    AMERICA MOVIL, S.A.B
ATN    ATLAS ENERGY RESOURC
CHK    CHESAPEAKE ENERGY CP
CSIQ    Canadian Solar Inc.
EXM    EXCEL MARITIME CARR
FAZ    FINANCIAL BEAR 3X
FRESX    FIDELITY REAL ESTATE PT
HYG    iShares iBoxx $ High Yield Corporate Bond Fund
KMP    KINDER MORGAN ENERGY
LNG    Cheniere Energy, Inc
MON    MONSANTO COMPANY
NIEQX    COLUMBIA FDS SRS TR  COLUMBIA MULTI ADVISOR INTERN
OIL    IPATH ETN CRUDE OIL
PCU    SOUTHERN COPPER CORP
RIG    TRANSOCEAN LTD
SFSF    SUCCESS FINL SERVICES GRP INC
SWINX    SCHWAB INTERNATIONAL INDEX FUND INVESTOR SHARES
TWM    PROSHR ULTRASHORT RUSSELL2000
XL    XL CAPITAL LTD
YUM    YUM BRANDS INC

We’ll check in with these groups next month to see how they did.