Monday, March 16, 2009

Weekly Stock Pick

Buy Sell Hold
Scanning the Charts for Opportunity

As I scan the charts this Monday morning for some low-risk high-rewards trade setups for this week, I’m getting updated on this week’s news and upcoming events. The first thing that grabs my attention is this headline. China’s Leader Says He Is ‘Worried’ Over U.S. Treasuries. China owns $1 trillion of USA debt. Keep your eye on that significant one. President Obama says he’s going to be working hard this week to get more credit flowing again. The U.S. Securities and Exchange Commission will be meeting on April 8 to consider whether to propose short sale price test rules. I don’t think they should but then again, maybe it’s a good idea right now. The Financial Accounting Standards Board is planning to discuss mark-to-market accounting rules on Monday.

Last Week and This Week

The market had a pretty good upside move last week considering the downtrend it’s been in. I’m hearing more optimism to keep buying stock at these levels. I’m not betting on it just yet. In fact, I’m putting a short term short sell call on an investment bank titan this week. I’m looking for one more big selloff in the market to find a solid sustainable bottom at least in the near to intermediate term. Longer term stock prices have gone down so much, the longer term investors might start coming in more and supporting prices somewhat. The market right now looks to be in a bottoming process. We will just have to watch, see, and be ready to move with it on whatever it does.

Selling a Big Bank

On September 1, 2008 I put a short-sell on JP Morgan at $38 a share, and I got a lot of negative comments feedback about my JP short-sale pick. JP Morgan did indeed head south as did everything else in that bloody October, and now it’s trading for $23.75. This week, I’m putting another short sale on JP Morgan’s major competitor for the short term. I believe long term investors would do well to be buying into another big selloff of the financials if and when it happens. The buys of the century look to be showing up possibly. For the near term, I’m going short on the following financial stock.

Short Sell Goldman Sachs. Ticker GS

Short Sell Entry: 95.64 to 107.41

Stop-Loss: 108 to 110

Take Profit Areas: 91.44, 87.24 to 83.04, 78.00

Goldman Sachs Company Profile

The Goldman Sachs Group, Inc. (Goldman Sachs) is a bank holding company and global investment banking, securities and investment management firm that provides services worldwide to a corporations, financial institutions, governments and high-net-worth individuals. Its activities are divided into three segments: Investment Banking, Trading and Principal Investments, and Asset Management and Securities Services. On December 11, 2007, Credit-Based Asset Servicing and Securitization LLC, a sub-prime mortgage investor, completed the sale of its Litton Loan Servicing business to Goldman Sachs. In May 2008, MBF Healthcare Partners, LP and Goldman Sachs announced the acquisition of OMNI Home Care (OMNI), a provider of skilled nursing and therapy home healthcare services. MBF Healthcare Partners, LP and Goldman Sachs will share joint ownership of OMNI. In June 2008, its division, Goldman Sachs Urban Investment Group, and Cordova, Smart & Williams, LLC announced the acquisition of H2O Plus, LLC.

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Click the Goldman Sachs Stock Chart for a larger view.

Goldmand Sachs Stock Chart