Monday, May 25, 2009

Weekly Stock Pick

Buy Sell Hold
Stock Scans, Bear Market Rallies, and Investing Abroad

As I run my stock scans this Monday morning looking for a low-risk high-reward trade and or investment, I’m wondering if and when the market is going to selloff big again like I’ve been thinking it might during this entire bear market rally. Sure, stocks are cheap from the bloodbath selloff last year so a rebound of some kind was in the works, but now are US Companies going to keep driving exceptional earnings to drive their stock prices higher? I’m not so sure, especially if it’s a company only operating in the USA, and not diversified abroad. And what about this record USA debt that’s piling up? I would recommend investing more abroad now through direct investment or the Foreign ADR’s on NYSE. That also includes USA Stocks with heavy international exposure.

To decouple or not to decouple?

It’s already happened. The internet, ecommerce have helped globalization along is a solid strong fundamental story now. The rest of the world was doing ok before Uncle Sam got caught printing too much money and over-leveraging the US taxpayer for too long. Now they are going to have to pay the piper. The world doesn’t need USA so much anymore. The world economies are producing for their own respectable growing consumption now, and with the still higher wages in USA, they still need the low cost producing countries for production unless all the unemployed now are going back to the factories. I don’t think that will happen so fast just yet. Is the Dollar going to lose its status as the reserve currency of the world? So far the Buck has been and looks very shakey still at the very least. Will the US Dollar weakness continue? I would say yes as the financial drama of mounting debt is still unfolding as I write this. China and other big economic countries are showing signs of bailing out of the dollar. Bottom line action would be to lighten up on US Stocks, Bonds, and the US Dollar, and start trading and investing in emerging market world growth more now.

My Weekly Stock Pick is Buy USA Healthcare Company

Even though I said sell above, I’m thinking the USA market may keep inching upward short-term. At least for certain selected sectors and stocks. My stock pick this week is a buy long position on a big USA healthcare supply chain services, and clinical medical products company. I think it has a little more upside from here, but not so much to let it ride, so pay attention and keep your trailing stop-loss take profit targets real tight. President Obama’s healthcare bill might help it along, but I didn’t look in depth into this as I’m putting my buy call on it from a technical point of view only.

Buy Long Position Cardinal Health – Ticker CAH

Buy Entry: 33.94 to 34.77

Stop-Loss: 33.80 or Lower

Take Profit Areas: 37.47 to 38.24, 39.13 to 39.94, 42.54 to 43.41

Cardinal Health Company Profile

Cardinal Health, Inc., together with its subsidiaries, provides products and services to the healthcare sector in the United States. The company operates in two segments, Healthcare Supply Chain Services, and Clinical and Medical Products. The Healthcare Supply Chain Services segment distributes various branded, private-label medical and laboratory, generic pharmaceutical, healthcare, and consumer products to retail customers, hospitals, and alternate care providers. This segment also provides distribution, inventory management, data/reporting, new product launch support and contract, and chargeback administration services, as well as operates a pharmaceutical repackaging and distribution program that provides repackaged pharmaceutical products. The Clinical and Medical Products segment develops, manufactures, leases, and sells medical technology products, including Alaris intravenous medication safety and infusion therapy delivery systems, software applications, needle-free disposables and related patient monitoring equipment, and Pyxis dispensing systems. This segment also offers medical and surgical products comprising infection prevention products, such as single-use surgical drapes, gowns and apparel, exam and surgical gloves, and fluid suction and collection systems; respiratory care products, including ventilation equipment and supplies; and medical specialties products, such as reusable surgical instruments and biopsy needles. Cardinal Health also provides Medicine Shoppe and pharmacy services; orthopedic implants and instruments; and enteral devices and airway management products. The company was founded in 1979 and is headquartered in Dublin, Ohio.

Click here to review and trial the Trading Software I used in determining my long position on Cardinal Health.

Click the Cardinal Health Stock Chart for a larger view.

Cardinal Health Stock Chart