Monday, June 08, 2009

Weekly Stock Pick

Buy  Sell Hold
The Market Week Ahead

Be careful shorting stocks in this current market environment right now, and if you do, keep your stop-loss price targets very tight. The USA is printing so much money for the economic bail out, and more than it did over the years and decades which created this financial credit mess to begin with. With these kinds of market conditions, stocks could soar on valueless money, and now the world could have a major currency crisis on its hands. There’s always opportunity within disaster. With the very possible increased volatility in the currency markets, there could be big fast money to be made there. A good strategy right now would be to sell some US Dollars, and invest trade in commodities. Commodities will most likely lead any economic recovery, and if they don’t for some weird reason, they are always a great place to be positioned for future inflation.

My Stock Pick This Week

I know I said be careful shorting stocks right now, but my stock pick this week is a short-sell. With the risk reward ratio favoring shorting this stock right now, I sometimes like to take the other side of the trade because if I’m right, I can be handsomely rewarded. If I’m wrong, I’ve got a tight stop-loss to take me out early for a small loss. This week I’m shorting a big Japanese financial institution purely from a technical point of view. I trade and invest from a sentiment and psychological perspective. Fundamentals are important especially long term, but too many times, analysts and economists use fundamentals after the fact as to why the market did move one way or another, whereas investor traders actually trade their beliefs about the market which are heavily influenced by sentiment and psychology. Putting money on the line in a trade or an investment, and analyzing why a stock did go up or down in price are two different animals entirely.

Sell Short: Mizuho Financial Group. Ticker MFG

Sell Entry: 5.43 to 5.85

Stop-Loss: 5.88 or Higher

Take Profit Areas: 4.44, 4.00 to 3.56, and 3.11 to 2.80

Mizuho Financial Group Company Profile

Mizuho Financial Group, Inc., through its subsidiary banks, provides various financial services, including banking, securities, and trust and asset management services in Japan and internationally. The company offers commercial banking services, foreign exchange transaction services, advisory services, capital markets financing services, syndicated loan services, and leverage and structure finance services. It also provides securities and investment banking services, such as underwriting and trading of bonds and equities. In addition, Mizuho Financial Group offers banking products and services, including housing and personal loans, credit cards, deposits, investment products, and consulting services, as well as offer products and services related to private banking, and trust and custody services. It offers its products and services primarily to individuals, small and medium sized enterprises, financial institutions, public sector entities, middle-market corporations, Japanese corporations, and foreign corporations. As of March 31, 2008, the company had 312 branches in Japan. The company is headquartered in Tokyo, Japan.

Click here to review and trial the Trading Software I used in determining my short position on Mizuho Financial.

Click the Mizuho Financial Stock Chart for a larger view.