Monday, October 19, 2009

Weekly Stock Pick

Buy Sell Hold
The Market Week Ahead

First, last Friday’s TIC data report shows the US Budget Deficit has hit a record of $1.4 Trillion dollars. This week half the Dow and about a quarter of the S&P500 companies earning reports are coming in. Click here for early Earnings Whisper Reports to get ahead of the market. Apple is reporting earnings on Tuesday. Is the iPhone going to continue to take market share? The new open source Android mobile phone operating system on the new touch-screen smart phones is becoming very popular now. I know I like mine very well. GE shareholders are getting worried about the company’s real estate holdings. Real estate prices and stocks for that matter have not seen the bottom yet in my opinion. Bear markets in stocks are bad enough. Imagine what it would be like in the real estate market? Protect yourself. With the end of October here now and other economic factors, I suggest extreme caution for a myriad of reasons too many to explain here. This upside run since March has been one big dead cat bounce and short covering event from one world record crash in my opinion. Keep your eye on the already high 10% US unemployment rate. Higher unemployment means more recession, and I would even suggest depression might be on the way. Have to wait and see more on-going economic data reports for the depression forecast.

My Stock Pick This Week is a Short Sell

It’s the smallest of the USA three biggest retailers. The other two are Walmart and Target. Retailers ended last week down after the negative consumer sentiment data report hit. The University of Michigan Survey of Consumers report fell in October to 69.4 from 73.5 last month. Economists were expecting the reading to hold at 73.5. Home-decorating guru Martha Stewart is ending her relationship with this company now after rumors she was talking down the company. She denies the allegation. The bottom line for me is the chart and the fundamental are telling me the price is headed down, and rumors only help move stocks too, so all the better. The potential drop and gain for this trade plan is 30% to 40% I believe. I’m looking to take profits in the 40’s on this. As long as you use stop-loss you should be fine in case the price heads higher.

Sell Short Sears Holdings – Ticker SHLD

Sell Entry: 69.19 to 74.20

Stop-Loss: 75.39 or Higher

Take Profit Areas: 64.72 to 60.25, 60.21 to 58.34, 56.52 to 54.76, 41.40 to 40.12, 24.94 to 24.17

Sears Company Profile

Sears Holdings Corporation operates as a broadline retailer. Its Kmart segment operates stores that sell general merchandise products under Jaclyn Smith, Joe Boxer, and Martha Stewart Everyday labels. Its stores offer home appliances; footwear; groceries; and automotive accessories, repair, and maintenance services, as well as operate in-store pharmacies. The company’s Sears Domestic segment operates stores that offer merchandise categories, including home appliances, consumer electronics, tools, fitness, lawn and garden equipment; automotive services and products, such as tires and batteries; home fashion products; apparel; and footwear and accessories. Its stores also sell health and beauty products, pantry goods, household products, and toys. This segment’s direct to customer business offers clothing, accessories, footwear, and soft luggage; sears commercial business provides appliances and services to construction/remodel, property management, multi family new construction, and government/military sectors; appliances business provides appliance and plumbing fixtures to architects, designers, and new construction or remodeling customers; and home services business offers parts and repair services for home appliances, lawn and garden equipment, consumer electronics, floor care products, and heating and cooling systems, as well as provides home improvement services. The Sears Canada segment conducts retail operations in Canada, and offers apparel and other softlines. As of January 31, 2009, the company operated approximately 1368 Kmart stores, 856 Full-line stores, 73 Sears Essentials/Grand stores, and 1233 specialty stores in the United States, as well as 122 full-line stores, 171 dealer stores, 5 appliances and mattresses stores, 30 corbeil stores, 11 outlet stores, 30 floor covering stores, 1858 catalog pick-up locations, and 106 travel offices in Canada. The company was founded in 1899 and is based in Hoffman Estates, Illinois.

Click here to review and trial the Trading Software we used in determining our sell short position on SHLD.

Click the Sears Holdings Stock Chart for a larger view.