A quick look at banks, brokers, computers, and GUMM.
Ron,
Thanks for the look at your trading room. Judging from the height and slope of the ceiling in the second picture, I would imagine that your office is upstairs. You are tall, so I hope you don't get too excited when you make a big score. If you jump up, you're likely to jam your head through the ceiling. gg
In addition to your sound advice to buy "great" companies cheaper during the recent market correction, I'd like to add that one should consider buying stocks that have shown good relative strength against the market throughout the decline. Stocks that held support levels, declined very little, or even rose last week, will probably outperform after the correction runs its course, or if the correction continues.
MUEI looks very good in the computer hardware group as it held 10 last week and showed good relative strength against the market. CPQ held its weekly support although it doesn't look very exciting for the short term. DELL held above its 20 week moving average and GTW looks like the strongest of the group.
IRF is back to what has been stiff resistance at 17 1/2. It is one to watch for a flip if it breaks out. I'm going to do a buy stop for the Z at 17 3/4, target 22 1/2 to 23 1/2, close stop (17ish) if it fills and fails.
Many bank stocks took a hit last week; however, one can find some that held up well against other stocks in the group. C has good support between 40 and 41 and looks like a good buy. COF looks good at 36. It held at this price a few weeks ago and the lower daily bollinger band is also near 36 which should offer support. I don't care for CHB or ONE, both of which broke down last week.
Some of the brokerage stocks held support last week and look like good buys. AMTD, for example, has good support at 17 and I would buy it. JBOH might be a dog to some, but it is back to a price that has supported it recently. MER has risk to about 60 where I might take a stab at it. NITE broke down last week and I wouldn't own it unless it bases. I think it has risk to 16 1/2 to 17 1/2. SCH broke down as well and I wouldn't hold it unless it bases.
GUMM exhibited good relative strength last week and held its recent support at about 12 1/4. The profit:loss ratio of owning GUMM is better than 20:1 in my estimation because the results of the clinical studies will be announced in a few weeks. If both studies are negative, I think the stock could pull back to 9 or 10 and hold there on prospects for the gum business, particularly nicotine gum. If both studies are positive, I think the stock could rally 30 to 50 points, and no I'm not crazy. How much would GumTech be worth if they had the only product worldwide that could claim it prevents the common cold? I think the stock would rally to 18 to 20 if the study for prevention isn't conclusive and the company's initial study that concluded Zicam reduces the duration of the common cold to 1.5 days is confirmed. I have personally used Zicam enough times, as have close friends and family, and Internet acquaintances that I trust, to have a high degree of confidence that the clinical studies will come back positive.
Have a nice rest of the weekend.
Dan |
