It’s another new week and I am fresh from my holidays. I was glad for the long weekend without any trading activity, especially so when all my positions were closed prior to my rest. I was asked when I was back drinking with my friends at the nice sake bar in Robertson Quay that if I had knew the Dubai’s saga beforehand since I sold all my trading shares on Wednesday. I would love to tell the whole world that I had predicted the event but honestly I didn’t. It is another tail-end event that occurred and I am sure no one in the market has foreseen this happening. The Dubai’s delayed in debt payment reminds me of the Russia’s default many years ago that resulted in the world stock market meltdown. However this is not the same as the Russian default that caused one of the respected funds to collapse. I am very sure the market will bounce back soon. It is good that it happened just after the recent financial turmoil we went through because most economies are fundamentally much stronger now to withstand such unexpected set back. Who can really believe that Dubai will default on its’ debt? I am sure they wouldn’t and I see this as an opportunity for the market to take a breather and for me to buy again.
Most analysts agree that the market will have bumps along its growth path and I totally agree with their views. My strategy is still to buy on low and sell when it achieved the targeted returns. This is the time to test my trading emotion management and stick close to my trading plan. So let’s see how the market will be this coming week;
As you can see from the Cycle Trend chart, DJIA will continue to be trading within range and it is testing the upper Bollinger band resistance. I am expecting the range to be broad and over the week the possibilities of decline is higher. This is confirmed by the candlestick formation where the Doji. Earning season is over but there are still some economic reports for the week and I will be careful with the with the ADP Employment change on Wednesday preceding the key Nonfarm Payrolls figure and Unemployment Rate on Friday. The market should be sensitive to any news and my macro decision remains.
The stocks KUTE selected based on fundamentals this week are: NOV, GIB, FRX and SIM.
CGI Group Inc. (CGI) is an independent provider of end-to-end information technology services (IT services) and business process services (BPS) to clients worldwide. The Company provides a range of services, such as consulting, systems integration and management of IT and business functions (outsourcing). Both the company’s operating income and cash flow are consistent and fundamentally this company should be a good buy. However the cycle trend is indicating a downward decline over the week and candle formation is telling me that the market has more bears than bulls for the weekly data. Based on the indication I will not buy the shares now but will continue monitoring the signals over the week.
Forest Laboratories, Inc. and its subsidiaries develop, manufacture and sell both branded and generic forms of ethical drug products, which require a physician’s prescription. The Company’s products in the United States consist of branded ethical drug specialties marketed directly or detailed to physicians by its Forest Pharmaceuticals, Forest Therapeutics, Forest Healthcare, Forest Ethicare and Forest Specialty Sales. The company has a strong pipeline going forward and is in good shape financially. It is one of the few companies actively buying back stock this year, having repurchased over 10 million shares. At the end of the second quarter, it had over $3 billion in cash and no long-term debt. Its operating profits are healthy and both the operating and free cash flows are positive. The cycle trend is indication a slow upside trend and candlestick indicates a hold and wait for new signals. This will be the stock I will be focusing and buy if it opens below Friday’s close of $30.56.
Grupo Simec, S.A.B. de C.V. (SIM) is a diversified manufacturer, processor and distributor of special bar quality (SBQ) steel and structural steel products with production and commercial operations in the United States, Mexico and Canada. The Company’s SBQ products are used across a range of engineered end-user applications, including axles, hubs and crankshafts for automobiles and light trucks, machine tools and off-highway equipment. The company’s operating income is consistent and cash flows are within my reasonable expectation, though I am a little concern with the increase in inventories. However with the cycle trend indicating an advancement and candlestick formation is high wave bullish harami, this will be the stock that I will buy.
As for NOV, I like this stock’s fundamentals and with the cycle trend indicating a buy signal and the confirmation of bullish homing pigeon candlestick formation, I hope to make more money from this stock.
Have a great trading week ahead.
Regards
Francies Cheng
BBus MAppliedFinance
Francies Cheng
BBus MAppliedFinance
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