Good morning,
2009 will be over soon and we will soon usher in 2010. It has been a spectacular year to witness the unprecedented uniformed efforts of nations to save the economies from another depression. Many have predicted the W recovery but it did not happen. So it was a V recovery for most markets and a resounding victory for the policy makers. Will 2010 bring in more cheers for the stock markets? I believe it will be. With the positive economic indicators reported so far, the market should continue its’ recovery into 2010. However, the flight will be bumpy and the market may have a slight correction when Fed increases its interest rates. I foresee this in between 1st and 2nd quarter next year.
This coming week will see the markets trading at low volume with many traders enjoying their long holidays. Though the trading week is short, there are however a few reports that I will follow; i.e. the Consumer Confidence on 29th, Chicago PMI and Crude Inventories on 30th. With the recovery in sight, I am expecting the Consumer Confidence report to bring cheers to the market. With the PMI and Crude Inventories and the short trading week, we should be expecting the market to be volatile but with the normal year end bulls, the markets should close the year on higher ground. With the weekly Cycle Trend indicating a potential downside decline and the weekly candlestick signals a marubozu, I will look for early buying opportunities and sell before the close for the week if these purchases are in the money.
The stocks recommended by KUTE for the week are: DOX, NOV, NE, PDE and PTI. Since PDE is the only new stock recommended, I will only look into the financials of this company.
Pride International, Inc. (PDE) is an offshore drilling contractor operating, as of February 02, 2009, a fleet of 44 rigs, consisting of two deepwater drill ships, 12 semisubmersible rigs, 27 jack ups and three managed deepwater drilling rigs. The Company has four ultra-deepwater drill ships under construction. Its customers include integrated oil and natural gas companies, state-owned national oil companies and independent oil and natural gas companies. Pride’s operations are conducted in oil and natural gas basins, including South America, the Gulf of Mexico, West Africa, the Mediterranean Sea, the Middle East and Asia Pacific. It provides contract drilling services to oil and natural gas exploration and production companies through the use of mobile offshore drilling rigs in United States and international waters. Analysts are covering this company and have upgraded this stock to buy. The company’s operating income and cash flows are positive except for year 2008 where it registered a negative free cash flow. However with the purchase of fixed assets, the company is primed to grow along with the economy recovery and the long term contracts it secured for the next 5 years. For the technical, Cycle Trend is indicating a possible upside move for the week but the weekly candlestick is a hanging man and there is a possibility for the stock to reverse its current price advances. Since both signals are contradicting, I will not place any order for the opening but instead will wait for the intra-week candle confirmation to decide if I want to trade this stock.
NOV’s weekly and daily candlesticks are both white spinning top indicating indecision for the bulls and the bears. However, its weekly Cycle Trend is indicating an upside potential. Since I am holding a position in this stock, I will continue holding and move my limit price higher.
NE’s weekly Cycle Trend is an upside movement but its weekly candlestick formation is the black spinning top, so I will not buy this stock at market open. As for DOX, the weekly and daily Cycle Trend are indicating a potential downside price decline, however both its weekly and daily candlestick are the white marubozu. Since both signals do not confirm each other, I will stay sidelined for this stock.
The other stock I am holding, PTI weekly candlestick has a bearish doji harami cross but its Cycle Trend is signaling that the price may advance this week. I will hold on to this share and adjust my limits lower so that my position can be squared before the holidays.
Have a great week ahead!
Francies Cheng
BBus MApopliedFinance
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