This World Leader Looks Like a Great Short-Term Trade

-- By Mike Turner

Based on my forecast data and how the market is conforming to that forecast, it looks like a Bullish trend is now developing.  My trend forecast software model indicates this trend should continue in the coming weeks.  However, my projection models strongly suggest we'll see a massive sell-off in the stock market in 2010.  As we get closer to that date, I will keep you updated on the timing.

For now, I am moving my client accounts back to about 60% invested and 40% cash.  Assuming market conditions remain positive, I will increase my percentage invested to 100% over the next couple of weeks.

I've reserved my top-ranked trades for my premium service, Mastering the Markets.  In that premium, fee-paid newsletter, which I sent out yesterday, I presented my readers with 15 high-quality "Doublers" picks -- 15 securities that my data systems are telling me have the least resistance to doubling in price in the coming months.  I then selected the three top-ranked securities from this list to trade in yesterday's issue.

One of these top picks is the world's leading supplier of a hard-to-find chemical element needed by many of the world's power providers.  Its shares have already surged +119.8% off their March lows, and my data systems are telling me that the uptrend is likely to continue in the coming months.  Meanwhile, one of my other top trades is a leading Canadian trust that saw its shares jump +5.61% yesterday alone.  To gain immediate access to these trades, click here to learn more about Mastering the Markets.

In the meantime, this week's "Trade of the Week" comes from the pharmaceutical sector.  Abbott Laboratories (NYSE: ABT, $52.35) is one of the world's leading providers of health care products.  It isn't often that my proprietary data system flashes such a " Strong Buy" as it has this week for Abbott Labs.

ABT's fundamentals are excellent.  Remember: I use fundamentals to find the best stocks to consider buying.  Meanwhile, I use technicals to tell me when to buy.  I cover this concept in Rule #1 of my 10 Essential Rules.  (Visit this link to view a full video briefing on all 10 rules.)

The following fundamentals make ABT an attractive trade: 

      The firm's earnings jumped +16.5% in the most recent quarter.

      ABT has one of the strongest drug portfolios in the business, with only one major patent due for expiration in the near term.  The company also benefits from a diverse revenue stream, as only 60% of sales come from pharmaceuticals.

      ABT pays a solid dividend yield of 3.0%.

Below are my technical reasons for selecting ABT: 

      The industry (Major Drugs) is in Bull-Mode and the sector (Healthcare) is just about to move back into Bull-Mode.  Since 50% or more of a stock's price is tied to the movement of its sector and industry, this is another strong indication that shares of ABT could move higher.

      I divide each security's trading range during the last three years into four Zones.  (If you look closely, you can see each of these Zones labeled in gray text in the center of the chart above.)  ABT is in trading in Zone 3, and the stock is on a laser-like trajectory toward Zone 4.  This is a very bullish sign.

      ABT has shown some decent insider buying in the past year.  I always like to see insider buying, as it indicates the people who know the most about the company might believe the stock is undervalued.

"Trade of the Week" Update

As you can see in the table below, four of my five trades are working quite nicely, posting gains of up to +8.87%.

We closed two trades last week, one for a loss and one for a profit.  We were stopped out of the Ultra Oil & Gas ProShares (NYSE: DIG)  with a loss of $5.52 per share.  We were also stopped out in our Vanguard Emerging Markets (NYSE: VWO) trade, where we posted a solid profit of $2.00 per share.  So, despite the very volatile market last week, our trades didn't suffer greatly.

My goal is always to get my stop loss prices above my cost basis for every trade as quickly as I can.  However, to make that move too soon can sometimes be costly, as it can cause us to get whip-sawed out of some of our current winning trades.  The key is to keep the stops low enough to avoid normal volatility, but high enough to get out of the trade before a trend reversal takes place.

This week I've increased my stop loss price on shares of Cognizant Technology (Nasdaq: CTSH) from $36.94 for $38.94.  I've also bumped up my stop loss price on the Dollar Bear ProShares (NYSE: UDN) from $27.60 to $27.94, and on the Short Dow 30 ProShares (NYSE: DOG) from $50.57 to $53.30.

In other news, a number of sectors and industries are flashing "Buy" signals this week, with some key equities and ETFs literally screaming it is time to buy.  I go into a lot more detail on this in my Mastering the Markets newsletter.  If you are not following this premium service, then you are missing out on investment strategies and specific trades you can put to work in this market right now.

(All security prices listed in this newsletter are as of the close of trading on Monday , November 9th.  Visit this link to view a listing of all closed trades.)

Thank you for reading today's issue of Trade of the Week.

Have a great week in the market!

Mike Turner Chief Strategist -- Trade of the Week

P.S. -- I firmly believe stock pricing patterns exist -- and that investors can use them to profit in any market.  I used such patterns to correctly predict the credit crisis and the Crash of last fall -- and made nearly +40% profit while the market lost over -40%.  You, too, could do the same.  Check out my Mastering the Markets service to learn more.