As part of my “Buy Europe” theme – which gets traders to avoid the upcoming $USD crisis that I believe will lead to problems for over-weighted U.S. portfolios – I have been looking at some large-cap European and British industrial corporations. ABB Ltd. (NYSE:ABB) of Switzerland is one.
While some of you may disagree with my recommendation, I feel you might wish to consider switching out of Cara 100 and Dow 30 component General Electric (NYSE:GE), and into ABB Ltd., the world's largest builder of electricity networks.
ABB has today reported third-quarter profit more than doubled as electricity companies in the U.S. and China boosted capacity to keep up with demand for power.
There is an October 4 dated report by Independent II Research PLC of the UK (get it here in .pdf) that was based on 2Q06 results, which preceded those that came out today, but is worthwhile reading nonetheless.
The stock has enjoyed a +12.4-pct run-up (from US$13.18 to US$14.81) in the 17 trading sessions since this research paper was published, and the RSI-7 is now in the Distribution Zone, but after a pull-back you might wish to consider it for Accumulation, or you may wish to switch out GE for ABB presently.
I do note that money managers must have liked this report because on Oct 5, the price of GE was bumped to a high of $36.48 and was subsequently sold off about $1. Thus, the RSI-7 values on the Daily-Weekly-Monthly for GE are presently 42.6, 61.5 and 61.6, while the ABB stock took off like a rocket on Oct 5 to where the price is presently over-priced with RSI-7 values of 81.6, 78.5 and 81.4 respectively.
In the next year, I believe that holders of ABB will be happy with the relative performance against the S&P500 index -- and against GE.