The Short Case on Allete Corp.

My weekly stock pick comes during a time of current market conditions that look like more stocks are going down than up. In fact after scanning the charts, I don't see any low-risk, highreward long positions in the market yet. Sure, some will say many stocks look cheap, and I would agree. The bottom line is they can become much more cheaper until investors and traders are ready to start betting big. In the meantime, if you're a long-term investor, you could start accumulating bit by bit if you absolutely want to buy something. If you're a trader, and like selling short, then in my opinion this current market environment is the market for you.

My weekly stock pick is a short-sale. Allete Corp. (ALE)

ALE Trade Setup:

Entry: Sell-Stop 39.95

Stop-Loss: 42.00 or slightly above

Take Profit: Short Term 38.13 – 37.22, Intermediate Term 34.42 – 33.67, Long Term 32.98 – 32.26

Allete provides affordable, reliable energy services in the upper Midwest and has significant real estate holdings in Florida. Allete's electric utility, Minnesota Power, serves 141,000 residents, 16 municipalities and several large industrial customers. Allete also owns a lignite mine in North Dakota, BNI Coal, and Superior Water, Light and Power in Superior, Wisconsin.

I like the energy sector in the USA and globally long-term. I just see ALE taking a correction near and intermediate term with the general market in its current downtrend. Many analysts are positive on ALE. The PE ratio is reasonable at 12. With the recession economy slowdown in the USA right now, I don't think ALE stock price can keep performing to the upside until a downside correction takes place.

Good day, good investing and trading.

Disclosure: Author is short ALE.