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Michael Michaud is the founder of Invest2Success.com (http://www.invest2success.com/) and the Invest2Success Blog (http://invest2success.blogspot.com/). He has been investing and trading in the financial markets since 1989. He founded Invest2Success.com to empower individual institutional... More
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  • Sell Stocks Buy Commodities 0 comments
    Feb 1, 2010 8:30 AM | about stocks: SVU, KR, SWY, WMT, ADRNY, WFM, CASY, WINN, CBD, BSI
    The Market Week Ahead

    Last Friday’s GDP report gave the US Dollar a boost, and stocks headed higher but then ended down at the end of the day. Short term, the downtrend in equities looks to be continuing. If you’re going to buy stock this week, at least try the value approach. Better yet, would be to buy things that you and other people consume everyday like food, and other commodities. The actual futures should be a better bet than trying to find which company involved in those products gets it right to translate it to their earnings per share. Commodities will provide protection against any inflation coming, and should be the leader on any economic recovery also, so it’s a win-win in any economic event.

    Major Global Economic Reports This Week

    Monday: Australia House Price Index. UK Mortgage Approvals, Consumer Credit, Net Lending, and Purchasing Managers Index. USA Personal Income, and ISM Manufacturing.

    Tuesday: Australia Central Bank Interest Rate Decision. USA Pending Home Sales, and Consumer Confidence

    Wednesday: Euro-Zone Retails Sales. USA ADP Unemployment, and ISM Non-Manufacturing. New Zealand Unemployment.

    Thursday: UK Central Bank Interest Rate Decision. Australia Central Bank Monetary Statement. European Central Bank Interest Rate Decision. Switzerland Trade Balance. Canada Building Permits, and Purchasing Managers Index. USA Factory Orders, and Chain Store Sales.

    Friday: UK House Prices. Japan Leading Index. UK Producer Price Index. Canada Unemployment. USA Non-Farm Payrolls Unemployment Rate, and Consumer Credit.

    My Stock Pick This Week

    Is a short-sell on a company involved in selling food commodities, with a price to earnings ratio in the mid 30’s, which is pretty high in a market environment as there is right now. In line with my investing trading theme this week, commodities would be the best place to be adding in new buy long positions, especially in the long term, but with this companies valuations far more than the industry and their peer averages, selling it short and buying the raw commodities right now is the better bet than trying to figure out which company involved in commodities can make it work best for their EPS. With a very tight stop-loss, downside is minimal if the stock decides to reverse its most recent downtrend since January 20th.

    Sell Short SuperValu Grocery Stores – Ticker SVU

    Sell Entry: 15.59 to 14.62

    Stop-Loss: 15.78

    Take Profit Areas: 14.35, 13.45, 12.40. If 12.13 Support Breaks Stay or Go Short Again To 10.00

    Supervalu Company Profile

    SUPERVALU INC. operates as a grocery retailer in the United States. The company operates combination stores, food stores, and limited assortment food stores under the Acme Markets, Albertsons, Bristol Farms, bigg’s, Cub Foods, Farm Fresh, Hornbacher’s, Jewel-Osco, Lucky, Save-A-Lot, Shaw’s Supermarkets, Shop ’n Save, Shoppers Food & Pharmacy, and Star Markets banners. Its stores offer various grocery products, general merchandise, health and beauty care products, pharmacy products, fuel, and other items and services. As of February 28, 2009, the company operated 2,421 retail stores, including 874 combination stores, 369 food stores, 316 limited assortment food stores, and 862 licensed Save-A-Lot stores. It also provides supply chain services, such as wholesale distribution of products to independent retailers, as well as a suite of logistics services, including warehouse management, transportation, procurement, contract manufacturing, and logistics engineering and management services. The company provides these services to single and multiple grocery store independent operators, regional and national chains, mass merchants, and the military. SUPERVALU INC. was founded in 1871 and is based in Eden Prairie, Minnesota.

    Click here to review and trial the Trading Software we used in determining our sell short position on SVU.

    Click the SuperValu Stock Chart for a larger view.

    SuperValu Stock Chart

    Disclosure: Disclosure: No Positions. Take Short Position Based On Trade Plan Above
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