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| PRIME
STOCK NEWSLETTER FOR October 9th, 2008 |
Position
Statement: In our Prime
Recommendation Letter we attempt to identify the
recommendation with the highest probability of
moving higher. We recommend that stop orders
be placed at the time of purchase, and once
the position has moved profitable we recommend
a stop be placed a minimum of $0.375 above the
purchase price and moved higher as the position
moves higher. |
|
Today’s Comments:
The overall market finished Wednesday sharply lower in a broad based move that saw the majority of the sector indices I track move lower on the day. The weakest sectors on the day were the Insurance, Broker/Dealer, Airlines, Telecom, Banking, Disk Drive Manufacturers, Pharmaceuticals, Healthcare Providers, Computers, Technology, Transports, and Retail indices. There was strength in the Commodities, Chemicals, Natural Gas, Oil & Gas, and Networking indices. .
In looking at Dow Jones Industrial Average the market is already fairly over extended and would normally rally off the next level of support that it is reached, however due to the current financial turmoil we could easily see several more support levels broken before the market finally stages a rally. So, I decided to a look at the long term chart to see where the different levels of support actually I see downside support at the following levels: 9,036.32, then 8,985.44, then 8,842.62, then 8,521.97 and then 8,235.81 My thoughts are that we would normally see the strongest level of support around the 8,842.62 level, and if that support is broken then 8,521.97 and 8,235.81 should have relatively equal levels of support and the market could rally from either level. However in my opinion the market appears to be undergoing a crisis of confidence unlike any other that we have seen in a generation or two. In other words, we may a much greater over extension than we are normally used to and as a result normal levels of support may not provide the market turning points that they normally would. So, in a nut shell, I think we'll see support around the 8,900 level, then 8,500, then 8,200 and then 7,500 give or take a 100 points either side of those levels. Where the market finally finds support is anyone's guess at this point (I'll take the lower support levels) however I doubt the market will make a meaningful turn back upwards significantly above any of these support levels..
The Bottom
Line: A trend remains in place until it is broken. The overall market should move
lower.
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| Sterling
Calendar for October 9th, 2008 |
| Date: |
Misc. Calendar: |
| 10/09 |
Chevron "CVX' announces earnings after the close. Est. $3.21 |
| 10/10 |
General Electric 'GE' announces earnings. Time N/A. Est. $0.45 |
The
full earnings calendar for this week can
be found (here) |
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Recommendation: Sell/Short
Kohl's Corp. 'KSS'
|
| Company:
Kohl's Corp. |
Symbol:
KSS' |
Closing
Price: $37.15 |
| Web: www.kohls.com |
YH: $63.97
YL: $36.74 |
EPS: $3.19
P/E: 11.6 |
Shares
Outstanding: 304 Million |
Forecasted
EPS:.$3.37 |
Market Cap.:
$11 Billion |
|
| Dividend:
N/A |
Yield: N/A |
Aver.
Daily Trading Volume: 8 Million Shares |
|
|
| Price Targets:
$22.80, and then $17.72 |
Upside Stop:
$38.69/share |
| Options Rec.:
November $35 Puts @ $3.50/contract |
Options
Symbol: KSSWG |
Additional
information on Kohl's Corp. "KSS'' can be found (here) |
|
Company Description: Kohl's Corporation operates a chain of departmental stores in the United States. The company offers apparel, footwear, and accessories for women, men, and children, as well as soft home products, such as sheets and pillows; and housewares through its stores and online. It also provides online shopping of furniture and electronics. As of May 1, 2008, it operated 957 stores in 47 states. The company was founded in 1962 and is headquartered in Menomonee Falls, Wisconsin.
 Chart updates daily
|
A
full list of the news headlines
for Kohl's Corp. "KSS" can
be found (here) |
|
Our Analysis: The shares of Kohl's Corp. 'KSS' moved sharply lower yesterday on extremely heavy trading volume. In the process the shares of 'KSS' closed below several key support levels. This is a very bearish trading signal. Additionally the S&P Retail Index "RLX" is in a very strong downward trend. In the process of closing below those key support levels yesterday, the shares of 'KSS' completed and inverted cup pattern with a measured move to our initial target level of $22.80/share. If the shares of 'KSS' close below that level as I think they will, then they should continue to move lower and test $17.72/share, a point of downside support established in October of 1998. I see upside resistance on the shares of 'KSS' @ $38.30/share, and have set my stops accordingly at $38.69/share. |
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Stocks
Looking Higher |
|
|
Stocks Looking Lower |
BAC, MSFT, C, CSCO, INTC, PFE, AAPL, ORCL, JPM,T, PBR, WMT, HAL, BSX, MOT, S, MU, HD, TXN, VZ, LOW, YHOO, MO, TGT, DIS, MYL, GM, KO, SBUX, VLO, MRK, DTV, KFT, MCD, AXP, SPLS, SGP, ALTR, DOW, MRO, BBY, ACI, UTX, JCP, TJX, PEP, ALL, UNH, CVS, WAG, BA, HON |
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| Yesterday's
Edition of the Prime Stock Newsletter |
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Sterling Investment Services may hold positions
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within this report. |
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