Power Ratings Across the Indexes: KFT, PG, PAYX, AAPL, BDX, ABT

Good news is starting to seep into the stock market. Stock were lifted today on the combined positive announcements of Pending Home Sales surprising analysts on the upside this morning Citigroup suggesting that it will boost lending lifted stocks today.

The worst may be over as the economy digests the bailout plan and investors hope to start seeing a light at the end of the tunnel. Knowing the right stocks to invest in during the current environment can potentially pay off big in the future. Our PowerRating Scanner helps you locate stocks that are most likely to perform well in uncertain times. The scanner slices and dices the market in a myriad of ways. It ranks stocks in the three major stock indexes: the Dow Jones Industrial Average, Nasdaq, and the Standard & Poors 500. It serves up the top Long Term PowerRated stocks in each of the indexes on demand. These ratings serve as a tool to help you avoid inherently risky and overtly dangerous stocks while focusing on stocks that are most likely to perform well over the long term.

Our studies clearly indicate that stocks that earn a 10 rating have a 81% chance of being higher one year later. Those awarded a 9 rating have a 79.1% chance of trading higher one year later. Conversely, those stocks with a low 1,2 or 3 Long Term Power Rating have proven to simply be too volatile thus risky for prudent, conservative long term investment. Lets take a closer look at several interesting stocks from our Power Rating Scanner across the three major indexes.

The DJIA

Kraft Foods (KFT | Quote | Chart | News | PowerRating) - This 5 Long Term Power Rated diversified major foods company is the number one ranked stock in the DJIA today. The company announced a superior 3rd quarter with Net Revenues increased by 19.4% and diluted EPS more than doubled from last year. Guidance was reaffirmed with positive words about the future. Anxiously awaited, fiscal 4th quarter results will be released tomorrow. They are expected to post earnings of around 44 cents/share. Technically, shares have been uptrending since the start of 2009. Price is above the 50-day SMA but was rejected by the 200-day SMA, spiking down on Friday. The stock seems to have found a bottom around $27.50/share bouncing up to the $28.50 area today.

Proctor and Gamble (PG | Quote | Chart | News | PowerRating) - The consumer product company is another 5 Long Term Power rated stock in the DJIA. They have been paying dividends without interruption since the 1800s. In its fiscal first quarter EPS were up 12% and sales up 9%. Second fiscal quarter EPS were up an astounding 61%. This gain is attributed to the Folgers Coffee transaction. Price has been downtrending since early 2009. The recent bounce was rejected back down near the 50-day SMA, stopping in the $52.00/share range. Both the 50 and 200-day SMAs are downtrending.

Market Grinds in Anticipation of Non Stimulus Pork Bill

rom 1990 to 1997, Kevin Haggerty served as Senior Vice President for Equity Trading at Fidelity Capital Markets, Boston, a division of Fidelity Investments. He was responsible for all U.S. institutional Listed, OTC and Option trading in addition to all major Exchange Floor Executions. For a free trial to Kevin’s Daily Trading Report, please click here.

The market continues to grind as Washington tries to jam a pork spending bill on the country, rather than an actual stimulus package, but the "Emperor" has now lost his clothes, and the "as is bill" fraud will have to be modified so the "Socialists" are not out on the limb by themselves with a package that is doomed for failure, and will inevitably put the country deeper in a hole. BHO substituted the word "catastrophe" yesterday as opposed to the original "depression" threat if the bill didn't pass. My guess is he got it right, except that he should have said "if it does pass" it will be a catastrophe" The market is clearly waiting for most of the pork to be cut, based on how it's trading, because it already knows "they" can pass anything they want without the Republicans.

NYSE volume was 1.39 bill shs yesterday as the SPX finished at -0.8 to 832.22 and the INDU at -1.5 to 7957. The QQQQ finished at +0.1 to 29.91 and is up 3 straight days, while Tuesday was the only up day for the SPX at +1.6 to 838.51. The Techs, Medical, Bio-Tech, and selected Industrial stocks have been the key "Trading Service" focus, as they continue to trend higher relative to the choppy SPX, while the Energy stocks are always a key day trading focus because of their daily intraday volatility.

The SPX has been grinding for the last two weeks, with almost all of the price action between 852.53 - 804.30, except for the one day last week when it was +3.4 to 874.09 followed by a -5.7 decline in 3 straight days. The key swing points in play for continuation in either direction are 878 and 804. However, day traders will continue to prosper because of all the knee-jerk reactions like we had yesterday.

Short term trading is ruled by Sentiment, not Fundamentals, and the more conflicting news there is, the faster the sentiment changes, which creates multiple opportunities for day traders, but wreaks havoc with swing traders. The SPX is neither ST-O/S, or at a key price zone right now, so there is no defined high probability short term trade opportunity based on how I approach the market, but you can get a good idea of it with a free trial to the Trading Service.

Have a good trading day!

Click here to find full details on Kevin's courses including Trading with the Generals with over 20 hours of professional market strategies. And for a free trial to Kevin’s daily trading service, click here.

PowerRatings Weekly Outlook: BDX, OMI, HMSY, AAPL, KFT, PG, MCD

fter a shaky start, this week is winding down to be quite positive for the stock market. Good vibes regarding the stimulus plan and the shrugging off of terrible economic numbers are rocketing stocks higher midday Friday.

Stocks were mixed Monday after Treasury Secretary Geithner advised the full bailout plan will be announced next week. Surprisingly positive Pending Home Sales figures combined with good earnings from the drug sector lifted stocks Tuesday. Midweek saw stocks closing in the negative after President Obama announced his ideas on executive salary caps and worried banks reversed an intraday rally. Fannie Mae gave thumbs up to the lowering of credit score requirements to qualify for mortgages. This combined with a changing of bank accounting requirements send stocks higher on Thursday.

It truly appears that times are a changing in the stock market potentially making 2009 far more positive than the preceding year. I remain solid in the belief that the government cash infusion, bargain hunters, and a tremendous amount of cash just waiting to be deployed should allow the bounce to continue. However, no one really knows what's going to happen in the future, we can just analysis the evidence and make the best educated decisions.

With this in mind, proven tools are critical in times like these to assist you in making the optimal investing decisions. Our Long Term PowerRatings fill this niche by being built upon 12 years of extensive, statistically valid studies across most market conditions.

Our studies indicate that stocks earning a 10 Long Term PowerRating have an 81% chance of being higher one year later. Those with a 9 rating possess a 79.1% chance of trading higher one year later. Conversely, stocks that are awarded low ratings of 1 or 2 have clearly shown to be simply too volatile and risky for prudent, conservative long term investors. You can clearly see the statistical advantage in building a long term portfolio consisting of 9 and 10 rated stocks, while avoiding the lower ratings.

Let's take a closer look at several of the most interesting Long Term PowerRated stocks profiled this week:

Becton Dickinson (BDX | Quote | Chart | News | PowerRating) - A global medical technology company that was just upgraded from a 4 to a 5 Long Term PowerRating. The firm is located in Franklin Lakes, New Jersey and employs over 28,000 people worldwide. They just announced fiscal first quarter results with an 18% increase in diluted EPS and a 1.6% increase in revenues. The CEO, Edward Ludwig, provided strong guidance into 2009 and increased targets indicating confidence. Technically, the shares have been in a strong uptrend since November 24th, 2008. Several days ago, an attempt was made to pierce the 200-day SMA with a wide intraday trading range failing on the attempt. Price is above the 50-day SMA, but still below the 200-day which is presently resting at $77.20/share.

The Importance of Position Sizing for Trend Trading

In a couple of my earlier articles as well as my interview with David Penn (Read Part 1 and Part 2 of the interview here), I expressed disdain for day trading. Strange view by a former pit trader who only day traded for many years.

Of course floor guys had advantages that you don't. I believe most of you would be increasingly successful by trading smaller and for bigger multi-day swings. The pursuit though of swing profits shouldn't mean that you need to sit with swing losses. In these markets you need to develop such flexibility that a long term position will be exited immediately if your technical or fundamental view is invalidated. By imposing a few rules to your discretionary trading you'll hopefully not be hung out to dry during those frequent periods when your big picture scenario is out of sync.

Assume You're Going to be Wrong and Position Size Accordingly

Why would you assume otherwise? Oh, because you're smarter. Here's a clue. Everyone who's trading big enough to move these markets is smart. Genius smart. Winning traders are either wise guy smart from the street or quaint smart from MIT but a fool and his trading capital are soon parted. Your higher intelligence is merely a required prerequisite to stay a few extra hands at the table but it's no edge by itself. Here's a good example for you football fans of zero sum genius. Let's say we clone Bill Belichick so that he’s coaching every team in the NFL. Those 32 Belichick’s at the end of the season would have a combined record of exactly .500.

So assuming your best guess might not be even as good as a random-trade position that won't annihilate you when you're wrong. Nor if you're wrong again. And again. If you need room then take it. But keep your size down correspondingly. Not to mention if you're as smart as you think you are, then why feel the need to kill it on each trade? Your innateness should give you insight advantage over a wide sample of trades. Hubris is a tool. Use it.

Could this key trendline finally break?

Dollar Index - a confluence of fib resistance on DXC is seen at 84.86-92 - this should keep a lid on any counter-trend move higher after this mornings move lower. We still see 84.42 as the key level - a break of this should intensify dollar selling as it will represent a break of the .786 retracement of the 5/15 low & 7/19 high.

USD/CAD - seems poised to continue lower - the re-test & failure of the broken trend-line at 1.1175 a few minutes ago is a good sign.

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As always, feel free to send me your comments and questions.

Dave

Dave Floyd is a professional FX and stock trader based in Bend, OR and the President of Aspen Trading Group. Dave's approach to FX combines technical and fundamental analysis that results in trades that fall into the swing trading time frame of several hours to several days. For a free trial to Dave Floyd's Daily Forex Alerts click here.

Short-term Technical Analysis

Short-term Technical Analysis
Cross	Spot level	Previous day move (in pips)	Supp.	Res.	Daily target
USD/CHF	1.1440	-0.0004	1.1370	1.1505
Daily chart			1.1340	1.1565
Short-term chart			1.1290	1.1660
Comments The employment market is deteriorating rapidly around the world. According to the ADP National Employment report, the US private sector shed a record 742 000 workers in March (well up on February's figure of 706 000). This had a direct impact on the greenback, causing the USD/CHF to ease from 1.1468 to 1.1385. However, other positive economic indicators enabled the US currency to hold firm. Movements on the pair before the weekend will be driven by the start of the G20 summit and the statements that follow the meeting.
EUR/USD	1.3276	0.0083	1.3210	1.3300
Daily chart			1.3165	1.3355
Short-term chart			1.3090	1.3420
Comments ECB President Jean-Claude Trichet has asked all of the G20 members to show unity to enable confidence to be restored. However, both Barack Obama and Nicolas Sarkozy feel that the 20 members will be unable to reach agreement on all of the items being discussed. The ECB will also be holding its monthly meeting today, which is expected to result in a 50 bps interest-rate cut. Trading on the EUR/USD has been fairly uneventful over the past 24 hours, with the pair fluctuating in a range between 1.3168 and 1.3293. Our target remains at 1.3000.
USD/JPY	98.76	0.02	98.15	99.50
Daily chart			97.55	99.95
Short-term chart			97.25	100.55
Comments Pending sales of existing homes in the US rose 2.1% in February, which was a positive sign for the housing market. This helped to keep the greenback close to its 2009 highs, but it was still unable to go the full distance and reach the elusive 100.00 mark. Over the past 24 hours, the pair has traded between 98.40 and 99.16, while the EUR/JPY has hovered between 129.89 and 131.89. Our short-term target is still 100.00
EUR/CHF	1.5188	0.0094	1.5135	1.5220
Daily chart			1.5090	1.5240
Short-term chart			1.5010	1.5305
Comments A sharp rise in Eurozone unemployment in February to 8.5% from January’s revised figure of 8.3% did not have the expected effect on the EUR/CHF, which edged up from 1.5064 to 1.5192. The repeated attacks by Switzerland’s main economic partners on tax havens and banking secrecy ahead of the G20 summit have put the CHF under pressure. Despite this, we are still sticking with our target of 1.5000 for the pair.
GBP/USD	1.4506	0.0222	1.4505	1.4620
Daily chart			1.4450	1.4640
Short-term chart			1.4430	1.4695
Comments Wednesday proved to be a neutral day for the Cable, which traded between 1.4275 and 1.4513. US automobile sales may have fallen 37% in February from one year before, but analysts had been expecting an even worse figure. Today will see the publication of more economic numbers in the US (including factory orders, durable goods orders and first-time claims for state unemployment benefits). These could bring extra volatility to the pair. Our expected trading range for today is 1.4200-1.4500.

Crude Oil and Precious Metals
	Spot	Pips move
Crude Oil	49.00	0.48	Daily chart
Platinum	1135.00	13.0	Daily chart
Gold	926.95	8.70	Daily chart
Silver	13.04	0.14	Daily chart

Economic Data
GMT Time	Economic data	Country	Period	Forecast	Previous
13:45	ECB RATE DECISION	EU	APR	1.00%	1.50%
14:30	US INITIAL CLAIMS	USA		650K	652K
14:30	US JOBLESS CLAIMS	USA		5.600M	5.560M
16:00	US DURABLE GOODS	USA

Today’s main events will be the start of the G20 summit in London and the ECB’s decision on interest rates. Contrary to previous expectations, the ECB

Today’s main events will be the start of the G20 summit in London and the ECB’s decision on interest rates. Contrary to previous expectations, the ECB is now expected to cut its benchmark rate by 50 basis points.

The ECB has completed sales of 35.5 tonnes of gold under the terms of a 2004 central bank agreement. These sales had no impact on the price of gold.

German retail sales fell 0.2% between January and February and were also down 5.3% from one year before.

The following PMI figures for March were published yesterday: France up from 34.8 in February to 36.5, Germany up from 32.1 to 32.4, Eurozone up from 33.5 to 33.9 and the UK up from 34.7 to 39.1.

In the US, according to the Challenger layoffs report, the number of planned job cuts announced by US-based employers in March declined to 150 411 from 186 350 in February. Spending on construction projects slipped 0.9% to a seasonally adjusted annual rate of USD 967.5 billion. The Institute for Supply Management's (ISM) index of national factory activity rose to 36.3 in March from 35.8 in February