Sawatdee kraup ("hello" in Thai) and good Monday to ya'! Just got back from a trip to Thailand and a few other Asian countries along the way and had to exercise my new found bi-lingual skills. Looks like I didn't miss much with the major markets but we've definitely had a few breakout trades that have put our Members in the money quite nicely if you've been following along. We'll get into that in a bit. I've also got what you might think to be a surprising short-term take on the major indexes but first...
There's a Much Bigger World Out There
I'm not going to go on ramble about my enlightening experiences abroad over the last few weeks but let me just quickly say whenever I travel, I'm always thinking about the market and am always looking for clues and hints that can help myself and our readers make money.
With that in mind, there were two huge glaring standout ideas that I took away from my trip. The first, everywhere I turned, renewable and/or sustainable energy concepts are alive and thriving abroad. I say this because when it comes to these issues, America appears to lag very far behind but rest assured, based on what I saw over the last couple of weeks, you can bet your small cap dollar that this space has no option but to heat up and reward early stage investors who are savvy enough to identify this rapidly growing International trend.
Secondly, now that we're living in a global economy, it's important to take into consideration global sales when it comes to evaluating the potential of a stock, not just looking at what the Company is doing here in the U.S. Case in point, McDonald's (MCD) and Starbucks (SBUX) were sitting on every major sweet spot commercial intersection. Location, location, location. And, they were jam packed. Guess foreigners can't get enough unhealthy food.
My point is, even if a Company's U.S. sales isn't experiencing quite the growth #'s you're looking for, let's make sure we consider their growth abroad. Caterpillar (CAT) was a classic example of a winning stock that fell into this category a few years back. Despite their lackluster U.S. growth, the Company was killing it abroad. Just something to keep in the back of your mind.
SCN Trading Ideas are Ripping
VirnetX (VHC), Rite Aid (RAD), U.S. Precious Metals, Inc. (USPR) and On Stream (ONSM) have all been on fire yielding anywhere from 20% to 80% gains respectively since we suggested them (with the exception of ONSM which has only rallied slightly above our entry price). I'm pretty impressed with the volume associated with all of these recent breakouts as well.
ONSM is holding an earnings conf. call today post close but I really don't think it's going to affect the price action in the stock much. Technically, I'd use a tight trailing stop on that one now that we're in the money slightly. Don't let that trade turn into a loser now.
I'm going to suggest the same strategy for our other ideas (VHC, RAD and USPR). Since I don't know what your individual risk tolerance and financial landscape looks like, I think setting trailing stops on the way up that you're comfortable with is always prudent. If you're willing to take some shots and have the risk tolerance to let some of these trades run for you, use more aggressive trailing stops and give your trade more breathing room. Make sense? Email me if you're not sure what I'm referring to.
Our most recent trading idea U.S. Energy Corp. (USEG) isn't performing all that well so far but we're not giving up on this one just yet. Sometimes good trades just need a little time to pan out.
It's Time to Shake the Tree
Although a lot of people may think this market's recent strength is the catalyst for the next leg up, I tend to disagree. Don't get me wrong, I'm NOT saying this market isn't going to rally in a big way. Actually, I'm not saying the opposite just yet either. What I am saying is this market looks prime for a short-term pullback right now. Picking up some one or two month out put options on the Q's or SPY's may prove profitable in the coming days ahead. Ther's been too little volatility of late for me to be biting on the concept that the lack of volatility is an early indicator this market is ready to rocket higher.
I think if this market is really going to stage a first quarter breakout, we're going to have some stormy seas in the short-term that we can exploit for some profit. A pullback to 2290 or so on the NDX would likely yield some excellent short-term trading profits. Let's use that as our short-term target and see what happens from there. If we happen to be wrong and this market decides to run, keep a short leash on your trade and be willing to exit without being stubborn.
Now that we're back full swing into the New Year, we can actually start to rely on what the markets are starting to tell us. I've got a feeling this first quarter of 2012 is going to be a wild one so stay on board and stay tuned. Missing one SCN Newsletter could make a big big difference.
Have an excellent rest of the day...