Hard to believe the first quarter of 2009 is already in the books; however, the markets did not make that time boring. It was definitely a hard task to find stocks to buy in 2009, but, with solid price entries in place, I am pretty confident with where they stand.
Overall all 4 stocks combined for -8.9%. Dow: -13.33% | S&P 500: -11.67% | Nasdaq: -3.07%
Using our designated entry targets all 4 stocks combined for +14% (buy not hit for AKS of BAC yet).
Before we get into the actual stocks, lets look back at what I expected in 2009:
Barack Obama will officially take office. The stock market did not participate on inauguration day, but over the last couple of weeks investors have gotten giddy over the possibilities. Because there is no substance there, this leaves me to worry that any gains made thus far may be quickly gone if we don’t take our profit.
According to history, the average global recession is 1.5 years, so we should be out somewhere near July. Just last week that time was pushed back to the end of 2009. What will they say when that time comes around?
Many companies have practiced the forget till new year policy, so the beginning of 2009 could be shaky to say the least. Expect direction of market to be unclear for the first 3-6 months of the year. Anybody could of guessed this. Slowly but surely we are still getting a big picture. Ideas are being digested right now. I feel confident that we should have a good grasp of where exactly things are heading in the next couple of months.
Now lets look at things I was hoping would benefit some stocks:
The price of oil has dropped so much. How much lower can it really go? It seems as though oil is posed to go higher. The chart is starting to round out, and we could be seeing higher prices come this summer.
The Dow was down roughly 35% for the year. While it could still go lower, predicting another 35% loss would be hard to imagine. For the year, the Dow is off 11% (thanks to a nice 2 week rally). It seems hard to believe that things could get even worse than they are to get to 35% come Christmas.
Lastly, remember the original goal of these picks were to find 4 stocks that would be hot in 2009. Obviously we still have 9 months to go, so stay patient.
Enough babbling, lets follow-up on TWI’s stock to buy in 2009.
AK Steel – AKS (-2.2)
AK Steel was and still is my bet on Obama’s plan to create new jobs. Once that eventually happens, I like AKS to kick in. I wasn’t really looking for AKS to make its move until the second half of the 2009.
I stated that I would like this stock over $15, which the stock has yet to hit. So no buy order should have been placed if you were looking long term. You see why we set entry points because now we can still get into AKS for lower than we first wanted to. I like the stock at over $10 or bounce of $5.
Similar stocks include: NUE and STLD
Schlumberger Limited – SLB (-1.71)
Earlier this year oil was looking to creep up a little, but as since slowed down. Once again, I look for this stock to pick up in the summer months and beyond.
According the technicals nothing has really developed. In fact, the stock has barely moved and moving between a trading range of $39 – $47. Look for a break out of this trading range. Obviously a break above $45 will be bullish, while below $39 would be bearish. If we are good we can get to at least $55 by year end.
Similar stocks include: XOM and HAL
Bank of America – BAC (-7.26)
Hey, I had to take a risk somewhere, but thanks to price entries no buy order was processed. The stock never hit $16. Like with AKS we can now get into in Bank of America even cheaper than before. Just over the last few weeks we were able to see how “fluff” news could lift BAC. You have to think the government will solve something by year’s end.
There are a couple ways to play BAC. It all depends on how active you want to be as the stock will be flunctating for a while. With 2010 in mind, I would like this stock above $7.50, with price target of $15, $25 and $35.
Netflix – NFLX (+13.03)
Unlike the other stocks, Netflix has already performed its course. I had updated what needed to be done because it had moved so rapidly. That being the case it looks like we are playing with house money. Like I predicted demand for Netflix has grown in this failing economy and has already added 600,000 subscribers this year alone.
When a stock hits a 52-week high it is interesting to see how a stock plays out. Obviously that point becomes somewhat of a resistance. If the stock passes above that, then we really don’t know how much higher it wants to go. That being said, I would feel more than comfortable trying to ride out Netflix. You can always take profits and invest them in the other 3 stocks that have yet to develop and for cheaper than we wanted them before.
Keep support at $39. If stock breaks above $44, then that becomes your new support, and just ride the stock out. I feel the resistance that was broke at $32 was pretty significant. With that in mind, the price target would be $44. That makes $44 even more important a number to watch.
So there you have it. All in all, with proper entry points in place, we were able to minimize our risk and not lose any more. Better yet, now we can get into many of our stocks for cheaper than we originally wanted to. For the second quarter, I would not look for too much change from the first; however, look for more things to form as I expect majority of my stocks to move in the second half of 2009.
Closing Prices as Market Closing 12/31/08 | 3/31/09:
- AKS – 9.32 | 7.12
- SLB – 42.33 | 40.62
- BAC – 14.08 | 6.82
- NFLX – 29.89 | 42.92
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