I continue to be very uneasy about the market and believe it
could begin trending lower at any time, so my natural inclination
is buy inverse
(ETFs). These are baskets of stocks that move higher when the
market moves lower.
I gave you a great inverseETF a couple of weeks ago,
ProShares UltraShort S&P 500 (
. I recommended thisETF because my systems were telling me then,
and they continue to tell me now, that this market could move lower
in the near term -- perhaps a lot lower. But, what did the market
do last week? It moved high enough to stop us out of the SDS trade.
But remember: I am a rules-based investor. I have rules for getting
into a position and rules for getting out. The rules for getting in
are still flashing "Short!" But just because I have a rule that
tells me when to short the market, it doesn't mean that I ignore my
rules for getting out of a trade.
There is an old saying that the market can remain irrational
longer than you can remain solvent. One of these days, the market's
trend will reverse and I am afraid that it will not be a happy
But, that may not happen today, or this week or this month
(probably). The market is saying, "Eat, drink and be merry, for
tomorrow will undoubtedly never come." No one knows when the day
ofaccounting will come. My forecasting systems indicate it could
start this December -- maybe sooner.
Indeed, if the market does actually begin to roll over this coming
week, I will personally, be looking to pick up some SDS shares. In
the meantime, I like the way my top-rated stock -- this week's
Trade-of-the-Week pick -- is performing in a market that seems to
[To receive free trading recommendations before the market opens
each week from either Dr. Melvin Pasternak or Mike Turner,
go here to sign up, risk-free.
Let's look at my pick for this week,
Gilead Sciences Inc. (Nasdaq: GILD)
To begin with, the bio-tech world tends to run on its own steam.
True, it cannot completely ignore the broader markets, but when a
fundamentally and technically strong stock like GILD bubbles to the
surface, I do not want to ignore it.
GILD is a global player in the field of biotechnology and
biopharmaceutical research, development and production of
life-saving drugs and therapeutics. The company, based in Foster
City, California, has just about everything that I look for in a
company and, by extension, its stock.
The fundamentals for GILD are very strong. Those with the largest
- The growth rate for total sales for the most recent quarter
versus the same quarter a year ago came in at +17%. By
comparison, the S&P 500's average growth rate for the same
period is +11%.
- The growth rate for total sales for the trailing twelve
months versus a year ago came in at +31.3%, compared to the
S&P 500's average growth rate of +6.4%.
- The growth rate in sales for the previous five years comes in
at +39.6%. GILD's industry average growth rate during this time
period is +26.2%. The S&P 500's average growth rate was about
- Theearnings growth rate for the most recent quarter compared
with the same quarter a year ago is +29.6%. By comparison, the
industry growth rate in that same time period for its industry is
- GILD'searnings growth rate for the trailing twelve months
compared with a year ago came in at 40.64%.
- Theearnings growth rate for the previous five years is
+41.7%, compared with the industry average of +22.1% and the
S&P 500's average of +7.6%.
- Within GILD's industry (Biotechnology and Drugs), the stock's
price-to-earnings ratio (P/E)
of 11.4 makes it undervalued compared to its peers.
The technical indicators for GILD are nearly perfect. Here are
some of my technical observations:
- To begin with, GILD has just moved out of zone 1 and into
zone 2. This is typically a good sign that momentum is shifting
into a positive trend for the stock. With the stock trading in
the bottom half of its three-year pricing range, there certainly
looks to be room to the upside before encountering major
of the stock is 90%, which generally means the big institutions
like the results of the research they have done on the company. I
also infer from this level of institutional ownership that these
big investors believe the stock's share price is likely to move
higher in the future.
- Both the industry (biotechnology and drugs) and the sector
(healthcare) are in strong bull-mode. This means the average
price of every stock in GILD's industry and sector is above the
trend-line and moving higher. This also probably means that more
money is flowing in to the industry and sector than flowing out
and could put pressure on GILD to move higher.
Action to Take -->
If you're interested in making this trade, consider buying GILD
at $37.96. I also recommend placing a stop-loss at $35.94 for
downside protection. My target price for this trade is $47.00,
which would lead to a gain of more than +28%.
-- Mike Turner
A published author on the subject of trading, Mike Turner's
proprietary trading system has led him to a spectacular long-term
success rate. Mike is founder of a money-management... Read
Disclosure: Neither Mike Turner nor StreetAuthority, LLC hold
positions in any securities mentioned in this article.
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