Stock picks including a coal play

We expect the stock market to sell off again this week. We would be locking in profits before it’s too late. Friday’s action could be the beginning of a significant correction. The economy hasn’t improved that much and the consumer is still strapped, and jobs are scarce, not a very bullish scenario in the short run, AND Obama and the Democrats care not about large spending, which will require large taxes. We believe it is prudent to hedge large positions that have large profits with puts if you are not inclined to sell.

We have immediate sell ratings on the following stocks with significant insider selling: Cree (NASDAQ: CREE, Stock Forum) 42.10; Precision Castparts (NYSE: PCP, Stock Forum) 95.53; Polo Ralph Lauren (NYSE: RL, Stock Forum) (again) 74.42; Apple (NASDAQ: AAPL, Stock Forum) (Again) 188.50. We also have an immediate sell rating on Minnesota Mining (TSX: T.MMM , Stock Forum) 73.57. The stock picks below are relatively low historically and have good charts but we would be buying lightly because of the potential of a continued decline in the Dow, which usually causes other stocks to decline also. Our normal buying strategy is to buy 40% of a position now, and 30% more on each 20% decline from your original buy price…so as to insure good entry prices.

Our stock picks (Based On Friday October 30, 2009 Closing Prices): Vertex Pharm. (NASDAQ: VRTX, Stock Forum) 33.56; Onyx Pharm. (NASDAQ: ONXX, Stock Forum) 25.60; Regal A (NYSE: RGC, Stock Forum) 12.61; Insulet (NASDAQ: PODD, Stock Forum) 11.10; Vivus (NASDAQ: VVUS, Stock Forum) (AGAIN) 7.90; Exelixis (NASDAQ: EXEL, Stock Forum) 6.08; Puda Coal (AMEX: PUDA) 6.52; Geron (NASDAQ: GERN, Stock Forum) 6.11; PMI Group (NYSE: PMI, Stock Forum) 2.42. This Market Letter was written on Monday, November 2, 2009, at 8:30 AM.

* Cotton’s “Stock of the Week”

** We hold a position in the stock or option

GO TO STOCKCHARTS.COM TO VIEW THE ABOVE STOCK PICKS
YOU CAN EASILY LOSE 100% OF YOUR MONEY TRADING OPTIONS

ABOUT THE AUTHOR

J.W. Cotton

Cotton's Technically Speaking is an online market letter published weekly by technical analyst Joe Cotton. The market letter features stock and option picks, and is based primarily on the analysis of stock and market trends. You can visit his website at www.cottonstocks.net to get more information or subscribe.

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