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PRIME STOCK NEWSLETTER FOR DECEMBER 9th, 2009

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Position Statement: In our Prime Recommendation Letter we attempt to identify the recommendation with the highest probability of moving higher.  We recommend that stop orders be placed at the time of purchase,  and once the position has moved profitable we recommend a stop be placed a minimum of $0.375 above the purchase price and moved higher as the position moves higher.

Today's Comments: The overall market finished sharply lower on a day that saw every sector index I track except for the Semiconductors move lower. The weakest sectors were the Gold/Silver, Oil Services, Commodities, Oil & Gas, Natural Gas, Chemicals, Consumer, Telecom, Broker/Dealer, High Tech, Healthcare related, and Retailers. Oil finished the day higher by $0.66 to $73.28/barrel, and Gold was lower by $10.60 to $1,132.80 per ounce.

In my review of the charts from yesterday's trading activity I noticed a couple of items that I felt were relevant for the market today. The 1st being that the majority of the sector indices I track have chart patterns that look to be moving lower. The second being that the vast majority of the high volume shares also have chart patterns indicating they are moving lower. I take both of these items to be a sign that we could see what may be the start of a short term market pullback.


Sterling Calendars for the Week of December 9th, 2009
Economic Calendar
Date Est. Time Release

For

Consensus Prior
12/09 10:00am Wholesale Inventories Oct. (0.5%) (0.9%)
12/09 10:30am Crude Inventories 12/04   2.09M
12/10 8:30am Initial Claims 12/05 465K 457K
12/10 8:30am Continuing Claims 12/04 5,435K 5,465K
12/10 8:30am Trade Balance Oct. ($37.0B) ($36.5B)
12/10 2:00pm Treasury Budget Nov. ($134.1B) ($176.4B)
12/11 8:30am Export Prices Ex-Ag. Nov. N/A 0.3%
12/11 8:30am Import Prices Ex-Oil Nov. N/A 0.4%
12/11 8:30am Retail Sales Nov. 0.7% 1.4%
12/11 8:30am Retail Sales Ex-Auto Nov. 0.4% 0.2%
12/11 9:55am Michigan Sentiment Dec. 68.5 67.4
12/11 10:00am Business Inventories Oct. (0.3%) (0.4%)

Recommendation: Sell/Short

Southwestern Energy Co. 'SWN'

Company: Southwestern Energy Co. Symbol: 'SWN' Closing Price: $41.31

Web: www.swn.com

YH: $50.61 YL: $25.01 EPS: ($0.26) P/E: N/A

Shares Outstanding: 345 Million

Forecasted EPS: $2.35 Market Cap.: $14 Billion
Dividend: N/A Yield: N/A Aver. Daily Trading Volume: 4.4 Million Shares  
Price Targets:  $40.28 and then $37.21 Upside Stop:  $41.93/share
Options Rec.: December 45 Puts@ $3.90/contract Options Symbol: SWN X45

Additional information on Southwestern Energy Co. 'SWN' can be found (here)

Company Description: Southwestern Energy Company engages in the exploration, development, and production of natural gas and crude oil in the United States. The company operates in two segments, Exploration and Production, and Midstream Services. The Exploration and Production segment involves in the development of the unconventional gas reservoir located on the Arkansas side of the Arkoma Basin, as well as exploration and production activities in Oklahoma, Texas, and Pennsylvania. This segment also engages in conventional drilling programs in the Arkansas part of the Arkoma Basin; and conducts development drilling and exploration programs in the Oklahoma portion of the Arkoma Basin, Texas and Pennsylvania, as well as operates drilling rigs in the Fayetteville Shale play and in East Texas. The Midstream Services segment engages in the marketing of its own gas production, as well as third party natural gas; and transportation of natural gas. As of December 31, 2008, the company’s estimated proved natural gas and oil reserves were approximately 2,185 billion cubic feet of gas equivalent. Southwestern Energy Company was founded in 1929 and is based in Houston, Texas.

Chart for Mosaic Company

Chart updates daily

Recent News:
12/06 Southwestern Energy: Real-Life Value Investing Opportunity at Seeking Alpha (Sun, Dec 6)
  11/23 Time to Bail on Shale? at Seeking Alpha (Mon, Nov 23)
  11/09 Shale Plays: Greater Yield And Lower Costs at Investopedia (Mon, Nov 9)
A full list of the news headlines for the Southwestern Energy Co. 'SWN' can be found (here)

Our Analysis: The shares of Southwestern Energy Co. 'SWN' gapped lower on the open of trading yesterday. They finished the day sharply lower and closing below a recently established support level on heavier than normal trading volume. This is a bearish trading signal. The shares of 'SWN' should continue to move lower and test $40.28/share, a point of downside support established on October 1st of this year. If the shares of 'SWN' close below that level then they should continue to move lower and test $37.21/share, the point from which they gapped higher on the open of trading on September 8th of this year. I see upside resistance on the shares of 'SWN' @ $41.49/share, and have set my stops accordingly @ $41.93/share.


Stocks Looking Higher
FDX, CYBX, IOC, NTY, DTV, ALTR, BIG, AXE, LRCX, CLX, CI, SYY, NVLS, CBS, KMR, AGU, GCI, ALTR
Stocks Looking Lower
PFE, KR, INTC, DELL, WFT, ORCL, XOM, PBR, MCD, RIG, EP, WAG, MRO, AMT, APC, JEC, BHI, DVN, APA, DO, AIZ

Yesterday's Edition of the Prime Stock Newsletter
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