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PRIME STOCK NEWSLETTER FOR June 1st, 2010

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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 moved moderately lower Friday on a day that saw light trading volume due to the Memorial Day weekend. Thursday's rally did nothing to break any of the downward trendlines on the various indices I follow. As a result, I am continuing to be bearish in respect to the overall market.

Oil was lower by $0.58 to $73.97 per barrel, and Gold was higher by $0.30 to $1,212.20 per ounce.



Recommendation: Sell/Short

Baker Hughes, Inc. 'BHI'

Company: Baker Hughes, Inc. Symbol: 'BHI'

Closing Price: $38.14

Web: www.bakerhughesdirect.com

YH: $54.80 YL: $33.11 EPS: $1.14 P/E: 33.5

Shares Outstanding: 429 Million

Forecasted EPS: $2.11 Market Cap.: $36 Billion
Dividend: $0.60 Yield: 1.60% Aver. Daily Trading Volume: 6.8 Million Shares  
Price Targets:  $36.34 and then $34.45 Upside Stop:  $38.43/share
Options Rec.: June 40 Puts @ $3.10/contract Options Symbol: BHI R 40

Additional information on Baker Hughes, Inc. 'BHI' can be found (here)

Company Description: Baker Hughes Incorporated and its subsidiaries supply wellbore related products, and technology services and systems for drilling, formation evaluation, completion and production, and reservoir technology and consulting to the oil and natural gas industry worldwide. It operates in two segments, Drilling and Evaluation, and Completion and Production. The Drilling and Evaluation segment provides products and services used to drill and evaluate oil and natural gas wells. It provides drilling and completion fluids, and fluids environmental services; Tricone roller cone bits and fixed-cutter polycrystalline diamond compact bits; directional drilling services; measurement-while-drilling and logging-while-drilling services; wireline formation evaluation, and completion and production services; and reservoir technology and consulting services. The Completion and Production segment provides products and services used in the completion and production phase of oil and natural gas wells. It primarily offers wellbore construction, cased-hole completions, sand control, and wellbore intervention solutions. This segment also offers oilfield chemical programs for drilling, well stimulation, production, pipeline transportation, and maintenance programs; various process and water treatment programs, and finished fuel additives for the refining industry; and a range of products and services for the pipeline transportation industry. In addition, it provides artificial lift systems, including electrical submersible pump systems and progressing cavity pump systems, as well as permanent monitoring systems and chemical automation systems; and integrated operations and project management services. Baker Hughes offers its products primarily through its sales organizations, as well as through independent distributors, commercial agents, licensees, or sales representatives. The company was founded in 1972 and is headquartered in Houston, Texas..

Chart for Mosaic Company

Chart updates daily

Recent News: 05/28 Gulf drilling curbs set to check expansion at Financial Times (Fri, May 28)
 

05/28 Baker Hughes Announces Conference Call PR Newswire (Fri, May 28)

  05/28 Oil Spill Losers: BP, RIG, Offshore Drillers at TheStreet.com (Fri, May 28)

A full list of the news headlines for Baker Hughes, Inc. 'BHI' can be found (here)

Our Analysis: The shares of Baker Hughes, Inc. 'BHI' gapped lower on the open of trading on Friday. They finished the day sharply lower on significantly heavier than trading volume. This is a bearish trading signal. The shares of 'BHI' are poised to open lower this morning. I am expecting them to quickly move through support @ 38.04/share. If they do this then my new downside price target is $36.34/share, the point from which they gapped higher on the open of trading on September 11th, 2009. If the shares of 'BHI' close below that level, then my next downside price target is $34.45/share. I have set my stops at $38.43/share.


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Yesterday's Edition of the Prime Stock Newsletter
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