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PRIME STOCK NEWSLETTER FOR MAY 19th, 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 finished Tuesday sharply lower in a broad sell off that saw every sector index I track move lower on the day. The weakest sectors were the Banking, Biotech, Chemicals, Commodities, Consumer, Cyclicals, High Tech, Insurance, retailers, Healthcare Providers, Airlines, Broker/Dealers, and the Energy related indices. Oil was lower by $0.67 to $69.41 per barrel, and Gold was lower by $13.50 to $1,214.60 per ounce.


Sterling Calendars for the Week of May 19th, 2010.
Economic Calendar

Date

Est. Time Release

For

Consensus Prior
05/19 8:30am Core CPI Apr. 0.0% 0.0%
05/19 8:30am CPI Apr. 0.1% 0.1%
05/19 10:30am Crude Inventories 05/15   1.95M
05/20 8:30am Continuing Claims 05/15 4,600K 4,627K
05/20 8:30am Initial Claims 05/15 440K 444K
05/20 10:00am Leading Indicators Apr. 0.2% 1.4%
05/20 10:00am Philadelphia Fed. May 21.3 20.2
  Misc. Calendar
Date: Comments:
05/18 Hewlett-Packard 'HPQ' announces earnings after the close. Est. $1.05
05/19 Deere 'DE' announces earnings before the open. Est. $1.09
05/19 Polo Ralph Loren 'RL' announces earnings before the open. Est. $0.64
05/19 Advance Auto 'AAP' announces earnings after the close. Est. $1.00
05/19 Applied Materials 'AMAT' announces earnings after the close. Est. $0.21
05/19 Limited 'LTD' announces earnings after the close. Est. $0.19
05/20 Dollar Tree 'DLTR' announces earnings before the open. Est. $0.83
05/20 Ross Stores 'ROST' announces earnings before the open. Est. $1.15
05/20 Target 'TGT' announces earnings before the open. Est. $0.86
05/20 Williams-Sonoma 'WSM' announces earnings before the open. Est. $0.11
05/20 Aeropostale 'ARO' announces earnings after the close. Est. $0.46
05/20 Dell Computer 'DELL' announces earnings after the close. Est. $0.26
05/20 Gap, Inc. 'GPS' announces earnings after the close. Est. $0.43
05/20 Sears Holdings 'SHLD' announces earnings after the close. Est. $0.14
05/20 Intuit 'INTU' announces earnings after the close. Est. $1.82
05/21 Ann Taylor 'ANN' announces earnings before the open. Est. $0.35
  The full earnings calendar for this week can be found (here)

Recommendation: Sell/Short

Petroleo Brasileiro 'PBR'

Company: Petroleo Brasileiro Symbol: 'PBR'

Closing Price: $36.32

Web:

YH: $53.46 YL: $34.00 EPS: $2.86 P/E: 12.7

Shares Outstanding: 4.39 Billion

Forecasted EPS: N/A Market Cap.: $159 Billion
Dividend: $0.15 Yield: 0.41% Aver. Daily Trading Volume: 25 Million Shares  
Price Targets:  $35.44 and then $32.43 Upside Stop:  $36.87/share
Options Rec.: June 40 Puts @ $4.50/contract Options Symbol: PBR R 40

Additional information on Petroleo Brasileiro 'PBR' can be found (here)

Company Description: Petroleo Brasileiro SA-Petrobras is an integrated oil and gas company. During the year ended December 31, 2008, the Company’s average domestic daily hydrocarbons production was 2,176 thousand barrels of oil equivalent per day (mboe/d). Approximately 84% of its proved reserves are in fields in the offshore Campos Basin. The Company operates the refining capacity in Brazil. The Company’s domestic refining capacity is 1,942 thousand barrels per day (mbbl/d). Its domestic refining production is 1,787 mbbl/d and sales of oil products to domestic markets is 1,748 mbbl/d. The Company is also involved in the production of petrochemicals and fertilizers. The Company distributes oil products through its own BR network of retailers and to wholesalers. During 2008, it increased its stake in the Sierra Chata and Parva Negra blocks to 45.55% and 100%, respectively, and acquired a 13.72% stake in the El Tordillo and La Tapera-Puesto Quiroga blocks. In November 2009, it acquired Chevron Chile SAC..

Chart for Mosaic Company

Chart updates daily

Recent News: 05/18 Latin American Markets: Brazil stocks drop as Europe worries rise at MarketWatch (Tue, May 18)
 

05/17 Oil & Gas Industry Outlook - May 2010 Zacks (Mon, May 17)

  05/14 Petrobras posts rise in first-quarter profit at MarketWatch (Fri, May 14)

A full list of the news headlines for Petroleo Brasileiro 'PBR' can be found (here)

Our Analysis: The shares of Petroleo Brasileiro 'PBR' have been in a downward trend since earlier this year. Yesterday they closed below a recently established downside support level. The shares of 'PBR' should continue to move lower and test $35.44/share, a point of downward support established on July 8th of last year. If the shares of 'PBR' close below that level, then they should continue to move lower and test $32.43/share, the point from which they gapped higher on the open of trading on April 29th of 2009. I see upside resistance on the shares of 'PBR' @ $36.49/share, and have set my stops accordingly at $36.87/share.


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Yesterday's Edition of the Prime Stock Newsletter
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