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Think Globally For Trading Opportunities

08/18/10 08:31:05 AM
by Billy Williams

With the US stock markets stuck in a trading range, look for stocks with a global presence outside the US for trading opportunties.

Security:   JKS, AGU
Position:   Accumulate

US stocks don't seem to be offering much in the way of opportunity lately, but fortunately, it's a global market that you can select from in order to find successful trades. With the US market stagnating painfully each day with 100-point plus swings in the Dow Jones Industrial Average (DJIA), keep in mind that there are stocks based abroad that do business outside of US borders. In this age of economic uncertainty, it might be a good idea to look globally for trading opportunities that are becoming more abundant each day.

China has been a beehive of economic activity with Jinku Solar Holding Co. (JKS) staging a successful initial public offering (IPO) on May 14, 2010. JKS was founded in 2006 out of Shangrao, China, and operates as a solar energy company manufacturing and marketing monocrystalline and multicrystalline silicon wafers. Its products are used for manufacturing photovoltaic solar cells and panels. See Figure 1.

FIGURE 1: JKS. After trading within a flat-based pattern after its IPO, JKS finally breaks out with strong momentum.
Graphic provided by:
Price fluctuated for almost two months, then broke out on July 7, 2010, and began an upward move. On July 29, 2010, JKS pulled back but formed a bullish doji candlestick pattern with the 40-day simple moving average (SMA) turning up.

If you had placed a buy order just over the top of that price bar at $15, then on August 2, 2010, you would have entered the move as it gained momentum to the upside.

As of August 17, JKS had reached a high of $21.90 for a potential gain of $6.90 or a 46% gain in just less than three weeks.

Agrium Inc. (AGU) is based in Calgary, Canada, and with its subsidiaries produces and markets agricultural nutrients, industrial products, and specialty products worldwide, as well as involves in the retail supply of agricultural products and services in the Americas. It boasts a a very healthy return on equity of 35.34% to the markets as well as a return on assets of 22.70%, making it a leader in its industry class. See Figure 2.

FIGURE 2: AGU. On July 8, 2010, AGU violently reversed course from its downtrend and exploded upward into a new bullish trend.
Graphic provided by:
On July 8, 2010, AGU sharply broke its downtrend with a large gap in price, reversing its course upward.

Between July 15 and July 28, price contracted sharply within a tight price range as AGU continued to climb its way upward and finally breaking through upward resistance on July 29, 2010. By entering on the close of that day at $62.31, then over the course of the next 13 trading days, you could have made a potential gain of a quick 10 points or 13% return.

The point is that no matter what your level of skill or involvement with trading, you must think outside any particular class of stocks or securities to profit over the long run. Stocks and markets fall in and out of favor, in and out of supply and demand, so as a result, you must look to where the strength and weakness is on a global level and then trade accordingly. By thinking in these terms, you learn to listen to the market and tailor your approach to maximize not only your returns but your success over the long run.

Billy Williams

Billy Williams has been trading the markets for 27 years, specializing in momentum trading with stocks and options.

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