Daily PACS Dec. 12, 2011

Author’s additional notes:

I said last week that the market was waiting for the result of the EU meeting and that if no positive result comes out then we may see further drop this week. I outlined four things that investors are waiting to hear. Although the meeting didn’t result into a picture perfect scenario, there were some positive developments that occurred. These were viewed by Wall Street and European market as a step into the right direction and that is why we saw gains from international market last Friday. Here are some significant key points that were agreed upon by 17 countries excluding British.

1)      Treaty changes such as a cap on budget deficit.

2)      An early introduction of European Stability Mechanism (fund for bailout), a year earlier than what originally planned. Although short from $1 trillion dollars which investors anticipated, it will still have a $667 billion fire power. Not a lot but relatively still big. However, it is still not clear how will they raise that amount of money. Remember, the problem right now is basically centered on sovereign debt. Probably they will ask help from China and the Middle East countries.

3)      EU leaders dropped the demand for private investors to take share in the bailout. This was the most important factor that lifted the market. It took the load off from banks and private creditors which freed up some more capitals in the market. In a way, the burden was shouldered by  EU government members  and essentially the tax payers.

In the US, consumer confidence also came out good. Everything went well and that is why DOW was up by 187 points.

Personally, I don’t think the move will solve European problem but doing something is better than doing nothing at all.

This week, we still have to worry about another crucial event which can affect the market greatly. I already mentioned this in my previous newsletter and this is the threat of S&P report to downgrade EUROPE and EFSF. My view is that S&P will delay the report until March of next year. I think they will want to see how things will progress further down the road before they release their ratings report.

As such, I came up with a list of stock to watch for this week. The following are stocks which are trending up and have shown good strength during last Friday’s trading. Here they are:

CASINO PLAY (possible good bets for next year)

LR – Trending upward. Watch if 9.75-9.80 will continue to hold and if 10.70-10.80 resistance will be broken and hold above it. If it does, stock will be seen to retest  12.23 all time high resistance and possibly break above it.

BEL – The stock can be bought near 4.60 level if it will pullback. The worst case scenario will be at 4.40.

AGI – Watch 10.73-10.78 support level. If it holds then stock may test 11.40 or 11.70 resistance. Good upward momentum will be seen if 11.70 resistance gets taken out.

AAI – Watch closely especially between 24 to 17.50 levels. Risk is a bit low. Refer to PACS

MINING PLAY

LC – Strength seen above 1.72. Strong resistance 1.81 is seen to break if stock can close above 1.77. Resistance will be seen at 1.87 followed by price level near 2.02.

LCB – Watch LC.

PXP – If 7.36 holds, expect the stock to trend upward towards initial resistance seen between 8.30-8.45 followed by 8.8-8.90.

PGOLD – The stock is great buy at near 15.60 but that will only be possible if stock breaks below 16.17 otherwise the momentum will continue to head north. A break above 17.10 will open doors for a possible target of 20 where resistance is found.

EDC – Possibly slow ascent towards 6.50 level target is seen. Good support seen near 6.11 while strongest is pegged at 6.0 level.

ICT – Refer to PACS

DMC – Stock has a good support near 38.80 level followed by 38.  If stock can break above 41 then the next target resistance will be seen at 43.50.

SCC- Sentiment driven play along with DMC. Watch if 211 will hold or 220 level will break.

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*Please note that PACS’ price  alert level will always supersede any opinion coming from the author.

*Try not to chase stock and always try to buy or sell near PACS given level.