Why charge when you can buy Mastercard in cash and make a 37% gain in two months. My physical stop has been placed with a GTC trailing stop 10% below the 52-week high. Any direct red flags (hard reversals on large volume) will force me sell prior to waiting for the trailing stop.

I first posted my analysis on Mastercard (MA) back on April 2, 2007:
Is Mastercard Priceless
$107.28 – “Bottom Line: MA is rated a buy in my book and I am grabbing shares today.”

I followed up this analysis with an update on May 3, 2007, Mastercard Pays Off, as the stock closed above $126; this still allowed investors a chance for a 16% gain to date.

Mastercard closed today at $147.13

Baidu.com (BIDU) was highlighted twice in one day as I recommended it as an immediate buy after returning from my Hawaii vacation in late April. It has worked well and now has a 31% gain in one month (not bad!).

Baidu.com (BIDU) buy Opportunity
$103.50 – “Short term target for BIDU is $118 area based on point and figure chart and fibonacci retracements.”

BIDU Stock Analysis
$104.34 (chart quote) – “Looking at the charts, I see a golden opportunity for a buy right here near the 200-d moving average with a confirmation above the 50-d moving average (which we got yesterday). “

“I mentioned a short term target of $118 earlier today based on Fibonacci retracement levels and the triple top breakout on the point and figure chart. A full 100% retracement and complete cup formation would take the stock back into the $130’s.”

Baidu.com closed today at $135.69.

Don’t sell for the sake of selling and continue to follow the trend. Place your physical sell stops to guarantee at least a 20-25% gain in both stocks (preferably better). We don’t need to be greedy as the fundamentals still look solid for both companies. Ride the trend and don’t guess the top as some stocks that may seem high are still low to others!

Stock of the Day
Cash America Intl. Inc.
Wednesday’s Intra-day Price: CSH – $43.09

Sector: Financials
Industry: Consumer Finance
Next Earnings: 7/26/07
52-week Price: $28.76 – $47.98

My Take:
To start, I have one issue with this stock and company in general: they make consumer loans so earnings could slide drastically if the economy takes a big hit later in the year. However, a sustained bull rally should benefit the stock allowing it to continue its uptrend, especially since it has a large institutional following. If institutions bail, this stock can fall quickly and will hurt investors along the way. For that reason, I am raising the risk factor for accumulating shares at this point in time.

The company owns and operates pawnshops in the U.S. and provides pawn loans, and short-term cash advances, and check cashing and other specialty financial services to individuals. These services will be needed whether we are in an up or down economic cycle but the company runs the risk of defaulting loans if the economy tanks and unemployment rises; leading to loans that can’t be repaid.

Recent chart action shows support at both the 50-d and 200-d moving averages with volume increasing above average levels. The stock must cross back above $44.50 in order to establish a recent new high above the last peak. If it fails, cut the stock and move on as the rally could be done.

Looking at the weekly chart, the stock must rise above the dotted down-trend line I have placed on the chart. It is very important for the stock to rise above this line in order to continue the long term up-trend. Gauge the volume to understand if institutions are driving the price higher or dropping shares.

Potential Trade Set-up:
Ideal Entry: $41 to $42 (we will use $42)
Risk is set at 1.0% maximum of total portfolio or $1,000 of $100k
Stop Loss is 5% or $39.90
Number of Shares: 475
Position Size is $20,000
Risk is $2.10
Target is $46-$49
Risk-to-Reward at $46 is 2-to-1
Risk-to-Reward at $49 is 3-to-1+

Strong Sister Stocks:
MasterCard Inc. (MA)
CBOT Holdings Inc. (BOT)
Alliance Data Sys Corp. (ADS)
Intercontinentalexchange (ICE)
Total System Services (TSS)

Institutional Analysis:
Held by Institutions: 89.13%
Money Market: 193
Mutual Fund: 293
Other: 13

[Read more…]

Stock of the Day
Home Inns & Hotels Management Inc.
Tuesday’s Opening Price: HMIN – $33.50

Sector: Leisure
Industry: Hotels and Motels
52-week Price: $21.50 – $49.50

My Take:
The stock blasted 7.51% higher yesterday on above average volume as it confirmed the move above the down-trend line and recovered the 50-day moving average for the first time since late February. As you will read below, the earnings released yesterday were positive and revenues increases by 65% (year-over-year).

The young stock has not formed a 200-d m.a. to date so we can only use the data available to make a trading decision. The recovery of the 50-d m.a. is positive and gives us the green light to set-up a trade and take a potential position. Ideally, the position should have been initiated near $34 but I had to wait until earnings were released, especially for a China based stock (the risk levels are increased with companies from this country).

Institutional support is increasing (see figures below) and most fundamental categories look solid. The P/E ratio is extremely high but that doesn’t scare me too much. High growth will cost more but it is an indicator to keep an eye on. I wouldn’t expect a value investor to give this stock a second look based on P/E alone.

Potential Trade Set-up:

• I would risk between 0.005% and 0.01% of your total portfolio
• My ideal entry would be near $34.
• Set a stop loss of 10% (near $30.60).
• Target price will be about $42 or the 61.8% Fibonacci level on the weekly chart. An aggressive target will be a full retracement to close the cup shaped pattern above $46.
• At $42, the risk-to-reward will be just above 2-to-1 (not great)
• At $45+, the risk-to-reward rises above 3-to-1 which is what we want as a minimum.

So, a $100,000 account will give you
Entry: near $34
1% Risk: $1,000
Stop Loss: 10%
Position Size: $10,000
Shares: 290
Stop Loss: $30.60
Target: $42-$45

[Read more…]