After few days of upswing, markets started its downward trend last week and lost nearly 4-5% in first full week of 2009. Despite this, my last week's recommendation HUN held up pretty well and still provides a great buying opportunity.
Now coming to this week's pick:
ETF: OIL
Buying price range: $21 to $ 23
12-month target price range: $ 33 (for 50% gain)
Context:
Oil has come down from $147 to $40 in less than 6 months. While upward movement was not justified, downward movement to $40 is also not justified. Given that world-wide economies are slowing, demand for oil is down and could be down by 5%. However with all stimulus packages rolling out later this year, impact of liquidity taking place and OPEC cuts, I am expecting oil to climb back above $ 60. When that happens, OIL ETF would go over $ 30 and would provide an excellent return. This ETF would have lot of volatility and you could get buying opportunity even below $20. However at current price of $22, downward risk is lower than potential rewards
Have a good weekend
/Shyam
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