Scanning the Greek stock market this morning, I picked three stocks that seem promising for May 2011. As I am holding positions in 4 other stocks, I am looking to invest into one more at most, so I need to buy shares of the stock I predict to have the highest reward/risk ratio. At this time Greek economy is struggling and that is quite obvious by the Greek banks’ stocks performance, the prices of which have recently broken below the 10-year support level going for lower lows! Thus picking Greek Postal Savings Bank’s stock (TT stock) is regarded the most risky of my stock picks, while Metka (METKK stock) and Fourlis (FOYRK stock) allow more confidence in trading their shares.
Why am I picking TT as one of the stocks to buy? Actually that particular bank’s stock hasn’t gone below the monthly support level. What’s more, the monthly graph shows a Fail Bottom in late 2010 and a very distinguished MACD divergence. Other than that, there was a great support level verification yesterday at the hourly graph, which can be used for a tight stop loss. Buying TT shares at 2.88 and risking no more than 20c per share while setting the target profit at 3.10 could prove a profitable strategy, although the stock’s sideways movement inclines us to expect a short uptrend up to 3.80.
Meanwhile, METKK stock’s monthly chart show a retracement back to the 20-month average and given the fact the stock’s downtrend has indeed ended in 2009, I am expecting a swing back to 11. Going long nowadays at 9.30 and setting a stop loss close to 9 means I stand to lose 0.30c per share but also look to profit about 1.70 per share. However keeping an eye on the hourly chart would prove valuable, as the stock price could make a full retracement to 8.00 and I don’t want to be risking €1.5 per share.
My final stock pick, FOYRK stock, shows great potential for a bounce off the support level at the monthly graph, given the Bollinger Bands’ narrowing width in the weekly graph. We could see eventually an uptrend up to €10, but it will take a lot of months to reach that high. For the time being, having a stop loss right at €5 and a profit target at €7.5 must be the most rational strategy, although not trading out all of our shares at that point would allow us to take advantage of a much longer uptrend, in case that happens of course.