Although shares are trading above the 50-day and 200-day simple moving averages, I would not buy shares in the company right now. My strategy would be use a channel-trading method to find the best timing for an entry. A break above $620 per share or a pullback to the 50-day simple-moving average of around $580 would both trigger my entry. Patience may pay with this one.
This international bank's stock has fallen by 20.24% during the past six months. The global economic slowdown, and in particular Brazil's slump, has weighed on this bank.
However, the falling value of the Brazilian real has contributed to the stock price slide as the price is denominated in greenbacks. The Brazilian government has recently lowered interest rates from 12.5% to 8.5%, a move that will help industry and exporters even while it does nothing to remove the pressure from the real.
There are clear signals that we've reached the bottom for the global economy. I think investors have become oversaturated with bad news, taking everything but extreme events in stride. On the other hand, any smidgeon of good news is embraced and aggressively bought.
This environment makes it a good time to buy this stock. The price has bounced off its lows, creating a solid buying opportunity in the $7-per-share area. The stock is also 38% off its 52-week high, but 4% above its 52-week low with solid upside potential. My stops would be at $6.50.
Risks to Consider:
It's important to keep in mind that just because Goldman Sachs has a stake does not mean your trade will be profitable. Be certain to position size properly and always use stops based on your risk tolerance and account size. Things can change very quickly in the economy and stock market, so never get overly committed to any one position.
Action to Take:
I like both these companies and, with the proper entry, they are both solid buys. Staying flat in the Apple channel as described makes sense right now. Buying Banco Santander Brasil around $7 per share is a solid strategy with stops at $6.50.
Dave Goodboy does not personally hold positions in any securities mentioned in this article.
StreetAuthority LLC does not hold positions in any securities mentioned in this article.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
This contributor reads:
On Twitter, this contributor follows: