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Dave & Donald Moenning

Mr. David Moenning is a full-time professional money manager and is the President and Chief Investment Officer for his Chicago-based Registered Investment Advisory firm, Heritage Capital Management (...

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Product Performance

Long Trade Idea Of The Day: Principal Financial Group


The market is open through the end of the week, and while stocks are moving at a snail's pace Thursday afternoon, there are still some decent trading opportunities to take advantage of.

With the "Santa Rally" in full effect, let's take a look at a quick trade in the Financials sector that is likely to be successful in the final four trading days of the year (including today).

Principal Financial Group (NYSE: PFG) has had a stellar year, both in terms of YTD gain and its relentless up-trending tendency.

Though 2012 was mostly a rocky ride, Principal Financial Group started gaining steam to the upside in December of last year, and carried momentum into 2013. Since the beginning of this year, Principal Financial Group has been straight up, with only three modest pull-backs along the way. Currently, Principal Financial Group has just completed pullback # 3 of 3, and has bounced off of its 50-day moving average back above its shorter-term moving averages.

Buying high-fliers on pull-backs for short-term trades is usually a good idea, and that's exactly the opportunity Principal Financial Group offers this afternoon.

The stock recently hit highs just south of $51 on December 2 before pulling back through this month.

In bullish fashion, Principal Financial Group bounced right off of the 50-day moving average early last week, and immediately started gaining again. Principal Financial Group tends to sustain its directional trends for weeks at a time, and the short-term trend is now clearly pointing up.

From current prices ($49.39) to a target of $50.90 is not a huge gain, but it does appear to have a high probability of happening based on what Principal Financial Group's 2013 price action. The potential upside here is 3.05 percent, while the downside with a stop at $48.86 is 1.07 percent, making the reward to risk ratio of this relatively conservative trade about 3 : 1.

Thus, a short-term buy of Principal Financial Group looks like a good move while stocks still have the "Santa Rally" to ride through the last few days of trading this year.

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When to Consider Entering the Trade:

At the current price (~$49.38).

When to Consider Exiting the Trade:
At a close below $48.86 (Breakdown) / An intraday price of $50.90 or above (Profit-Taking)

Disclosure: At the time of publication the editor and affiliated companies own the following positions: None

Note: Positions may be bought or sold while this publication is in circulation without notice.

Principal Financial Group Inc - Last 30 Days 

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Principal Financial Group Inc - Last 3 Months
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Principal Financial Group Inc - Last 6 Months
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Tags: Santa rally

Posted in: Education Long Ideas Trading Ideas General