THE Best Trade idea This Week

"Hello Pete Mitchell. I heard the best of the best were going to be back here."

-Charlie, Top Gun

Here is EidoSearch’s best of the best trade idea for the week that even Tom Cruise would be proud of. How did we select it?

We screened through 5,500 US Equities and ADR’s, looking at 1 month trading patterns and doing literally billions of pattern comparisons to see what stocks have the strongest return probabilities in the next 5 days. We required the following with our search criteria:

· High similarity for historical matches in a peer group
· Statistically significant number of matches
· Consistent reaction by the market to the stocks pattern historically, across environments (% positive)
· High average return of pattern matches in the next 5 days
· Large upside/downside skew (risk/reward)

Once we narrowed the field down with the above criteria, we then required the results to be strong regardless of the peer group we looked at for historical pattern matching. So, we ran each match against their sector, industry, market cap and the stocks own history to narrow down to the projection with the strongest statistics in the next 5 days regardless of peer group.

…and the winner is? Potash Corp of Saskatchewan (POT), a $30B market cap. Here are the projections looking at the following peer groups for matches: 1) Basic Materials 2) Agricultural Inputs (Large Cap Only) 3) Potash’s history only

Using Basic Materials as the peer group: Stocks are up 66.3% of the time (98 matches)

Using Agricultural Inputs and Large Caps only as the peer group: Stocks are up 68.4% of the time (98 matches)

Using Potash’s stock history only to find similar instances of the current pattern: Potash is up 70.7% of the time (99 matches)

The statistics, regardless of peer group used, are very consistent with an average return between 2.8% and 3.0% and a positive skew ranging up to around 8%.

If you’re interested in some fundamental back-up, Potash was also profiled in an article in Barron’s over the weekend, “Potash Shares Could Rally on Firmer Fertilizer Prices”.

Have a great week!