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Editor's note:

We are bullish on stocks in general but remain wary about adding new bullish candidates at current levels. The major stock averages remain short-term overbought and due for a correction.

Canon - CAJ - close: 55.24 change: +0.79 stop: 52.85

Company Description:
Canon produces and markets products and solutions for homes, offices and industries worldwide, with a focus on enhancing the quality of life. Our global strategies are implemented through our Three Regional Headquarters system with bases in the U.S., Europe and Asia. In 2003, the Canon Group's consolidated net sales were approximately 3,198 billion (U.S.$29,888 million), of which about 75% was generated outside Japan. (source: company press release)

Why We Like It:
We are bullish on stocks but expect the U.S. markets to correct from overbought status sooner rather than later. That's why CAJ looks like a safer bet for bullish traders. Shares of CAJ should be somewhat insulated from a pull back in the U.S. markets since it is a Japanese stock traded as an ADR here in the states. Looking at CAJ we see that the stock has been stuck in a trading range between $51.00 and $54.40 since it peaked in late December. Friday's 1.4 percent rally is a bullish breakout through the top of its trading range. Friday's move also helped CAJ produce a new triple-top breakout buy signal on its Point & Figure chart, which now points to a $71.00 target. CAJ isn't the fastest climbing stock so we're only going to target an eight-week move into the $58.00-59.00 range. Readers can choose to go long CAJ at current levels or hope for a pull back toward the $54.50 region and buy the dip.

Picked on May 29 at $55.24
Change since picked: + 0.00
Earnings Date 04/27/05 (confirmed)
Average Daily Volume: 157 thousand

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