This Week’s Intermediate-Term Report
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How do you spell
relief in a ‘confirmed rally?’ C-O-N-S-O-L-I-D-A-T-I-O-N. With
the averages slightly lower this week the ETFs are essentially unchanged for the
past three weeks. It was literally a zig and then a zag kind of week, as there
was absolutely no follow thru from one day to the next. The only consistency as
measured by the S&P 500 ETF, The Spyder
(
SPY |
Quote |
Chart |
News |
PowerRating) was the up and down
gyrations that held the indices hostage in front of Greenspan’s two day policy
meeting. Net-net the broader market as measured by this index proxy was down
approximately two percent on the week, on much lighter volume. Could we ask for
anything more?
Resident macroeconomic guru Mark
Boucher is seeing some potential topping action based on the new fundamental
picture that has been woven into the global markets. He also makes a case
for his proverbial line in the sand as to what price level things might start to
get messy when viewing the
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) chart. I’ll chime in by saying
that I respect the heck out of the guy’s opinion, so I do take heed in his
words, but bottom line, price and volume are my two champions of the market. The
‘confirmed rally’ is still intact, and so far on this pullback from highs,
volume has decreased markedly, from the accumulation levels that we witnessed
not too long ago, and price levels in both our growth stocks, and the individual
indices are still spelling relief in a very nice manner.
Speaking of price and volume,
looking at Mark
Boucher’s Top
RS and ER List, in the past week while the market has consolidated slightly
lower, this list has increased dramatically over what is once again a ‘non existent’ Bottom
RS and ER list. Many of our top performing sectors also continued to show
strength versus the broader market. While only the Internet sector
(
HHH |
Quote |
Chart |
News |
PowerRating) managed
a percentage gain for the week, the Hombuilders
(
$HGX.X |
Quote |
Chart |
News |
PowerRating), Biotechnology
(
BBH |
Quote |
Chart |
News |
PowerRating), and the Broker/Dealers
(
$XBD.X |
Quote |
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News |
PowerRating)
all put in better performances than the broader ETFs, as well as several of our
individual growth stock names putting in fresh 52-Week Highs.
I’ll say it again because I think
it’s important that the words resonate in your trading.I also know that I’m
personally at my best when I turn off the TV, and tune into the market instead.
So here we go again, ‘Relax already, the charts are still recommending the market, don’t worry about
what your broker is or isn’t recommending. Pullbacks are a natural course
for the markets to take, when digesting gains. When the situation changes to
something that requires more than a swig from the Peptol bottle, you’ll be the
first to know. How do I know that? Well, if you’re diligent enough to be doing
your homework (and this ain’t the worst place to start), you’ll be perfectly
aware of the ‘patient’s condition’, well ahead of the other prognosticators.
You’ll see the health of the market deteriorate beyond the occasional sick day,
into something more serious.’
Taking partial profits is a sign of
a job well done, but it doesn’t mean that we’re off duty in our search for
strong stocks that meet our specific trade criteria when the market environment
is confirming an established uptrend. By continually doing our work, we’ll be
there ready to trade as the next quality growth stock is ready to breakout. We’ve
had another week of consolidation, during which time the majority of our stocks
have made either fresh highs, or have consolidated in an orderly manner. A
couple of amendments and notes to speak of this week. Gtech Holdings
(
GTK |
Quote |
Chart |
News |
PowerRating)
fell 3% thru our pivot before reversing to close virtually unchanged. The stock
will remain on the ‘caution’ watchlist, although depending on the rules that you
employ in your trading, this one might have been taken off during this setback.
Also being put on this list is Garmin
(
GRMN |
Quote |
Chart |
News |
PowerRating) as the stock has dropped over
25% from it’s highs, and has convincingly broken the 50-Day EMA Institutional
support level. On the brighter side of the things, Kronos
(
KRON |
Quote |
Chart |
News |
PowerRating),
from the swing watchlist is very close to triggering. Extra diligence might be
in order for those who like the prospects, and Digital River
(
DRIV |
Quote |
Chart |
News |
PowerRating),
from the handle list, is also in a similar situation close to its pivot.
Another week goes by in the land of
consolidation, and our list of potential swing trade candidates grows as well. This week includes
a couple of new names for potential triggers.
Â
| NYSE | NASDAQ | |
| Advancing Issues |
1339 | 1398 |
| Declining Issues |
1494 | 1648 |
| Total Volume |
1.23B | 1.53B |
| New 52-week Highs |
64 | 120 |
| New 52-week Lows |
11 | 9 |
Â
New Category:
Swing Trade Setups: Potential
position plays that are expected to last 2 to 7 trading days, using key
technical levels for entry. These stocks do not necessarily meet all of our
stringent Intermediate Term requirements, but are demonstrating many of the same
strong criteria. Due diligence on the individual traders part is an absolute
requirement!!! Proper money management rules are emphasized in scaling out of
profitable positions, as is, the setting of prudent stop losses, on the
establishment of any positions taken. The list is not maintained on a weekly
basis as trades are considered short term in nature.Â
None Today.
| Company Name |
Symbol | 12 Month RS |
Price | Pivot +.10 |
Technical Perspective |
| Emulex | ( ELX | Quote | Chart | News | PowerRating) |
65 | 23.08 | 26.74 | 7-Month basing pattern |
| BEA Systems |
( BEAS | Quote | Chart | News | PowerRating) |
72 | 11.07 | 12.42 | 4.5-Month basing pattern |
| Kronos | ( KRON | Quote | Chart | News | PowerRating) |
80 | 49.14 | 50.02 | Weekly handle forming |
| Pixar | ( PIXR | Quote | Chart | News | PowerRating) |
55 | 58.42 | 62.23 | Six month C&H pattern with 4 week handle |
| Mercury Interactive |
( MERQ | Quote | Chart | News | PowerRating) |
79 | 39.09 | 40.52 | Consolidation pullback to 38% Fib and the 50-Day EMA, with approx. 2pts of initial risk based on pattern breakdown |
| Avid Technology |
( AVID | Quote | Chart | News | PowerRating) |
94 | 36.82 | 38.25 | One month High level ascending triangle with money stop inside pattern |
Â
Watch List Action:
As always, the search goes on for top stocks meeting our fundamental and
technical criteria. Stocks forming bases or handles are monitored, and put on
our watchlist, and then moved to our position list of recent breakouts, on price
triggers above resistance pivots.
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Stocks Building A Base
| Company Name |
Symbol | 12 Month RS |
Price | Technical condition |
Average Volume |
Pivot |
| Â | Â | Â | Â | Â | Â |
                      Â
Stocks Forming A Handle
| Company Name |
Symbol | 12 Month RS |
Price | Technical condition |
Average Volume |
Pivot |
| Digital River |
( DRIV | Quote | Chart | News | PowerRating) |
89 | 19.28 | 8-week handle |
1,300m | 20.20 |
      Â
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Recent Breakouts
We monitor the action of Recent Breakouts as an
indicator of the market health for IT traders. When breakouts are acting well,
this is a good sign for the likelihood of further sustainable breakouts. When
breakouts are failing, IT traders should be even more cautious.Â
   Â
| Company Name |
Symbol | 12 Month RS |
Price | Average Volume-65 Day |
Pivot | 52-Week High |
| Apollo Group |
( APOL | Quote | Chart | News | PowerRating) |
70 | 61.74 | 2,085M | 46.89 | 64.19 |
| Career Education |
( CECO | Quote | Chart | News | PowerRating) |
76 | 67.73 | 774K | 54.40 | 69.35 |
| Centex Corp. |
( CTX | Quote | Chart | News | PowerRating) |
77 | 79.17 | 1,425M | 59.80 | 87.50 |
| Coach Inc. |
( COH | Quote | Chart | News | PowerRating) |
79 | 49.94 | 1,015M | 28.35 | 53.53 |
| Hovnanian | ( HOV | Quote | Chart | News | PowerRating) |
88 | 61.69 | 937k | 40.90 | 70.50 |
| Boston Scientific |
( BSX | Quote | Chart | News | PowerRating) |
85 | 62.46 | 3,529M | 47.65 | 65.73 |
| International Game Technology |
( IGT | Quote | Chart | News | PowerRating) |
77 | 101.53 | 1,174M | 74.84 | 101.56 |
| New Century Financial |
( NCEN | Quote | Chart | News | PowerRating) |
76 | 43.76 | 726K | 34.90 | 50.84 |
| UCBH Holdings |
( UCBH | Quote | Chart | News | PowerRating) |
75 | 29.10 | 356K | 22.60 | 29.94 |
| Corinthian Colleges |
( COCO | Quote | Chart | News | PowerRating) |
65 | 47.01 | 831K | 43.09 | 50.58 |
| Endo
Pharmaceutical |
( ENDP | Quote | Chart | News | PowerRating) |
88 | 17.37 | 645K | 14.98 | 19.45 |
| Nextel | ( NXTL | Quote | Chart | News | PowerRating) |
95 | 18.49 | 23,929M | 15.85 | 19.09 |
Breakouts that may
require extra diligence. Those issues that are near pivot entries or 15%
or more, from established highs.
This list accounts for those issues that have performed strongly, but may
require position management due to deteriorating technical condition before
pivot price is reached.
| Company Name |
Symbol | 12 Month RS |
Price | Average Volume-65 Day |
Pivot | 52-Week High |
| Â Gtech Holdings |
( GTK | Quote | Chart | News | PowerRating) |
67 | 37.47 | 640K | 37.05 | 40.70 |
| Garmin Ltd. |
( GRMN | Quote | Chart | News | PowerRating) |
75 | 38.65 | 816K | 23.46 | 51.70 |
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