Monday’s Intermediate-Term Report
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Since we
last left off the ‘mooovement’ to higher ground has been confirmed by all three
of our ETF friends. The past week’s action has the index proxies
scoring fresh 52-Week Highs and showing strong Institutional support. This fact
is confirmed by the number and quality of breakouts that we’ve witnessed, as
well as the volume statistics, which show a definitive taste for equities. As
the index proxies have moved further along in our ‘confirmed uptrend’ the ‘more
or less’ lateral consolidations have taken the shape of a more bullish, angularÂ
uptrend, or channel…call it ‘channelingstocks.com’ if you want, but one things
for certain; we like what what were seeing, and it’s certainly something that I
personally don’t mind ‘subscribing to.’
With the market indices enjoying
over four weeks of ‘upside’, off of our early August pivot lows, the technical
picture continues to look solid. Besides the fore mentioned fresh highs in the
broader market, breakouts from solid weekly consolidation patterns in our
favorite growth stocks continue to trigger and demonstrate leadership.
Accumulation and distribution statistics within the indices during the past
three weeks also clearly show the support that this ‘bull’ needs in order to
continue its winning ways. The S&P 500, which up to a week ago was lagging on a
price basis has the strongest figures during this period as the count rests at
six days of accumulation and absolutely ‘nada’, ,for da’ bears. The Dow Jones is
in second place at with a six to one count, while our leading market proxy, the
Nasdaq Composite is also demonstrating some gumption with its six to two count
in favor of Institutions still putting money in to our ‘confirmed rally.’ It
must be noted too, that the two sessions of Institutional distribution have both
occurred at relative highs within the ‘four-plus’ week rally. In my opinion,
this looks more akin to some profit-taking at decent levels, rather than
‘institutions not buying it’ at this juncture.
The last three sessions of the week,
while marking higher ground for the market proxies and their ETF brethren has
really been more of a consolidation thus far. As we all know, the markets,
especially healthy ones must take a breather if we are to expect them to
ultimately proceed higher. The digestion of recent gains is anticipated and
fully welcomed as long as the price and volume action is constructive, and not
destructive. With only the Nasdaq showing more than one day thus far of any
‘concerning evidence’, we’ll continue to monitor for signs of something other
than enthusiastic participation in our ‘confirmed rally.’ So far, so good in my
humble opinion.
The technical evidence remains
compelling (if in reading my report you hadn’t figured it out by now). But, the
three days of consolidation work that our index friends put in late last week
might be prone to some further profit-taking that looks more like an actual
pullback. With Fibonacci ‘clusters’ of overhead resistance right above our most
recent highs, channel resistance in our upward trending market proxies, and
probably a few less ‘shorts’ to push the market higher, the higher probability
bet comes in the form of a small percentage pullback towards some key technical
levels. Fibonacci retracements from the August pivot lows, prior price
congestion acting as support, as well as some key exponential moving averages (EMAs)
give us something to work with, and look forward to within the ebbs and flows of
our ‘confirmed rally.’ For the ETFs (since Chris ‘Forrest Gump’ Tyler likes the
small numbers), the preliminary support zones that I’ve mapped out as potential
support levels within the current ‘healthy market environment’ are: The Q’s
(
QQQ |
Quote |
Chart |
News |
PowerRating):
32.60 – 32.80 confirmed by the 20-Day EMA, a 38% Fibonacci retracement off
the August pivot lows (FRA), prior highs, and approximately a 5% pullback from
highs. 31.60 – 32.10 comprises the 50-Day EMA, both the 50 and 62% FRA,
prior price supports, and an approximate 7% pullback off of highs. For the
S&P 500 ETF
(
SPY |
Quote |
Chart |
News |
PowerRating): 100.75 – 101.10 shows the 20-Day EMA, a 38% FRA, and
a 2% pullback from highs. 99.50 – 100.10 encompasses the 50-Day EMA, the
50% FRA, and a 3% pullback from highs. And lastly, for the glittering Dow
Jones
(
DIA |
Quote |
Chart |
News |
PowerRating): 93.80 – 94.25 is confirmed by the 20-Day EMA, the 38% FRA,
and a 2.5% pullback from highs. 92.40 – 93.15 has the technical support
of the 50-Day EMA, both the 50 and 62% FRA levels, prior price supports, and an
approximate 4% to 5% pullback from highs. These initial levels of technical
support are how most technicians define a healthy market environment. The
characteristics include indices that pullback no more than 10% from their
respective highs and show less than four to five sessions of distribution,
within a ‘confirmed rally.’ Looking forward, at least in the very short term, we
may be looking ‘down’, but definitely not out, as we continue to look, and
execute trades on leading growth stocks breaking out in the current healthy
market environment.
Now that we’ve entered ‘the Fall’
and the markets have continued to rise, it should come as no surprise that our
lists show a few fresh faces. We’ve also had many fresh highs with our ongoing
list of growth stock breakouts, as well as stocks that have triggered off of the
swing list of potential candidates. Nobody promised you a rose garden, but
within a healthy environment we’ll continue to take the strong, quality
triggers. Some will show promise with budding price spikes, but ultimately don’t
bloom into that special something. That’s perfectly o.k. though. As long as we
know that the investing ground is fertile, we’ll be there to trim and prune
(exercising our risk management), so that those that remain will continue to
produce that ‘some kind of wonderful’ that makes it all worthwhile in the end.
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, at time of entry, short term in nature.
None Today.
| Company Name |
Symbol | 12 Month RS |
Price | Pivot +.10 |
Technical Perspective |
| Integra Lifesciences |
( IART | Quote | Chart | News | PowerRating) |
64 | 27.90 | 29.10 or 30.04 |
1.5 year Cup and Handle |
| Scientific Games |
( SGMS | Quote | Chart | News | PowerRating) |
75 | 10.10 | 10.31 |
17-Month Cup and Handle |
| Emulex | ( ELX | Quote | Chart | News | PowerRating) |
58 | 24.98 | 26.74 | 9-month lateral trading range |
| Adobe | ( ADBE | Quote | Chart | News | PowerRating) |
72 | 37.91 | Â 40.10 | 1.5 Month cup and handle |
| E*trade | ( ET | Quote | Chart | News | PowerRating) |
88 | 9.63 | 10.74 | 20-Month Cup w/ weekly handle trigger |
| Fidelity National Solutions | ( FNIS | Quote | Chart | News | PowerRating) |
40 | 24.35 | 25.19 | 7-Week High level base approx 10% from 52-week highs |
| Netscreen | ( NSCN | Quote | Chart | News | PowerRating) |
74 | 25.41 | 26.10 or 27.39 | 9-Week Cup & Handle (handle and cup triggers) off daily |
| Entegris | ( ENTG | Quote | Chart | News | PowerRating) |
74 | 14.88 | 15.69 | 13-Week ‘shake-n-bake’ High-level base |
| M I Schottenstein | ( MHO | Quote | Chart | News | PowerRating) |
68 | 43.51 | 46.50 | 12-Week High-Level base |
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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 |
| Apollo | ( APOL | Quote | Chart | News | PowerRating) |
55 | 62.37 | 2.5 Month high level base |
2,000m | 67.38 |
| Nextel | ( NXTL | Quote | Chart | News | PowerRating) |
86 | 19.20 | 8-Week High Level base ala Daily Cup & Handle | 20,463m | 19.95 or 20.63 |
| Sharper Image | ( SHRP | Quote | Chart | News | PowerRating) |
68 | 27.87 | 8-Week High Level base ala Daily Cup & Handle | 265k | 31.25 |
                      Â
Stocks Forming A Handle
| Company Name |
Symbol | 12 Month RS |
Price | Technical condition |
Average Volume |
Pivot |
| Kronos | ( KRON | Quote | Chart | News | PowerRating) |
83 | 58.72 | 18-month Cup w/ 8-week handle, second attempt |
150k | 60.60 |
| Fresh DelMonte |
( FDP | Quote | Chart | News | PowerRating) |
35 | 27 | 10-Month Cup and Handle |
407k | 29.10 or 29.80 |
| Constellation Brands | ( STZ | Quote | Chart | News | PowerRating) |
40 | 29.80 | Weekly one year Cup and Handle | 935k | 31.90 to 32.10 |
| *Axcan Pharmaceutical | ( AXCA | Quote | Chart | News | PowerRating) |
50 | 14 | 16-Month Cup and Handle(14week) | 109k | 14.86 to 15.92 |
       *Axcan Pharmaceutical
ROE at 8% is lower than typical 15% to 17% threshold that many IT investors
accept as minimum threshold
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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
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| Company Name |
Symbol | 12 Month RS |
Price | Average Volume-65 Day |
Pivot | 52-Week High |
| Apollo Group |
( APOL | Quote | Chart | News | PowerRating) |
55 | 62.37 | 2,000m | 46.89 | 67.30 |
| Career Education |
( CECO | Quote | Chart | News | PowerRating) |
80 | 43.99 | 1,750m | 27.20 | 46.98 |
| Coach Inc. |
( COH | Quote | Chart | News | PowerRating) |
74 | 57.40 | 773k | 28.35 | 59.39 |
| Boston Scientific |
( BSX | Quote | Chart | News | PowerRating) |
74 | 58.97 | 3,861m | 47.65 | 67.18 |
| International Game Technology |
( IGT | Quote | Chart | News | PowerRating) |
67 | 26.98 | 2,785m | 18.71 | 27.50 |
| UCBH Holdings |
( UCBH | Quote | Chart | News | PowerRating) |
69 | 32.79 | 330k | 22.60 | 33.55 |
| Corinthian Colleges |
( COCO | Quote | Chart | News | PowerRating) |
63 | 55.45 | 775k | 43.09 | 59.43 |
| Nextel | ( NXTL | Quote | Chart | News | PowerRating) |
86 | 19.20 | 20,463m | 15.85 | 20.53 |
| Gtech Holdings |
( GTK | Quote | Chart | News | PowerRating) |
80 | 42.77 | 649K | 37.05 or 40.80 |
43.26 |
| Digital Insight |
( DGIN | Quote | Chart | News | PowerRating) |
77 | 23.56 | 520k | 22.38 | 24.55 |
| Centex | ( CTX | Quote | Chart | News | PowerRating) |
53 | 76 | 1,639M | 59.80 | 87.50 |
| Endo Pharmaceuticals |
( ENDP | Quote | Chart | News | PowerRating) |
69 | 17.24 | 1,025M | 14.98 | 19.45 |
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. If an issue pull backs 36% or more from highs, the stock
will be removed from our lT lists, so we can make room for more compelling trade
candidates.
| Company Name |
Symbol | 12 Month RS |
Price | Average Volume-65 Day |
Pivot | 52-Week High |
| Â | Â | Â | Â | Â | Â | Â |
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