At Odds
Just when you thought there was no end
to my analogies, today’s piece is short and to the point.
Another follow-through signal on the
Nasdaq Composite is being challenged by the market — Mr. September is showing
everyone just really who’s boss.
When last week’s tent was folded up,
the Naz was left sitting a hair above the 3940 level — the closing level of the
O’Neil FTD recorded on Aug. 17. However, this particular FTD signal was
triggered 11 days from the August 2 closing low. Signals occurring outside of the
four-to-seven day window are typically less powerful, and the Naz is now owning
up to history.
But even with the FTD from three weeks
ago, there haven’t been any stocks with all of the right characteristics to buy
—
the right earnings and revenue growth, the right RS ranking, the right
liquidity, the right basing pattern, the right pivot point, etc. This has
been the case, for the most part, ever since the Naz broke down from its high in
mid-July.
Yes, there have been a handful of
stocks to check out, as they swung back to old highs in big basing patterns
recently, but, up to this point, a lot of question marks. Even some of the
leading-type stocks, like Juniper Networks
(
JNPR |
Quote |
Chart |
News |
PowerRating) and Applied Micro
Circuits
(
AMCC |
Quote |
Chart |
News |
PowerRating), broke out from sloppy basing patterns, and on sub-par
volume.
The only two market indicators you
really need — studying the market’s price-and-volume action and the action of
the leading stocks — have been at odds with each other over the past few weeks.
The market, in this case the Naz, was acting okay, but its recent FTD has
only been as good as the stocks the trader could identify as properly set up to
buy.
On the second count, the
intermediate-term trader should still be mostly sidelined at this point.
With that said, one stock that is
worth keeping a close eye on, in the event last week’s pullback holds, is Network
Appliance
(
NTAP |
Quote |
Chart |
News |
PowerRating). The company
has shown explosive earnings and revenue growth over the past three quarters of
100%, 133%, 125%, and 100%, 120%, 124%, respectively.
Additionally, the company’s five-year
earnings growth rate is 79%. Moreover, after-tax profit margins in the most
recent quarter came in at 13.9% — the highest in eighteen quarters.