Intermediate-Term Report
The reality of
the intermediate-term downtrend became a bit more evident during the market’s
abbreviated work week, as both the S&P500
and Nasdaq Composite finished lower–off between 1.19% to 3.01%.
With a continuing lack of leadership out of quality growth stock names like EASI–it’s
been an easier policy to maintain the mantra of, ‘a good defense is your best
offense’, in a very challenging environment.
With the indices effectively
entrenched in their intermediate-downtrends, and the majority of growth stocks
in disrepair–this cautious bull continues to sit on the sidelines. I would
expect that the Nasdaq and semiconductor sector will find a technical bounce off
some key technical supports that were tested during this past week, but that’s
as far as ‘the bull’ goes at this point in time. The fact of the matter is that
even when the broader indices were consolidating less than two weeks ago–growth
stock leadership was questionable at best. The breakouts that were finally
triggering out of quality bases were still failing to approach gains of 20%–a
benchmark typically associated with a healthy environment for trading growth
stock breakouts. Factor in the ongoing low levels of volatility as the market
continues to move lower, and the odds on bet for intermediate-term growth stock
players is to sit this hand out, and wait until the card count is a bit more
favorable.
It is our own personal risk
tolerance levels within the market waves that ultimately dictate how well we
fare during both the great investing climates, as well as those that will be
considered less-than-perfect ‘sailing conditions. When the breakouts stop
triggering consistently–it’s time to focus your energies on existing positions.
Bottom line–as technicians, we know where we like to make adjustments, either
adding to, or decreasing our portfolio, but it doesn’t mean that the decision is
the same for every trader. While the markets are sailing high, we realize that
between the peaks, troughs do exist, and it’s always in our best interest to
stay prepared for whatever comes our way.
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.
| Company Name |
Symbol | 3- Month RS |
ADX/DMI |
Price | Pivot +.10 |
Technical Perspective |
| Lca-vision | ( LCAV | Quote | Chart | News | PowerRating) |
74 | 18/down | 27.21 | 30.05 | 2-Month cup and handle |
| Kyphon | ( KYPH | Quote | Chart | News | PowerRating) |
57 | Â 16/up | 26.83 | 29.87 | 5-Month cup and handle |
| Engineered Support Services | ( EASI | Quote | Chart | News | PowerRating) |
82 | 25/up | 55.21 | 60.12 | 8-Month cup w/ handle trigger |
| Oshkosh Truck | ( OSK | Quote | Chart | News | PowerRating) |
66 | 12/up | 55.50 | 58.63 | 5.5 Month cup and handle |
| Tractor Supply | ( TSCO | Quote | Chart | News | PowerRating) |
80 | 13/up | 40.49 | 42.28 | 5.5 Month cup and handle |
| Petroleum Development Corp | ( PETD | Quote | Chart | News | PowerRating) |
80 | 9/up | 27.29 | 29.26 | 14% handle consolidation right side of 4-month base |
| American Healthways | ( AMHC | Quote | Chart | News | PowerRating) |
97 | 41/up | 27.03 | 27.60 | 4-Month cup and handle |
IT Watch List Action:
As always, the search goes on for top stocks meeting our fundamental and
technical criteria, but issues may still show ‘flaws.’ The most common ‘flaw’
being ROE, according to strict IBD-style investing . Always do your own
homework before entering a trade .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.
Stocks Forming Handle Or Basing Patterns
| Company Name |
Symbol | 12 Month RS |
Price | Technical condition |
Average Volume in 000’s |
Pivot |
| Central Euro. Distr. | ( CEDC | Quote | Chart | News | PowerRating) |
80 | 24 | 8-Month cup and handle | 179 | 26.70 |
| Cognizant Technology | ( CTSH | Quote | Chart | News | PowerRating) |
78 | 24.81 | 5.5-Month cup and handle | 1,880 | 26.74 |
| Open Solutions | ( OPEN | Quote | Chart | News | PowerRating) |
77 | 23.71 | 4-Month lateral base w/ handle | 204 | 25.75 to 26.07 |
| Deckers | ( DECK | Quote | Chart | News | PowerRating) |
97 | 28.07 | 2-Month cup and handle | 319 | 30.70 |
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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. Due to
additional ‘fresh’ candidates making the grade–stocks on the breakout list will
be dropped after six months or a pullback of greater than 25% from highs.
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| Company Name |
Symbol | 12 Month RS |
Price | Average Volume-50 Day in 000’s |
Pivot | 52-Week High |
| Zebra Technologies | ( ZBRA | Quote | Chart | News | PowerRating) |
87 | 84.43 | 389 | 56.18 | 90.06 |
| Whole Foods Market | ( WFMI | Quote | Chart | News | PowerRating) |
93 | 92.31 | 826 | 56.34 | 96.74 |
| Guitar Center | ( GTRC | Quote | Chart | News | PowerRating) |
85 | 43.19 | 479 | 37 – 37.20 | 47.42 |
| Engineered Support Systems | ( EASI | Quote | Chart | News | PowerRating) |
85 | 55.21 | 381 | 55.07 – 55.59 | 61.93 |
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-50 Day |
Pivot | 52-Week High |
| NA | NA | NA | NA | NA | NA | NA |