Intermediate-Term Report
After a shortened
holiday week
not much has changed for the market, or for this cautious bull.
With a mixed fractional performance that resulted in a
slight loss of .41% to a gain of .16% for the Nasdaq Composite and S&P500
respectively–capped off by a rather lackluster finish in Friday’s trade, this
cautious bull remains vigilent within the market’s intermediate downtrend.
The last four days of trade amount
to what many technicians would classify as a classic consolidation week after
last Tuesday’s FTD in both of our major market averages. That is typically a
good thing, but considering Friday’s rather tepid attempt to break above its
recent range after a plethora of positive releases–and this cautious bull has
one more reason to heed the proverbial yellow flag of caution. If we also
consider the fact that most of our quality, leading growth stocks have failed to
move materially higher past their pivots during the past two weeks, and that the
vast majority are still in need of more constructive base work, then we have
more than enough compelling evidence to maintain a defensive posture.
As stated last week and still very
much relevant to the market today, ‘While the Follow-Thru-Day does lend itself
to potential trading in our leading stocks–within the context of the market’s
intermediate downtrend it is akin to winning an individual battle in the context
of an ongoing war. At this juncture, coming off a market top and establishing an
intermediate downtrend takes precedence over a FTD, as far as
trading breakouts are concerned in this analyst’s opinion. In strategy terms
this means that during our current market phase I look at each candidate even
closer for possible flaws before establishing positions. For those stocks that
do look worthy of an initial entry, the philosophy of trading ‘light and tight’
and taking quick, partial profits on a piece of any profitable trades is still
viewed as the most realistic way to trade breakouts for the time being.’
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 |
| Teva Pharmaceutical | ( TEVA | Quote | Chart | News | PowerRating) |
59 | 10/up | 65.08 | 67.30 – 67.46 | 3.5-Month lateral base |
| St.Judes Medical | ( STJ | Quote | Chart | News | PowerRating) |
76 | 11/up | 76.94 | 79.13 | 3-month double top lateral base |
| Axcan Pharma | ( AXCA | Quote | Chart | News | PowerRating) |
79 | 29/up | 19.85 | 20.90 | 3.5-month base |
| Respironics | ( RESP | Quote | Chart | News | PowerRating) |
71 | 10/up | 55.13 | 56.48 | 4-month lateral base |
| Broadcom | ( BRCM | Quote | Chart | News | PowerRating) |
69 | 16/up | 41.64 | 42.98 | 4-month lateral base w/ handle |
| Avid Technology | ( AVID | Quote | Chart | News | PowerRating) |
91 | 20/up | 52.31 | 55.10 | 4-month YTD cup w/ handle |
| Arthocare | ( ARTC | Quote | Chart | News | PowerRating) |
81 | 25/up | 24.85 | 25.30 | 3-month ‘W’ pattern w/ handle |
| Dick’s Sporting Goods | ( DKS | Quote | Chart | News | PowerRating) |
63 | 16/up | 28.92 | 29.35 | 2-Month cup w/handle |
| Marvell Technology | ( MRVL | Quote | Chart | News | PowerRating) |
84 | 18/up | 46.44 | 47.67 | 2-Month cup w/handle |
| Valueclick | ( VCLK | Quote | Chart | News | PowerRating) |
78 | 13/up | 11.24 | 12.85 | 4-Month base on base |
| Integra Lifesciences | ( IART | Quote | Chart | News | PowerRating) |
78 | 12/up | 32.83 | 33.96 | 5-Month YTD ascending triangle |
| Countrywide Financial | ( CFC | Quote | Chart | News | PowerRating) |
79 | 13/up | 63.60 | 64.77 – 64.97 | 3-Month cup and handle |
| Biosite | ( BSTE | Quote | Chart | News | PowerRating) |
92 | 18/up | 39.55 | 43 | 2-month lateral base, YTD highs |
| Pulte Homes | ( PHM | Quote | Chart | News | PowerRating) |
66 | 16/up | 51.60 | 53.64 | 3-Month cup and handle |
| Wilshire State Bank | ( WSBK | Quote | Chart | News | PowerRating) |
64 | 12/up | 26.76 | 28.85 or 29.70 | 3-month cup and handle |
^next^
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 Building A Base
| Company Name |
Symbol | 12 Month RS |
Price | Technical condition |
Average Volume in 000’s |
Pivot |
| Engineered Support Systems | ( EASI | Quote | Chart | News | PowerRating) |
78 | 51.99 | 3-Month high level lateral base w/ handle or 10% pivot entry |
307 | 55.07 or 55.59 |
Stocks Forming A Handle Or Pivot Base
| Company Name |
Symbol | 12 Month RS |
Price | Technical condition |
Average Volume in 000’s |
Pivot |
| Icos Vision | ( IVIS | Quote | Chart | News | PowerRating) |
97 | 28.21 | 3-Month lateral base w/right side of base 10% pivot trigger |
18 | 33.10 |
| Cognos | ( COGN | Quote | Chart | News | PowerRating) |
55 | 33.28 | 6.5-Month cup and handle pattern | 1,040 | 35.39 |
| Omnicare | ( OCR | Quote | Chart | News | PowerRating) |
67 | 42.90 | 3.5-Month cup w/10% handle | 791 | 44.10 |
| Mine Safety | ( MSA | Quote | Chart | News | PowerRating) |
91 | 29.74 | 2-Month cup and handle | 94 | 31.80 |
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Recent Breakouts From “Base & Handle”
Lists
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) |
84 | 78.05 | 308 | 56.18 | 82.90 |
| St. Jude Medical | ( STJ | Quote | Chart | News | PowerRating) |
75 | 76.90 | 1,332 | 58.89 | 79.03 |
| NII Holdings | ( NIHD | Quote | Chart | News | PowerRating) |
94 | 35.50 | 837 | 26.90 | 41.95 |
| Whole Foods Market | ( WFMI | Quote | Chart | News | PowerRating) |
87 | 84.46 | 746 | 56.34 | 87.09 |
| Guitar Center | ( GTRC | Quote | Chart | News | PowerRating) |
85 | 42.38 | 396 | 37 – 37.20 | 43.85 |
| Digital River | ( DRIV | Quote | Chart | News | PowerRating) |
90 | 31.52 | 882 | 30.65 | 34.30 |
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 |