Intermediate-Term Report
Growth
stock investors got their much-coveted ‘follow-thru’ day in the Nasdaq Composite
earlier this week. Equally — if not more — important is the fact that
breakouts in our favorite stocks have started to trigger consistently, and
continue as of this writing, to hold onto their gains in a healthy market
environment. The Diamonds have gone on to trade slightly above our multi-week
trading range, the Q’s are in testing mode of their highs, while the broadest
index proxy of the three, the Spyders, is still within its daily consolidation
pattern.
The technical action that we’ve
witnessed during the last few sessions has been the strongest case for the bulls
in several weeks. Although the Composite hasn’t broken out yet, the fact that
the index scored a ‘follow-thru’ day as previously mentioned, as well as a day
of accumulation in the very next session speaks very strongly of institutional
investors’ true intentions. Over the past few weeks, there were more than a few
close calls and signs of ominous distribution that could have brought the
indices below the key technical supports that have been outlined in this report
on prior occasions. Their failure to do so, followed up by our most recent action,
has given growth stock investors once more, the opportunity to take advantage
of high-probability setups in quality issues.
We’ve got the Ebert & Roper
‘thumbs up’, but that doesn’t mean trying to ‘hitch a ride with just anybody
that crosses your path.’ Relax, take a look at what’s going on around you,
and then stick to a well-disciplined plan of attack. The proverbial thumbs up or
green light doesn’t, in this growth stock investor’s opinion, mean that every
breakout is now a ‘taker.’ While acknowledging that the environment is conducive
to positioning one’s portfolio out of cash, and into strong issues, it’s equally
important to recognize where we are within our ‘confirmed uptrend.’
With the most recent action from the
past week, price is technically extended, especially if one considers some of
the leading sectors like the Semiconductors
(
SMH |
Quote |
Chart |
News |
PowerRating). Coupled with sentiment
readings such as the VIX, that are barely off of ‘the floor’, and the prudent
man says it might not be such a bad idea to wait for a pullback. It doesn’t
necessarily have to be big in percentage terms. As a matter of fact, a pullback
down to the 13 or 20 EMAs should provide the necessary technical support to a
market that is turning the corner to the upside. While we wait, our selected
stocks should show evidence that they are still ready to lead the way out of
solid patterns that continue to exhibit exceptional weekly price and volume
characteristics.
Our technical levels of support have
moved up within our confirmed uptrend, to reflect the fresh buyside interest.
August 6, which marked pivot lows in all of our ETF friends should now be
considered the definitive ‘line drawn in the sand’ for the bullish case. In our
acknowledged ‘healthy environment’ though, we ultimately anticipate
Institutional support for equities before a test of this magnitude happens. The
anticipation is for a pullback to happen on lighter trade, down to a Fibonacci
retracement from the August pivot lows, and/or significant EMAs. Although we
anticipate, ultimately it’s market action, comprised of price and volume, and
our own tolerance for risk within a disciplined trade methodology, that will be
our guide to know when the risk to initiate the trade is truly acceptable.
The past few sessions were exactly
why we accept the responsibility of ‘keeping the powder dry’ until the proper
signals are in place. Many breakouts of strong growth stock candidates have
triggered during this period, including some off of our own list of potential
swing trade and handle setups that were waiting for the market’s health to
confirm the evidence of strength that was already apparent in these select
individual issues. Continue to ‘take the trade’, but be cognizant of the fact
that roughly 70% of stocks do follow the broader market. With the averages
having ‘climbed the old trading tree’ quite aggressively as of late, don’t be
afraid to be equally prepared and aggressive with a sound money management plan.
Remember, in a healthy market there will be opportunities for those that can
afford to stay prepared for the next trigger, because of their constant
diligence in executing the trade from both sides of the gamut. For us that means
clean entries, and just as important…clean exits when the environment dictates
it, because as the song goes, ‘you have to know when to hold ’em, know when to
fold ’em.’
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) |
65 | 26.29 | 29.10 or 30.04 |
1.5 year Cup and Handle |
| Talk America |
( TALK | Quote | Chart | News | PowerRating) |
89 | 11.90 | 12.55 or 13.53 |
10 week handle consolidation |
| BEA Systems |
( BEAS | Quote | Chart | News | PowerRating) |
81 | 12.75 | 13.88 – 14.08 |
7-Month Saucer pattern |
| Scientific Games |
( SGMS | Quote | Chart | News | PowerRating) |
72 | 9.10 | 10.07 – 10.31 |
17-Month Cup and Handle |
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.
Stocks Building A Base
| Company Name |
Symbol | 12 Month RS |
Price | Technical condition |
Average Volume |
Pivot |
Stocks Forming A Handle
| Company Name |
Symbol | 12 Month RS |
Price | Technical condition |
Average Volume |
Pivot |
| Kronos | ( KRON | Quote | Chart | News | PowerRating) |
77 | 57.92 | 18-month Cup w/ 6-week handle |
150k | 59.60 or 60.50 |
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.
| Company Name |
Symbol | 12 Month RS |
Price | Average Volume-65 Day |
Pivot | 52-Week High |
| Apollo Group |
( APOL | Quote | Chart | News | PowerRating) |
67 | 65.49 | 2,019m | 46.89 | 67.30 |
| Career Education |
( CECO | Quote | Chart | News | PowerRating) |
85 | 87.80 | 855k | 54.40 | 92.75 |
| Coach Inc. |
( COH | Quote | Chart | News | PowerRating) |
80 | 55.83 | 913k | 28.35 | 57 |
| Boston Scientific |
( BSX | Quote | Chart | News | PowerRating) |
84 | 64.55 | 3,861m | 47.65 | 66 |
| International Game Technology |
( IGT | Quote | Chart | News | PowerRating) |
68 | 25.82 | 1,356m | 18.71 | 27.11 |
| UCBH Holdings |
( UCBH | Quote | Chart | News | PowerRating) |
61 | 32.03 | 360k | 22.60 | 32.05 |
| Corinthian Colleges |
( COCO | Quote | Chart | News | PowerRating) |
75 | 58.17 | 775k | 43.09 | 59.43 |
| Nextel | ( NXTL | Quote | Chart | News | PowerRating) |
92 | 18.53 | 20,463m | 15.85 | 20.53 |
| Gtech Holdings |
( GTK | Quote | Chart | News | PowerRating) |
81 | 41 | 649K | 37.05 or 40.80 |
41.90 |
| Digital Insight |
( DGIN | Quote | Chart | News | PowerRating) |
80 | 23.14 | 350K | 22.38 | 23.79 |
| Centex | ( CTX | Quote | Chart | News | PowerRating) |
65 | 77.73 | 1,639M | 59.80 | 87.50 |
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 pullbacks 30% 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 |
| Endo Pharmaceutical |
( ENDP | Quote | Chart | News | PowerRating) |
79 | 16.13 | 1,025m | 14.98 | 19.45 |