Intermediate-Term Traders Report
It was another
abbreviated work week as Friday’s memorial service to ex-President Reagan has
Wall Street paying tribute.
The market paid its own kind of tribute, with
Thursday’s flat line, light volume performance that kept the market upright for
a third week in a row, within the intermediate downtrend. For the four day
period, the Nasdaq Composite and S&P500
were up between 1.07% to 1.24%respectively–worthy of a salute, but its own
longevity is seriously questioned by this still vigilant, cautious bull.
After last Friday’s poor technical
finish, I personally thought that a pullback to test technical supports was in
order for our broader averages. As it turns out we didn’t see it, and prices
actually moved higher into key resistance within the intermediate downtrend.
What I also didn’t see for growth stock traders, was the need to take any
questionable triggers out of leading growth stocks. The song remains the same,
as those which have triggered, have failed on average to put in consistent
performances reflective of a healthy market environment. From my own lists
posted in this column, the majority of stocks that have been triggering are from
the swing list. In general, these are quality stocks based on fundamentals and
technicals, but they are typically flawed in one or two areas, leaving them out
of the hands of most IBD players. The one stock that did trigger and would
qualify as making the grade was Mine Safety (MSA). In one humble bull’s opinion
however, this was a very questionable trigger to take based on the intraday
volume levels at the pivot, as well as the nearly 8% run that it needed to elect
that price point. For every questionable MSA that has worked in this
environment, and of which there have been few of–there are far more eResearch’
(ERES) and Digital River’ (DRIV)–which had better developed bases at their
pivots, and have still failed to really impress this cautious bull. As such,
words of caution are still the gospel around these parts. To rehash from last
week, ‘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 | 9/up | 66.23 | 67.30 – 67.46 | 3.5-Month lateral base |
| St.Judes Medical | ( STJ | Quote | Chart | News | PowerRating) |
57 | 9/up | 76.51 | 79 – 79.13 | 3-Month double top base w/handle |
| Axcan Pharma | ( AXCA | Quote | Chart | News | PowerRating) |
75 | 27/up | 19.48 | 20.10 | 3.5-month cup and handle |
| Avid Technology | ( AVID | Quote | Chart | News | PowerRating) |
87 | 20/up | 51.74 | 53.60 | 4-month YTD cup w/ handle pivot entry |
| Valueclick | ( VCLK | Quote | Chart | News | PowerRating) |
83 | 12/up | 10.94 | 11.74 and 12.85 | 4-Month base on base w/ pivots |
| Integra Lifesciences | ( IART | Quote | Chart | News | PowerRating) |
66 | 12/up | 32.71 | 33.65 | 4-month ‘W’ w/ handle |
| Biosite | ( BSTE | Quote | Chart | News | PowerRating) |
90 | 14/up | 39.99 | 41.80 | 2-month cup w/ handle pivot |
| Wilshire State Bank | ( WSBK | Quote | Chart | News | PowerRating) |
75 | 11/up | 28.03 | 28.85 or 29.70 | 3-month cup and handle |
| Akamai | ( AKAM | Quote | Chart | News | PowerRating) |
84 | 32/up | 15.38 | 16.76 | 3-month cup and handle |
| Sigmatel | ( SGTL | Quote | Chart | News | PowerRating) |
na | na | 26.80 | 27.49 – 27.60 | 15% RSB (right side of base) b/o |
| United Online | ( UNTD | Quote | Chart | News | PowerRating) |
89 | 5/down | 19.42 | 20.03 | YTD low level 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 | 52.79 | 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 |
| Cognos | ( COGN | Quote | Chart | News | PowerRating) |
58 | 33.04 | 6.5-Month cup and handle pattern | 1,040 | 35.39 |
| Omnicare | ( OCR | Quote | Chart | News | PowerRating) |
60 | 42.04 | 3.5-Month cup w/10% handle | 791 | 44.10 |
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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) |
87 | 81.09 | 308 | 56.18 | 82.90 |
| St. Jude Medical | ( STJ | Quote | Chart | News | PowerRating) |
74 | 76.51 | 1,332 | 58.89 | 79.03 |
| NII Holdings | ( NIHD | Quote | Chart | News | PowerRating) |
93 | 33.86 | 837 | 26.90 | 41.95 |
| Whole Foods Market | ( WFMI | Quote | Chart | News | PowerRating) |
89 | 85.97 | 746 | 56.34 | 87.09 |
| Guitar Center | ( GTRC | Quote | Chart | News | PowerRating) |
89 | 44.70 | 396 | 37 – 37.20 | 44.97 |
| Digital River | ( DRIV | Quote | Chart | News | PowerRating) |
91 | 31.72 | 882 | 30.65 | 34.83 |
| Mine Safety | ( MSA | Quote | Chart | News | PowerRating) |
94 | 34 | 104 | 31.80 | 36.75 |
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 |