Intermediate-Term Traders Report
During the last
two weeks since our last report, it’s been an easy decision to stay on the
sidelines for cautious bulls. With the
latest five days of trade however, intermediate-term growth stock traders have
their first positive technical sign in the broader averages. For the week both
the S&P500 and Nasdaq Composite finished fractionally lower–between .18% to
.54% respectively, but the real technical news that keeps us ready for potential
opportunities in the days and weeks ahead, is the ‘attempted rally’ that was set
in motion during this period.
Both the S&P500 and our tech and
growth-laden favorite, the Nasdaq–have put in ‘attempted rally’ days, or
possible bottoms. This is the first technically positive clue that has us
watching our own list of stocks very closely as we await a potential FTD, or
Follow-Thru-Day. The FTD count officially begins with Monday’s trade in the
S&P500, and for the Nasdaq Composite, on Tuesday. The difference of one day in
the count, is due to the first positive close in each index, after the fresh
pivot lows were established. FTDs are typically established between the fourth
through seventh days out of an ‘attempted rally’ pivot low. Our job now is to
wait and see if the coming week can deliver the proverbial goods, in the broader
averages–a move of 1% or more in one of these two indices, on greater volume
than the prior day. If this technically significant event occurs, it will mark
the second clue for growth stock investors to be prepared to trade their own
lists of quality issues that may be ready to break out of sound basing patterns.
With the vast majority of growth
issues firmly entrenched within their bases, if an FTD were to trigger this
week–more likely than not, there won’t be many quality issues taking the lead.
There are a few out there, such as eResearch (ERES) and Digital River
(DRIV) that look to be in position, but from my own database I’m personally
finding very few others that could trigger their respective pivots at this time
without ‘extending’ themselves to reach this level. This type of trigger would
of course be more prone to failure, and not ideal, especially given the fact
that the market is technically in an intermediate-term downtrend. My own
thoughts coming in this week are that I would relish seeing the FTD, but I would
also keep any potential triggers ‘light and tight’, as I think that a necessary
period of consolidation work would still be needed before any true consistency
will be seen in growth stock names.
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 |
| St. Jude Medical | ( STJ | Quote | Chart | News | PowerRating) |
67 | 22/down | 74.62 | 78.93-79.13 | 10-week lateral base |
| Western Wireless | ( WWCA | Quote | Chart | News | PowerRating) |
80 | 20/up | 24.70 | 25.79 | 3-Month cup and handle |
| Teva Pharmaceutical | ( TEVA | Quote | Chart | News | PowerRating) |
73 | 16/up | 65.20 | 67.30 – 67.46 | 3-Month lateral base |
| Martek Biosciences | ( MATK | Quote | Chart | News | PowerRating) |
90 | 22/up | 70.75 | 73.46 | 2.5-Month cup b/o |
| United Surgical Partners | ( USPI | Quote | Chart | News | PowerRating) |
67 | 19/down | 36.14 | 38.08 | 4-month base w/pivot |
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 |
| Respironics | ( RESP | Quote | Chart | News | PowerRating) |
77 | 53.16 | 3-Month lateral base | 184 | 56.48 |
| Open Solutions | ( OPEN | Quote | Chart | News | PowerRating) |
70 | 23.05 | 2.5-Month lateral base | 109 | 26.17 |
^next^
Stocks Forming A Handle Or Pivot Base
| Company Name |
Symbol | 12 Month RS |
Price | Technical condition |
Average Volume in 000’s |
Pivot |
| Integra Lifesciences | ( IART | Quote | Chart | News | PowerRating) |
51 | 30.48 | 6-Month ‘W’ w/ 3% pivot | 165 | 33.96 |
| Sonic Solutions | ( SNIC | Quote | Chart | News | PowerRating) |
88 | 18.83 | 3.5-Lateral Base w/ mid level pivot entry | 311 | 20.60 |
| eResearch | ( ERES | Quote | Chart | News | PowerRating) |
91 | 32.14 | 4-month cup and handle | 977 | 35.72 |
| Digital River | ( DRIV | Quote | Chart | News | PowerRating) |
82 | 28.42 | 7-Month cup and handle | 762 | 30.65 |
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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) |
83 | 76.06 | 298 | 56.18 | 77.65 |
| St. Jude Medical | ( STJ | Quote | Chart | News | PowerRating) |
75 | 74.62 | 1,500 | 58.89 | 79.03 |
| NII Holdings | ( NIHD | Quote | Chart | News | PowerRating) |
93 | 33.43 | 830 | 26.90 | 41.95 |
| Whole Foods Market | ( WFMI | Quote | Chart | News | PowerRating) |
78 | 77.98 | 703 | 56.34 | 81.07 |
| Guitar Center | ( GTRC | Quote | Chart | News | PowerRating) |
83 | 39.32 | 345 | 37 – 37.20 | 42.39 |
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 |