Monday’s Intermediate-Term Report
The ‘attempted
rally’ lows witnessed several sessions back have thus far failed to deliver the
goods for Intermediate-Term traders.
Within what we can now call a two week trading range–the S&P500 finished off
.20% for the week. More importantly, the broader market proxy failed to qualify
for the classic Follow-Thru-Day which typically occurs between the fourth and
seventh days off an ‘attempted rally’ day. As for the growth and tech-heavy
Nasdaq Composite, it ended up a fractional .40% for the week, within its own
trading range. The Naz’ however failed to hold its original ‘attempted rally’
lows, as a gap down in price in Monday’s trade has officially reset the count in
that index–for better or worse, you be the judge.
As judge and jury in this article,
I’m not holding my own breathe for the second attempt at an FTD for the Nasdaq.
The price action within a trading range can said to be constructive in the fact
that it gives the index time to build up momentum. Unfortunately, my fear is
that the momentum has the earmarks of further downside–rather than one filled
with upside action and quality breakouts triggering in our select lists of
leading growth stocks. The market is still in a confirmed intermediate
downtrend, and growth stocks in general, still look to have their work cut out
for them as most are well-entrenched, and technically removed from proper
triggers. In this corner, I know I’ll be hoping that this isn’t the case in the
coming days, and the market can actually break to the upside out of a qualified
FTD. I also realize ‘hope’ is a four letter word and best left out of the
investment decision. At this point, all that we can do is stay ready should
conditions change for the better.
As stated last week, ‘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.’ One of two names highlighted in that
article, Digital River
(
DRIV |
Quote |
Chart |
News |
PowerRating)–did in fact trigger on Wednesday.
Intraday, the issue delivered nearly 10% from those levels before reversing to
close less than 1% above the pivot. Subsequent trade has the stock holding its
handle breakout pivot of 30.65 quite strongly. With the pivot having been
breached by a mere .15, DRIV is still showing some strong conviction on the part
of traders. A small victory one could say, but it’s really being pointed out at
this juncture as a lesson of why money management comes in handy, especially in
a market without any real conviction of its own. To give up nearly 10% in an
uncertain market, if the trade was taken–is a reality check not soon forgotten.
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 |
| Western Wireless | ( WWCA | Quote | Chart | News | PowerRating) |
94 | 19/up | 26.50 | 27.50 | 3-Month cup trigger |
| Teva Pharmaceutical | ( TEVA | Quote | Chart | News | PowerRating) |
71 | 16/up | 64.99 | 67.30 – 67.46 | 3-Month lateral base |
| United Surgical Partners | ( USPI | Quote | Chart | News | PowerRating) |
80 | 18/up | 37.35 | 38.08 | 4-month base w/pivot |
| Plantronics | ( PLT | Quote | Chart | News | PowerRating) |
58 | 14/up | 38.36 | 39.88 | 3-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 Building A Base
| Company Name |
Symbol | 12 Month RS |
Price | Technical condition |
Average Volume in 000’s |
Pivot |
| Respironics | ( RESP | Quote | Chart | News | PowerRating) |
73 | 52.04 | 3-Month lateral base | 184 | 56.48 |
Stocks Forming A Handle Or Pivot Base
| Company Name |
Symbol | 12 Month RS |
Price | Technical condition |
Average Volume in 000’s |
Pivot |
| eResearch | ( ERES | Quote | Chart | News | PowerRating) |
92 | 33.30 | 4-month cup and handle | 843 | 35.72 |
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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) |
88 | 80.08 | 295 | 56.18 | 80.57 |
| St. Jude Medical | ( STJ | Quote | Chart | News | PowerRating) |
76 | 74.78 | 1,400 | 58.89 | 79.03 |
| NII Holdings | ( NIHD | Quote | Chart | News | PowerRating) |
94 | 34.72 | 854 | 26.90 | 41.95 |
| Whole Foods Market | ( WFMI | Quote | Chart | News | PowerRating) |
79 | 79.76 | 719 | 56.34 | 81.07 |
| Guitar Center | ( GTRC | Quote | Chart | News | PowerRating) |
86 | 40.69 | 366 | 37 – 37.20 | 42.39 |
| Digital River | ( DRIV | Quote | Chart | News | PowerRating) |
90 | 32.38 | 827 | 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 |