Monday’s Intermediate-Term Report

• April 25, 2004
• Chris Tyler

It was a wild
week, in which volatility reigned supreme in the major indices, but ultimately
put them in a stronger position than where they had started.
The first part of the week saw April’s lowest prices
on fresh distribution signs in both the S&P500 and the Nasdaq before recovering
on an impressive reversal day in Wednesday’s trade that led to two more
impressive rally days on very strong institutional buying. For the week, our
proxy for growth and tech issues, the Nasdaq, was up a very impressive 2.71%,
while the broader S&P500 also managed a gain of .54%–giving growth stock
investors once again, a reason to be looking for quality triggers for which to
trade.

If you look at the last three weeks
of trade, we have a virtual stalemate as far as the bulls and bears are
concerned. In both the S&P500 and the Naz, the accumulation / distribution
figures, as well as the price performance over this period couldn’t be any
closer. The volume count over this time frames stands at four days for the
bulls, and four days for da’ bears in both indices. The percentage moves for
these 15-days of trade, after all the price movement in-between, are also,
astonishing enough–virtually flat for both indices. It hasn’t come without
incident of course, as growth stocks were suffering on a whole, during this
period. But, as quick as the indices have been to repair themselves, and even
the score so to speak–our leading growth issues have also come back a long ways
it seems, and some of these leading stocks now find themselves settling in very
close to their weekly and daily chart pivots. Coming in to Monday’s trade, I
would anticipate that some consolidation work will need to occur before, and if,
the indices can test their respective pivot highs set in early April. If a
quality issue is triggering on above-average volume next week, and it’s not
extended as it tries to test the actual breakout pivot–my attitude is that it’s
a trade that’s worthy of entering, but possibly set a tighter initial stop (such
as session lows), and look to be aggressive on taking that first piece off–as
we’ve seen how quick the conditions can change.

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. When the time comes that the indices
are ‘precariously’ testing levels of support once again, as they always do–many
of the stocks we watch, will actually be breaking out to fresh highs, or ready
to, from solid weekly basing patterns. All that we can do to take advantage of
the high-probability trade is continue to keep ready, and dare to prepare for
the next quality breakout within the market’s ongoing ‘confirmed rally.’

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
Websense	( WBSN | Quote | Chart | News | PowerRating)	63	16/up	31.11	32.55	3-month cup and handle
A T I Technologies	( ATYT | Quote | Chart | News | PowerRating)	61	18/up	17.11	17.38	3-Month Cup w/ handle
American Power Conversion	( APCC | Quote | Chart | News | PowerRating)	64	27/up	24.99	25.34	3-Month Cup w/ handle
D J Orthopedics	( DJO | Quote | Chart | News | PowerRating)	59	22/down	24.50	27.70	4-Month cup and handle
Petmed Express	( PETS | Quote | Chart | News | PowerRating)	58(12mo.)	na	12.18	13.18	2.5-Month lateral base All-Time-Highs
Artisan Components	( ARTI | Quote | Chart | News | PowerRating)	56	20/up	22.55	23.70 – 23.98	3-month YTD cup and handle
Sfbc Int’l.	( SFCC | Quote | Chart | News | PowerRating)	68	29/down	31.90	32.05	3-Month lateral base
Teekay Shipping	( TK | Quote | Chart | News | PowerRating)	47	14/up	66.57	70.06	8-Week lateral base
Biolase Technology	( BLTI | Quote | Chart | News | PowerRating)	20	19/up	17.50	19.25	3-month base w/ pivot consolidation
Tractor Supply	( TSCO | Quote | Chart | News | PowerRating)	67	20/up	42.45	45.92	6-month basing pattern
Teva Pharma	( TEVA | Quote | Chart | News | PowerRating)	63	15/up	64.59	66.57	2-Month cup w/ handle
eCollege.com	( ECLG | Quote | Chart | News | PowerRating)	71	15/down	21.05	23.10	6.5-Month symmetrical triangle w/ pivot b/o entry
Silicon Labs	( SLAB | Quote | Chart | News | PowerRating)	88	17/down	56.34	60.02	8-Week base

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
First Cash Financial	( FCFS | Quote | Chart | News | PowerRating)	90	24.06	8-Week lateral base	242	25.13
Sonic Solutions	( SNIC | Quote | Chart | News | PowerRating)	86	20	3-Month base	304	22.60
eResearch	( ERES | Quote | Chart | News | PowerRating)	90	34.52	3-Month base	977	37.50
Ceradyne	( CRDN | Quote | Chart | News | PowerRating)	94	31.94	6-Month base on base formation	641	33.28
Gen Probe	( GPRO | Quote | Chart | News | PowerRating)	85	37.59	4-Month lateral base	535	40.03

Stocks Forming A Handle Or Pivot Base

Company Name	Symbol	12 Month RS	Price	Technical condition	Average Volume in 000’s	Pivot
H D F C Bank	( HDB | Quote | Chart | News | PowerRating)	71	31.19	3-Month ‘W’ bottom w/ 8% pivot	72k	32.07
Engineered Support Systems	( EASI | Quote | Chart | News | PowerRating)	81	51.22	4-Month ‘W’ bottom w/ 10% pivot	332	55.59
Integra Lifesciences	( IART | Quote | Chart | News | PowerRating)	43	32.71	5.5-Month ‘W’ w/ 3% pivot	167	33.96
K Swiss	( KSWS | Quote | Chart | News | PowerRating)	62	25.60	3.5-Month ‘W’ base w/ 6% pivot	346	26.73

 

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.

 

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)	71	74.11	344	56.18	76.73
St. Jude Medical	( STJ | Quote | Chart | News | PowerRating)	75	78.28	1,500	58.89	79.03
Serologicals	( SERO | Quote | Chart | News | PowerRating)	81	19.97	602	19.07/19.39	22.35
NII Holdings	( NIHD | Quote | Chart | News | PowerRating)	95	39.72	907	26.90	40.99
Mobile Telesys	( MBT | Quote | Chart | News | PowerRating)	91	125.59	306	87.60	141.15
Celgene	( CELG | Quote | Chart | News | PowerRating)	84	56.94	1,305	48.98	58.50
Whole Foods Market	( WFMI | Quote | Chart | News | PowerRating)	73	80.58	735	56.34	80.93

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
Guitar Center	( GTRC | Quote | Chart | News | PowerRating)	62	36.69	252	37 – 37.20	40.23