Monday’s Intermediate-Term Report
Unfortunately for
growth stock investors, this week provided a double whammy of sorts.
Not only were the averages showing their worst divergence in weeks, but our
‘leading’ Nasdaq Composite was the whipping boy, as it turns out that Diamonds
(Dow Jones Industrials) really are an investor’s best friend, showing a little
glitter in a difficult week, by closing up .10%. The broadest index, the S&P500
dropped a fractional .54%, but the real kicker, and they did give it the
proverbial boot–was the Nasdaq’s drop out of its light volume daily handle, to
the ‘tune’ of 2.78%–and that action doesn’t have this cautious bull whistling
dixie.
Just as important to growth stock
investors, was the very unimpressive action in most growth stock issues, as well
as two qualified days of institutional distribution. Friday’s action for the
most part also saw heavy selling, although at slightly lower levels. After four
hard sessions of lower lows, I would expect that a contra move to retest price
and moving average resistance from below, is the only relief that growth stock
oriented investors are going to see in the short term.
Most growth issues, as mentioned,
remain in their weekly bases–so as Bill Murray once (well kinda) said, ‘so we
got that going for us.’ The problem is, that this week’s volatility produced
some disturbing triggers early in the week, as price pivot failures, or at least
a good reason to break out the Tums, seemed to be the only consistency with
breakout plays. Off my own list: ABAX, CAMD, DECK, and EVG sum up the action
best. Secondly, in those issues that didn’t trigger–many of those are now
deeper into their respective bases. Patience it seems, will be an important
virtue going forward in the coming days. At this point, the growth issues that
have maintained strength within their bases and could be considered ‘defensive
growth’, are names that haven’t been whispered in passing on ‘Main
Street’–issues such as HDB, TNP, AXCA, and EASI are ongoing candidates that
could play out contra to the Nasdaq, if relative strength in the other averages
remains the theme du jour.
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 |
| Amdocs | ( DOX | Quote | Chart | News | PowerRating) |
79 | 12/down | 28.52 | 29.84 | 2-month lateral base |
| Dendrite | ( DRTE | Quote | Chart | News | PowerRating) |
73 | 24/up | 16.72 | 17.99 | 4.5 Month base |
| Websense | ( WBSN | Quote | Chart | News | PowerRating) |
59 | 21/down | 29.27 | 32.55 | 2.5 month cup and handle |
| A T I Technologies | ( ATYT | Quote | Chart | News | PowerRating) |
55 | 23/down | 16.07 | 17.38 | 2.5-Month Cup w/ handle |
| American Power Conversion | ( APCC | Quote | Chart | News | PowerRating) |
61 | 27/up | 23.96 | 25.34 | 3-Month Cup w/ handle |
| Tsakos Energy Navigation | ( TNP | Quote | Chart | News | PowerRating) |
87 | 11/down | 29.55 | 33.35 | 2-Month lateral base |
| Scansource | ( SCSC | Quote | Chart | News | PowerRating) |
52 | 28/up | 49.87 | 53.05 | 3-Month cup and handle |
| Inamed | ( IMDC | Quote | Chart | News | PowerRating) |
61 | 37/up | 54.44 | 56.34 | 5.5-Month cup and handle |
| D J Orthopedics | ( DJO | Quote | Chart | News | PowerRating) |
55 | 26/down | 24.35 | 27.70 | 4-Month cup and handle |
| Flamel Technologies | ( FLML | Quote | Chart | News | PowerRating) |
70 | 22/up | 28.56 | 30.10 | 3-Month ‘low level’ cup and handle |
| Measurement Specialties | ( MSS | Quote | Chart | News | PowerRating) |
98(12mo.) | na | 21.03 | 23.05 – 23.85 | 3.5-Month base w/ pivot entries |
| Petmed Express | ( PETS | Quote | Chart | News | PowerRating) |
58(12mo.) | na | 12.10 | 13.18 | 2.5-Month lateral base All-Time-Highs |
| Radisys | ( RSYS | Quote | Chart | News | PowerRating) |
88 | 30/up | 22.69 | 24.90 – 24.95 | 2.5-Month cup and handle |
| Artisan Components | ( ARTI | Quote | Chart | News | PowerRating) |
75 | 24/up | 21.76 | 23.70 – 23.98 | 3-month YTD 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 |
| Axcan Pharma | ( AXCA | Quote | Chart | News | PowerRating) |
72 | 18.65 | 9-Week lateral base | 291 | 20.80 |
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) |
70 | 30.85 | 3-Month ‘W’ bottom w/ 8% pivot | 72k | 32.07 |
| Engineered Support Systems | ( EASI | Quote | Chart | News | PowerRating) |
77 | 50.61 | 4-Month ‘W’ bottom w/ 10% pivot | 332 | 55.59 |
| Select Comfort | ( SCSS | Quote | Chart | News | PowerRating) |
82 | 29.46 | 5.5-Month cup w/ handle | 523 | 30.20 |
| Integra Lifesciences | ( IART | Quote | Chart | News | PowerRating) |
45 | 30.80 | 5.5-Month ‘W’ w/ 3% pivot | 167 | 33.96 |
| K Swiss | ( KSWS | Quote | Chart | News | PowerRating) |
69 | 25.56 | 3.5-Month ‘W’ base w/ 6% pivot | 422 | 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 |
| Centex | ( CTX | Quote | Chart | News | PowerRating) |
73 | 49.21 | 2,700 | 29.90 and 39.76 | 58.40 |
| Countrywide Financial | ( CFC | Quote | Chart | News | PowerRating) |
77 | 56.73 | 3,392 | 39.44 | 64.86 |
| Whole Foods Market | ( WFMI | Quote | Chart | News | PowerRating) |
68 | 75.11 | 741 | 56.34 | 79.24 |
| Zebra Technologies | ( ZBRA | Quote | Chart | News | PowerRating) |
67 | 71,96 | 344 | 56.18 | 74.97 |
| St. Jude Medical | ( STJ | Quote | Chart | News | PowerRating) |
74 | 76.28 | 1,743 | 58.89 | 79.03 |
| Serologicals | ( SERO | Quote | Chart | News | PowerRating) |
82 | 20.06 | 543 | 19.07/19.39 | 22.35 |
| NII Holdings | ( NIHD | Quote | Chart | News | PowerRating) |
95 | 34.54 | 954 | 26.90 | 39.10 |
| Mobile Telesys | ( MBT | Quote | Chart | News | PowerRating) |
93 | 130.35 | 298 | 87.60 | 141.15 |
| Celgene | ( CELG | Quote | Chart | News | PowerRating) |
82 | 52.41 | 1,360 | 48.98 | 53.14 |
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 | 36.89 | 287 | 37 – 37.20 | 40.23 |
| Marvell Technology | ( MRVL | Quote | Chart | News | PowerRating) |
65 | 44.95 | 3,062 | 46.73 | 48.50 |