Monday’s Intermediate-Term Report
Once more, my
favorite expression seems entirely appropriate given the last five days of
market activity. Besides growth stock
heavyweight Yahoo (YHOO) catapulting itself to levels not seen since 2000, the
Nasdaq Composite–our favorite barometer of overall growth stock activity, has
carved out a beautiful four day consolidation on lighter volume after last
Friday’s FTD. For this cautious bull, combined with the increasing number of
solid looking bases developing in our growth stock issues….it all adds up to
an enthusiastic, ‘Oh Yahoo!!’
For the abbreviated four day trading
week, as Good Friday was celebrated away from the exchanges–the Nasdaq finished
off a very slight .21%, while the S&P500 also followed suit, with a almost
identical .22% pause. With the four sessions of consolidation work validating
the FTD or Follow-Thru-Day, and as mentioned, many sound growth stock issues
setting up within their bases–I am looking forward to a very ‘good Monday’, or
at least the potential for a very solid week in growth stocks that trigger. Last
week, I emphasized that the proverbial green light for growth stock investors
was on, but with the short term price extension, that I would be weary of trying
breakouts that had also ‘bee-lined it’ within their basing pattern, bringing
them close to their actual pivot levels. I mentioned two examples, one which
emphasized a stronger base (HAR), and one which looked susceptible to
exhaustion, if it was going to trigger (MSA). As it turns out, both
triggered–but both had flaws as well. MSA actually had a much stronger,
‘classic’ pivot breakout as determined by volume and where it closed in its
range. Subsequent trade though, had the issue pulling back nearly 5% below its
pivots, and not being able to get above the closing price of the breakout day.
Harman (HAR) on the other hand, while breaking out of an ascending base that was
much tighter technically–failed to provide the necessary institutional support
that one normally looks for in a quality breakout candidate, sending out
potential warning flags to those who took the trigger. While Harman has pulled
back less than .7% through its triggers, because of this action, and the fact
that many other quality issues are ready to trigger in next week’s trade–I’m
personally focused elsewhere. Hmm, maybe I should be from Missouri, ‘the show
me’ state?
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 | 12 Month RS |
Price | Pivot +.10 |
Technical Perspective |
| Amdocs | ( DOX | Quote | Chart | News | PowerRating) |
72 | 28.70 | 29.84 | 2-month lateral base |
| California Micro Devices | ( CAMD | Quote | Chart | News | PowerRating) |
97 | 13.99 | 14.97 | 12-Week lateral base |
| Quest Diagnostics | ( DGX | Quote | Chart | News | PowerRating) |
63 | 83.55 | 85.97 | 10-Week lateral base |
| Dendrite | ( DRTE | Quote | Chart | News | PowerRating) |
69 | 17 | 17.99 | 4.5 Month base |
| LCA Vision | ( LCAV | Quote | Chart | News | PowerRating) |
96 | 24.69 | 25.52 (+.12) | 2.5-Month Cup w/ handle |
| Websense | ( WBSN | Quote | Chart | News | PowerRating) |
81 | 31.48 | 33.49 | 2-Month base |
| Secure Computing | ( SCUR | Quote | Chart | News | PowerRating) |
89 | 16.84 | 17.45 | 2.5-Month Cup w/ handle |
| F 5 Networks | ( FFIV | Quote | Chart | News | PowerRating) |
86 | 34.18 | 35.70 | 2.5-Month Cup w/ handle |
| Silicon Labs | ( SLAB | Quote | Chart | News | PowerRating) |
81 | 58.50 | 60.02 | 9-Week lateral base |
| Evergreen Resources | ( EVG | Quote | Chart | News | PowerRating) |
58 | 35.02 | 35.94 | 3-Month lateral base |
| Deckers | ( DECK | Quote | Chart | News | PowerRating) |
97 | 25.21 | 27.95 | 2.5-Month ascending base |
| A T I Technologies | ( ATYT | Quote | Chart | News | PowerRating) |
82 | 17.15 | 17.38 | 2.5-Month Cup w/ handle |
| eCollege.com | ( ECLG | Quote | Chart | News | PowerRating) |
94 | 22.28 | 23.02 | 5-Month triangle, ‘gap fill’ 14% b/o |
| Buenaventura Comp | ( BVN | Quote | Chart | News | PowerRating) |
77 | 28 | 30.17 | 4-Month Cup w/ handle |
| Gen-Probe | ( GPRO | Quote | Chart | News | PowerRating) |
87 | 36.89 | 37.54 | 2.5-Month ‘W’ pivot entry |
| American Power Conversion | ( APCC | Quote | Chart | News | PowerRating) |
65 | 24.61 | 25.10 | 3-Month Cup w/ handle |
| Tsakos Energy Navigation | ( TNP | Quote | Chart | News | PowerRating) |
92 | 31.29 | 33.35 | 2-Month lateral 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 |
| Netflix | ( NFLX | Quote | Chart | News | PowerRating) |
93 | 37.65 | 2.5-Month Cup w/ handle–cup entry | 3,846 | 39.87 |
| Axcan Pharma | ( AXCA | Quote | Chart | News | PowerRating) |
72 | 18.66 | 8-Week lateral base | 291 | 20.80 |
| Sonic Solutions | ( SNIC | Quote | Chart | News | PowerRating) |
87 | 19.75 | 2.5-Month base | 409 | 22.60 |
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) |
64 | 30.74 | 3-Month ‘W’ bottom w/ 8% pivot | 77 | 32.07 |
| Engineered Support Systems | ( EASI | Quote | Chart | News | PowerRating) |
77 | 52.10 | 4-Month ‘W’ bottom w/ 10% pivot | 354 | 55.59 |
| Abaxis | ( ABAX | Quote | Chart | News | PowerRating) |
96 | 20.18 | 2.5-Month Cup w/ handle | 292 | 22.35 |
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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 |
| Centex | ( CTX | Quote | Chart | News | PowerRating) |
70 | 49.61 | 3,200 | 29.90 and 39.76 | 58.40 |
| Countrywide Financial | ( CFC | Quote | Chart | News | PowerRating) |
77 | 86.58 | 2,297 | 59.16 | 97.30 |
| Whole Foods Market | ( WFMI | Quote | Chart | News | PowerRating) |
62 | 75.11 | 741 | 56.34 | 79.24 |
| Zebra Technologies | ( ZBRA | Quote | Chart | News | PowerRating) |
67 | 73.26 | 344 | 56.18 | 73.93 |
| St. Jude Medical | ( STJ | Quote | Chart | News | PowerRating) |
68 | 74.40 | 1,743 | 58.89 | 79.03 |
| Serologicals | ( SERO | Quote | Chart | News | PowerRating) |
86 | 21.29 | 543 | 19.07/19.39 | 22.35 |
| NII Holdings | ( NIHD | Quote | Chart | News | PowerRating) |
94 | 36.95 | 954 | 26.90 | 39.10 |
| Mobile Telesys | ( MBT | Quote | Chart | News | PowerRating) |
93 | 137 | 298 | 87.60 | 141.15 |
| Marvell Technology | ( MRVL | Quote | Chart | News | PowerRating) |
73 | 48.09 | 3,062 | 46.73 | 48.50 |
| Celgene | ( CELG | Quote | Chart | News | PowerRating) |
75 | 50.94 | 1,360 | 48.98 | 53.14 |
| STET Hellas Telecom | ( STHLY | Quote | Chart | News | PowerRating) |
93 | 22.58 | 272 | 20.06 | 24.26 |
| Coventry Health | ( CVH | Quote | Chart | News | PowerRating) |
72 | 45.98 | 948 | 45.19 | 47.25 |
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 |
| Laserscope | ( LSCP | Quote | Chart | News | PowerRating) |
98 | 27.80 | 619 | 27.95 | 29.90 |
| Guitar Center | ( GTRC | Quote | Chart | News | PowerRating) |
63 | 37.60 | 287 | 37 – 37.20 | 40.23 |