Monday’s Intermediate-Term Report
‘Oh
Yahoo’…again!! Last week we entered the market excited about the prospects for
growth stock investors, as the Nasdaq
Composite had triggered an ‘attempted rally day’–and our growth stock
selection list which included names like Yahoo, looked to be shaping up quite
constructively within their respective high level bases. One week later, the
market has delivered the proverbial green light for many investors and traders
in the form of a high volume, FTD or Follow-Thru-Day–and that is reason enough
for growth stock players to continue to pull the trigger on quality growth
issues that are breaking out of sound basing patterns.
After a week of gains of nearly 5%
in the Naz and a hair over 3% for the S&P500 that culminated with Friday’s FTD
in the Composite–the only advice that I might bring to the table with a price
extension of this percentage magnitude, and a series of seven sessions of higher
highs–would be sticking to potential breakout candidates that have consolidated
closer to their pivot point triggers over the past one to two weeks, rather than
‘bee-lined it’ straight up within their base in the last few sessions along with
the broader averages. Although technically a sound basing pattern has developed
in this type of candidate, as defined by a minimum of seven weeks and no more
than a 35% base depth–because of the short term overbought nature that has put
some issues close to their pivots–an actual trigger out of the base, without
any further consolidation work, lends itself to a higher likelihood of failure
in my humble opinion. Stocks, like the people that buy them, most often need a
certain amount of time to digest and rest before moving further along–so my own
preference is to give this particular type of candidate less consideration than a
stock that has done more preparatory work before the actual trigger. In
selecting my own picks for this week’s report, this point is best reflected if
one compares the bases of Mine Safety Appliances
(
MSA |
Quote |
Chart |
News |
PowerRating) versus
Harman Int’l.
(
HAR |
Quote |
Chart |
News |
PowerRating). Harman, in my humble opinion–looks sturdier or
less extended within its base, and all else being equal, would require less of a
trade decision at its pivot, should it trigger this week…other than that, ‘oh yahoo again!!’
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) |
75 | 28.91 | 29.84 | 2-month lateral base |
| Michaels Stores | ( MIK | Quote | Chart | News | PowerRating) |
64 | 48.80 | 49.62 | 4-Month Cup w/handle triggers |
| Cognex | ( CGNX | Quote | Chart | News | PowerRating) |
67 | 34.89 | 35.15 | 2-Month lateral base |
| California Micro Devices | ( CAMD | Quote | Chart | News | PowerRating) |
98 | 13.72 | 14.97 | 11-Week lateral base |
| Quest Diagnostics | ( DGX | Quote | Chart | News | PowerRating) |
57 | 82.50 | 85.97 | 9-Week lateral base |
| Dendrite | ( DRTE | Quote | Chart | News | PowerRating) |
63 | 16.94 | 17.99 | 4.5 Month base |
| Euronet Worldwide | ( EEFT | Quote | Chart | News | PowerRating) |
82 | 19.75 | 20.34 | 1.5 Month Cup B/O |
| Fisher Scientific | ( FSH | Quote | Chart | News | PowerRating) |
82 | 56.90 | 57.40 | 8-Week lateral base |
| LCA Vision | ( LCAV | Quote | Chart | News | PowerRating) |
97 | 24.90 | 27.30 | 2.5 Month base |
| Mine Safety | ( MSA | Quote | Chart | News | PowerRating) |
86 | 30.94 | 32.02 | 2.5 Month base |
| Websense | ( WBSN | Quote | Chart | News | PowerRating) |
83 | 31.07 | 33.49 | 2-Month 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 |
| Safenet | ( SFNT | Quote | Chart | News | PowerRating) |
62 | 38.53 | 11-Week lateral High-Level Base | 306 | 41.90 |
| Abaxis | ( ABAX | Quote | Chart | News | PowerRating) |
96 | 20.25 | 10-Week high level base | 364 | 23.55 |
| Coventry Health | ( CVH | Quote | Chart | News | PowerRating) |
68 | 43.47 | 2.5 Month lateral base | 947 | 45.19 |
| Harman Int’l. | ( HAR | Quote | Chart | News | PowerRating) |
85 | 80.64 | 10-Week angular base | 696 | 82.10 |
| Laserscope | ( LSCP | Quote | Chart | News | PowerRating) |
97 | 25.65 | 7-Week 37% deep base | 562 | 27.95 |
| Silicon Laboratories | ( SLAB | Quote | Chart | News | PowerRating) |
80 | 55.37 | 8-Week base | 1,500 | 60.02 |
| Axcan Pharma | ( AXCA | Quote | Chart | News | PowerRating) |
75 | 19.39 | 7-Week lateral base | 279 | 20.80 |
Stocks Forming A Handle
| Company Name |
Symbol | 12 Month RS |
Price | Technical condition |
Average Volume in 000’s |
Pivot |
| NA | NA | NA | NA | NA | NA | NA |
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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.
Â
| Company Name |
Symbol | 12 Month RS |
Price | Average Volume-50 Day in 000’s |
Pivot | 52-Week High |
| Centex | ( CTX | Quote | Chart | News | PowerRating) |
72 | 51.13 | 3,200 | 29.90 and 39.76 | 58.40 |
| Countrywide Financial | ( CFC | Quote | Chart | News | PowerRating) |
81 | 91.25 | 2,666 | 59.16 | 97.30 |
| Whole Foods Market | ( WFMI | Quote | Chart | News | PowerRating) |
65 | 75.19 | 687 | 56.34 | 79.24 |
| Zebra Technologies | ( ZBRA | Quote | Chart | News | PowerRating) |
69 | 72.41 | 348 | 56.18 | 72.90 |
| St. Jude Medical | ( STJ | Quote | Chart | News | PowerRating) |
65 | 72.25 | 1,659 | 58.89 | 79.03 |
| Serologicals | ( SERO | Quote | Chart | News | PowerRating) |
82 | 20.87 | 489 | 19.07/19.39 | 21.17 |
| NII Holdings | ( NIHD | Quote | Chart | News | PowerRating) |
94 | 36.44 | 1,100 | 26.90 | 39.10 |
| Mobile Telesys | ( MBT | Quote | Chart | News | PowerRating) |
91 | 134.08 | 255 | 87.60 | 135.50 |
| Marvell Technology | ( MRVL | Quote | Chart | News | PowerRating) |
75 | 46.98 | 2,999 | 46.73 | 47.15 |
| Celgene | ( CELG | Quote | Chart | News | PowerRating) |
73 | 51 | 1,386 | 48.98 | 51.20 |
| STET Hellas Telecom | ( STHLY | Quote | Chart | News | PowerRating) |
90 | 20.22 | 303 | 20.06 | 21.65 |
| Guitar Center | ( GTRC | Quote | Chart | News | PowerRating) |
67 | 37.88 | 272 | 37 – 37.20 | 38 |
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 |