Monday’s Intermediate-Term Report
It was just
another week within the market’s ‘confirmed rally.’
Of course, for those who
were prepared–it was the kind of growth stock action that makes all
the work worthwhile as many leading issues triggered out of classic patterns.
The S&P cash and Nasdaq Composite were able to rally quite handily off of their
respective technical supports to finish up on the week, with gains of
approximately 2.5% and 4% respectively…’all respect I tell ya’, as this market
still looks like anything but an impression of Rodney Dangerfield.
What a week it was, or should have
been–for those who dared to prepare. As stated last week–‘Wake up folks. Worry is in the air,
the media is starting to play up ‘the concern bit’, prices have pulled
back….and guess what, it’s fast becoming our favorite time to do our
high-probability business of trading growth stocks out of classic weekly
patterns, as the market gives us an opportunity within it’s ‘confirmed rally.’
With the leading Nasdaq off its recent highs by approximately 5.5%, and the
broader S&P500 down by 3% we are in better position for triggers out of the
market’s leading issues, than we have been for nearly three weeks. This isn’t a
‘call to arms’, but it is time to be ready as price and volume are still very
much healthy. After the market’s most recent action, there is a slight edge in
favor of distribution on the Nasdaq. But, what must be remembered is that the
distribution has been happening as we pullback in a very constructive manner. We
are at, or near technical levels that keep the rally alive, while at the same
time, shake out the ‘weak hands.’ Ideally, we would like to see an actual
Follow-Thru-Day at the same time in which our breakouts are triggering. This may
or may not happen. The reality of it is that leading stocks lead, and not the
other way around. Chances are that stock that you’ve been stalking for weeks,
will trigger before you read about a possible FTD over a cup of brew the next
morning. If we start to go lower, that’s fine–as long as the ‘confirmed rally’
remains constructive. This means that leading stocks maintain their composure
within their weekly bases, while the markets continue to pull back less than 10%
from their recent highs and volume continues to say ‘A-O.K.’ as the ‘ebbing’
cycle takes place. Volume, price, and pattern within a healthy market
environment is what we wait for. With price just below the 50-Day EMA on volume
and ‘headlines’ that keep me on my toes, and ready to take the trade within our
market’s ‘still confirmed rally’–I’m ready to do the CNBC thing, and ‘Profit it
from it.”
I hope you had some names ready,
because quite a few healthy, leading growth stock issues triggered for some
decent gains–especially considering that last week was an abbreviated week with
the Thanksgiving holiday…boy, now wasn’t that appropriate? Prices in the
indices are approaching 52-highs once more, with the S&P cash, approximately
.05% from surpassing this benchmark, while our preferred benchmark, the Nasdaq
Composite is still about 2% shy of this level. Very healthy as far as price is
concerned, but it will be pointed out, that in considering both price and
volume, the Nasdaq’s performance is lagging, which gives us at a minimum a
reason to remain sharp and vigilant. We prefer to see the Nasdaq lead the
broader indices, due to the fact that many of our growth stocks come from this
index. After this past week’s technical rally, there remains light signs of
distribution. Couple this with volatility levels that are once again approaching
historic lows, and in this analyst’s opinion–the best advice at this juncture
is to maintain profitable positions with normal stop loss management, but don’t
get overly aggressive with breakouts at this juncture. For instance, if you take
two qualified triggers in a row, and find that the trades are not producing the
desired results–back off and look around for further signs as to the health of
the market. My personal attitude is to take the triggers, but initially look at
each new position as a daytrade (assume less than the traditional 7% stop loss
and use a money stop, perhaps one point for instance), until proven otherwise.
If the triggers you take continue to run favorably intraday, and the volume
suggests institutional interest, by all means stick with our regularly scheduled
program of swing and growth stock investing. But, if the triggers are working,
but ultimately not holding convincingly–take what the market gives you, or
decide ahead of time to stay on the sidelines until some more high-probability
trading is in our cross-hairs.
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. While the markets are sailing
high, we also realize that between the peaks, troughs do exist, and it’s always
in our best interest to stay prepared for whatever comes our way within the
‘confirmed rally.’
New Category:
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.
None Today.
| Company Name |
Symbol | 12 Month RS |
Price | Pivot +.10 |
Technical Perspective |
| Shuffle Master | ( SHFL | Quote | Chart | News | PowerRating) |
56 | 29.91 | 31.75 or 32.91 | 15-week cup and handle w/ handle and 52-week cup triggers |
| Columbia Sportswear | ( COLM | Quote | Chart | News | PowerRating) |
59 | 59.28 | 59.49 | 2-Month ascending triangle |
| Yahoo | ( YHOO | Quote | Chart | News | PowerRating) |
85 | 42.99 | 44.87 | 8-Week high level base |
| Genentech | ( DNA | Quote | Chart | News | PowerRating) |
82 | 84.30 | 86.66 | 10-Week cup w/ handle pivot entry |
| Paccar | ( PCAR | Quote | Chart | News | PowerRating) |
61 | 80.26 | 82.30 | 2.5-month high level consolidation |
| Formfactor | ( FORM | Quote | Chart | News | PowerRating) |
69 | 25.50 | 27.85 | 2-Month ascending triangle |
| American Pharmaceutical | ( APPX | Quote | Chart | News | PowerRating) |
90 | 36.04 | 36.90 | 10-Week ‘deep’ Cup w/handle entry |
| Dot Hill Systems | ( HILL | Quote | Chart | News | PowerRating) |
95 | 17.05 | 18.05 | 3-Month cup w/ handle entry |
| UT Starcom | ( UTSI | Quote | Chart | News | PowerRating) |
69 | 37.88 | 38.33 | 11-Week consolidation b/o |
Watch List Action:
As always, the search goes on for top stocks meeting our fundamental and
technical criteria. 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 |
| Teva Pharmaceutical | ( TEVA | Quote | Chart | News | PowerRating) |
58 | 60.19 | 5.5 Month high level base | 2,282 | 61.66 |
Stocks Forming A Handle
| Company Name |
Symbol | 12 Month RS |
Price | Technical condition |
Average Volume in 000’s |
Pivot |
| San Juan Basin | ( SJT | Quote | Chart | News | PowerRating) |
49 | 19.74 | 4.5 Month cup and handle | 177 | 20.12 |
Recent Breakouts
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.
| Company Name |
Symbol | 12 Month RS |
Price | Average Volume-50 Day in 000’s |
Pivot | 52-Week High |
| Apollo Group |
( APOL | Quote | Chart | News | PowerRating) |
63 | 69.36 | 1883 | 46.89
|
69.96 |
| Career Education |
( CECO | Quote | Chart | News | PowerRating) |
86 | 51.28 | 1,838 | 27.20 | 56.20 |
| Coach Inc. |
( COH | Quote | Chart | News | PowerRating) |
86 | 39.84 | 1,641 | 14.18 | 39.92 |
| Boston Scientific |
( BSX | Quote | Chart | News | PowerRating) |
72 | 35.89 | 5,592 | 23.83 | 36.20 |
| International Game Technology |
( IGT | Quote | Chart | News | PowerRating) |
80 | 34.69 | 2,627 | 18.71 | 34.75 |
| UCBH Holdings |
( UCBH | Quote | Chart | News | PowerRating) |
77 | 39.10 | 241 | 22.60 | 39.30 |
| Corinthian Colleges |
( COCO | Quote | Chart | News | PowerRating) |
71 | 63.93 | 770 | 43.09 | 65 |
| Nextel | ( NXTL | Quote | Chart | News | PowerRating) |
82 | 25.33 | 15,991 | 15.85 | 25.90 |
| Gtech Holdings |
( GTK | Quote | Chart | News | PowerRating) |
77 | 49.76 | 520 | 37.05 or 40.80 |
50.31 |
| Centex | ( CTX | Quote | Chart | News | PowerRating) |
85 | 109.40 | 1,193 | 59.80 & 79.52 |
109.55 |
| Countrywide Financial | ( CFC | Quote | Chart | News | PowerRating) |
85 | 105.60 | 2,411 | 78..84 | 108 |
| Whole Foods Market | ( WFMI | Quote | Chart | News | PowerRating) |
51 | 65.69 | 759 | 56.34 | 65.87 |
| Marvel Enterprises | ( MVL | Quote | Chart | News | PowerRating) |
88 | 28.76 | 1,032 | 26.05 | 31.95 |
| Sharper Image | ( SHRP | Quote | Chart | News | PowerRating) |
72 | 31.62 | 332 | 27.85 | 32.70 |
| Garmin | ( GRMN | Quote | Chart | News | PowerRating) |
80 | 55.99 | 590 | 46.85 | 57.23 |
| Zebra Technologies | ( ZBRA | Quote | Chart | News | PowerRating) |
65 | 63.57 | 522 | 56.18 | 63.82 |
| Constellation Brands | ( STZ | Quote | Chart | News | PowerRating) |
61 | 0 | 556 | 31.90 – 32.10 | 0 |
| Odessey Healthcare | ( ODSY | Quote | Chart | News | PowerRating) |
85 | 35.62 | 550 | 33.52 | 36.94 |
| St. Jude Medical | ( STJ | Quote | Chart | News | PowerRating) |
68 | 63.34 | 1,616 | 58.89 | 64 |
| Gevity HR | ( GVHR | Quote | Chart | News | PowerRating) |
96 | 22.50 | 334 | 20.25 | 22.75 |
| Invitrogen | ( IVGN | Quote | Chart | News | PowerRating) |
85 | 68.17 | 912 | 63.15 | 68.85 |
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 |
| Sharper Image | ( SHRP | Quote | Chart | News | PowerRating) |
72 | 31.62 | 332 | 31.25 | 32.70 |
| San Juan Basin | ( SJT | Quote | Chart | News | PowerRating) |
49 | 19.75 | 177 | 19.18 | 20.02 |
| Axcan Pharmaceutical | ( AXCA | Quote | Chart | News | PowerRating) |
44 | 14.42 | 212 | 14.87 | 14.89 |
| Odessey Healthcare | ( ODSY | Quote | Chart | News | PowerRating) |
85 | 35.62 | 550 | 36.13 | 36.94 |