Monday’s Intermediate-Term Report
A scene from the
movie TopGun seems so appropriate for our high flying index friends. ‘Hey
Maverik!!! We had them, what were you waiting for? It doesn’t get any better
than that!!!’…’I’ll go when I’m god ‘darned’ good and ready!!!’
Chris ‘L.A.Hollywood’ Tyler and the character,
‘Hollywood’Â were both right. It really doesn’t get much better than what
the market proxies and our ‘top gun’ style growth stocks did this past week.
Since we left off, the S&P 500 and the market leading Nasdaq Composite
have both established fresh 52-week highs, and gains of 1.7% to nearly 3%,
within our ‘confirmed rally.’
Last week we stated that: ‘With the
most recent action, the skies (conditions) look more promising as we set sail
into Monday’s session. With some fresh rations (new growth stock names) and
other familiar staples that we’ve continued to keep on board, we look forward to
the next leg of our journey.’ Monday ushered in slightly lower prices and a
ninth day of consolidation work within the indices, setting the stage for the
next three sessions of higher prices, and the best levels that our ETF friends
have seen in over 18 months. The past week saw two days of accumulation in both
the S&P 500 cash and the NAZ. Distribution was evident in one session in the
Nasdaq, while the S&P 500 escaped the wrath of Institutional selling during the
past five sessions. For the past three weeks that puts our ongoing count at a
favorable 4:2 margin in the S&P, and 5:3 for the Nasdaq. What this meant for
growth stock investors was a plethora of 52-week highs in many familiar names,
as well as fresh faces triggering breakouts from classic consolidation bases on
strong volume…hmm, another token, ‘so far, so good in my humble opinion’ seems
more than appropriate as we look forward to the coming week.
As we continue to move up the ol’
trading tree, let’s make sure that we stay completely grounded. Our mission
consists of taking outsized profits in a healthy market climate, as well as
maintaining what we have earned, if and when the ‘beautiful leaves (growth
stocks) start to fall from the market’s branches’. It is after all, that time of
year…the ‘Fall.’ No doom and gloom forecast here, as the investing climate
continues to look sunny. But, if the weather does start to change we want to be
prepared ahead of time, if at all possible. This means to continue climbing
higher up the proverbial market tree, as long as the fertile ground
(accumulation vs. distribution, technical highs and lows maintained, growth
stocks leading) from which the market grows, keeps receiving more of the same
‘necessary elements’ that are currently being placed into the market’s soil. If
the market gods are kind enough (the Big IF), to keep the folks on Main St.
smiling and the ‘kids’ on Wall & Broad ‘up to no good’; prices at that point
should have investor’s happy faces a bit too far extended to maintain
appearances for much longer. On that note, the next 1.5% to 3% percent in our
index friends poses some technical resistance on the weekly charts that should
have some disciplined traders looking to add some extra layers of protection to
their exposed portfolios.
In case we do see some falling
leaves this ‘Fall’, some basic technical levels of support that might prove
useful for picking up some of those ‘fallen’, but still gorgeous pieces of
foliage (growth stocks) are: For the Q’s
(
QQQ |
Quote |
Chart |
News |
PowerRating): 33 – 33.35 = price
supports, the Aug. 38% Fibonacci support, approx. 5% pullback from highs, and
price between the 20 and 50-Day EMAs. 32.40 – 32.50 = the 50/50, or the Aug. 50%
Fib. and the 50-Day EMA, and approx. 7% from established highs. For the
Spyders
(
SPY |
Quote |
Chart |
News |
PowerRating): 101.35 – 101.55 = price support pivots, the Aug.38%
level, price between the 20 and 50-Day EMAs, and approx. a 3% pullback from
highs. 100.50 – 100.75 = a ’50/50′ support area and an approx. 4% pullback in
the SPY. These initial levels of technical support are well within the confines
of how most technicians define a healthy market environment. Those
characteristics are defined by the indices retracing no more than 10% from their
respective highs and also showing less than four to five sessions of
distribution within a ‘confirmed rally’….’so far, so good.’
Our own personal risk tolerance
levels within the market waves will 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’, but possibly good enough for many folk
to take their chances with a ‘quick day trip’, and see where the currents take
them from there. As it stands right now, it looks to be an ‘all hands on deck’
situation, as the immediate forecast bodes well. With plenty of fresh supplies
on board, we’re fully stocked to take advantage of any further passage into the
high seas of the financial markets, and hopefully a new exciting leg in our
ongoing journey 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 |
| Integra Lifesciences |
( IART | Quote | Chart | News | PowerRating) |
71 | 29.73 | 30.04 & 33.60 | 1.5 year Cup and Handle w/ handle and cup pivots |
| Hutchinson Technology | ( HTCH | Quote | Chart | News | PowerRating) |
76 | 36.58 | 37.55 | 11-Week High-Level C&H w/ Cup trigger |
| Documentum | ( DCTM | Quote | Chart | News | PowerRating) |
67 | 22.34 | 23.50 | 15-Week High-Level C&H w/ Cup trigger |
| Marvell Technology | ( MRVL | Quote | Chart | News | PowerRating) |
85 | 40.77 | 42.25 | 5-Week Channel Line Breakout |
| E*trade | ( ET | Quote | Chart | News | PowerRating) |
85 | 10.10 | 10.74 | 20-Month Cup w/ weekly handle trigger |
| Quest Software | ( QSFT | Quote | Chart | News | PowerRating) |
43 | 12.23 | 12.80 | 3.5 month cup w/ handle trigger |
| NetScreen Technology | ( NSCN | Quote | Chart | News | PowerRating) |
74 | 24.58 | 27.39 | 11-week High-Level base |
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 |
| Zebra Technology | ( ZBRA | Quote | Chart | News | PowerRating) |
63 | 55.07 | 11-week High Level base | 419 | 56.18 |
| Nextel | ( NXTL | Quote | Chart | News | PowerRating) |
81 | 19.98 | 10-Week High Level base ala Daily Cup & Handle | 20,463 | Â 20.63 |
| Sharper Image | ( SHRP | Quote | Chart | News | PowerRating) |
66 | 27.89 | 15-Week High Level base | 265 | 31.25 |
| Gilead Sciences | ( GILD | Quote | Chart | News | PowerRating) |
71 | 59.96 | 10-Week High Level Base | 3,437 | 70.71 |
| USNA Health Sciences | ( USNA | Quote | Chart | News | PowerRating) |
97 | 47.43 | 14-week High Level Double bottom base | 180 | 51.49 |
| *American Healthways | ( AMHC | Quote | Chart | News | PowerRating) |
87 | 38.94 | 11-Week Cup & Handle Base with two daily pattern entries |
278 | 40.95 or 42.10 |
| Marvel Entertainment | ( MVL | Quote | Chart | News | PowerRating) |
89 | 23.15 | 16-Week Cup&Handle base w/ handle and cup pivots |
1,251 | 24.05 or 25.35 |
| Aeropostale | ( ARO | Quote | Chart | News | PowerRating) |
86 | 28.30 | 8-Week High Level Double bottom base | 954 | 30.52 |
* AMHC’s ROE at 14%
is slightly lower than typical 15% to 17% threshold that many IT
investors accept.
Stocks Forming A Handle
| Company Name |
Symbol | 12 Month RS |
Price | Technical condition |
Average Volume in 000’s |
Pivot |
| Fresh DelMonte |
( FDP | Quote | Chart | News | PowerRating) |
47 | 25.75 | 10-Month Cup and Handle |
367 | 29.10 or 29.80 |
| Constellation Brands | ( STZ | Quote | Chart | News | PowerRating) |
46 | 30.79 | Weekly one year Cup and Handle | 859 | 31.90 to 32.10 |
| *Axcan Pharmaceutical | ( AXCA | Quote | Chart | News | PowerRating) |
54 | 14.08 | 16-Month Cup and Handle(16week) | 142 | 14.86 to 15.92 |
| Whole Foods Market | ( WFMI | Quote | Chart | News | PowerRating) |
29 | 54.51 | 20-Week Cup w/ Mid-Level Handle pivot entry | 745 | 56.34 |
*Axcan Pharmaceutical
ROE at 8% is lower than typical 15% to 17% threshold that many IT investors
accept.
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) |
64 | 68.03 | 1,776 | 46.89 & 67.38 |
69.32 |
| Career Education |
( CECO | Quote | Chart | News | PowerRating) |
87 | 48.78 | 1,500 | 27.20 | 50.46 |
| Coach Inc. |
( COH | Quote | Chart | News | PowerRating) |
78 | 58.68 | 789 | 28.35 | 59.65 |
| Boston Scientific |
( BSX | Quote | Chart | News | PowerRating) |
76 | 68.41 | 4,050 | 47.65 | 68.74 |
| International Game Technology |
( IGT | Quote | Chart | News | PowerRating) |
65 | 28.17 | 2,300 | 18.71 | 28.23 |
| UCBH Holdings |
( UCBH | Quote | Chart | News | PowerRating) |
65 | 32.09 | 300 | 22.60 | 33.55 |
| Corinthian Colleges |
( COCO | Quote | Chart | News | PowerRating) |
72 | 60 | 705 | 43.09 | 60.70 |
| Nextel | ( NXTL | Quote | Chart | News | PowerRating) |
81 | 19.98 | 17,800 | 15.85 | 20.53 |
| Gtech Holdings |
( GTK | Quote | Chart | News | PowerRating) |
68 | 43.80 | 586 | 37.05 or 40.80 |
44.12 |
| Centex | ( CTX | Quote | Chart | News | PowerRating) |
61 | 76.42 | 1,395 | 59.80 | 87.50 |
| Endo Pharmaceuticals |
( ENDP | Quote | Chart | News | PowerRating) |
88 | 21.66 | 640 | 14.98 | 21.90 |
| Digital Insight | ( DGIN | Quote | Chart | News | PowerRating) |
85 | 23.73 | 512 | 22.38 | 24.55 |
| TALX Corp | ( TALX | Quote | Chart | News | PowerRating) |
87 | 29.35 | 271 | 27.10 | 30.50 |
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 |
| Eon Labs | ( ELAB | Quote | Chart | News | PowerRating) |
78 | 39.26 | 267 | 40.93 | 41.32 |