Monday’s Intermediate-Term Report
During the past
two weeks since our last report the Nasdaq Composite finally did what it usually
does best–leadership out of a three month long lateral consolidation.
For this period the Nasdaq has traded up on a closing basis, approximately 3%,
while the broader S&P500 is up almost another 2%. Volume during this period
becomes a more enigmatic piece of the trading puzzle as lighter, holiday induced
trade generally leads, or misleads versus price action. So, with prices scoring
fresh highs within the market’s ongoing ‘confirmed rally’–it’s still business
as usual for growth stock traders until the markets and our individual issues
tell us otherwise.
With further price extension by the
Dow and S&P barely giving investors any reasonable chance at entries out of
pullbacks, we should anticipate that a percentage pullback ( 2 to 5%) is not too far off at
this time. Consider that the S&P in the past 29 sessions has not even managed a
2% pullback–and an ‘ebb’ with the market’s confirmed rally should be considered
the higher probability market action coming in this week. For the Nasdaq
however, and the index that we focus most of our energies on–the story looks to
be somewhat stronger, and reflects the notion that as growth stock traders we
should still be focused on entries out of classic high level bases–while they
continue to work. The Nasdaq, with the most recent price action has just emerged
out of a 3 month lateral base, so while we might expect a pullback down to
possibly the 20-Day EMA ( approximately 3% from highs)–the index is in much
better position to lead higher.
Growth stock triggers have been
working quite nicely on average since our last report, and personally
speaking–I anticipate leading names to continue to trigger, and our focus to be
on taking the trade as long as price and volume action remains constructive. As
stated previously, some stocks may decide to ‘make their moves’ when the indices
are either consolidating or even pulling back. For some investors this presents
a problem, as they enjoy having broader confirmation from the market. My
attitude towards this ‘traders’ dilemma’ is if the growth stocks that you are taking out of proper triggers are still
working, and the broader market pullback can still be classified as nothing more
than ‘constructive’, within the confines of our established bull–then the trade
deserves consideration.
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. We have to
remember, that when the next round of classic triggers does emerge out of our
leading growth stock candidates–they will be doing just that…leading. While
the indices are ‘precariously’ testing levels of support, many of the
stocks we watch, will actually be breaking out to fresh highs, 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 |
| Ati Technologies | ( ATYT | Quote | Chart | News | PowerRating) |
87 | 15.18 | 16.51 to 16.60 | 4.5-month lateral base |
| Guitar Center | ( GTRC | Quote | Chart | News | PowerRating) |
46 | 32.33 | 33.43 | 10-Week right side of base entry |
| Ansys | ( ANSS | Quote | Chart | News | PowerRating) |
64 | 39.74 | 41.65 | 4.5 Month basing pattern–second b/o attempt |
| Applied Films | ( AFCO | Quote | Chart | News | PowerRating) |
71 | 33.14 | 35.30 | 4.5 Month Reverse H&S w/ 2year highs and neckline breach as trigger |
| Tetra Tech | ( TTEK | Quote | Chart | News | PowerRating) |
74 | 24.90 | 26.07 | 5-Week cup and handle |
‘Traditional’ IT 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 |
| Quality Systems | ( QSII | Quote | Chart | News | PowerRating) |
76 | 44.80 | 4-Month Lateral base | 62 | 49.85 |
| Knight Trading | ( NITE | Quote | Chart | News | PowerRating) |
90 | 14.61 | 9-Week High Lateral base | 1,577 | 15.35 |
| PetroKazakhstan | ( PKZ | Quote | Chart | News | PowerRating) |
85 | 22.92 | 3-month Lateral Base | 456 | 23.35 |
| Cognizant Technology | ( CTSH | Quote | Chart | News | PowerRating) |
83 | 47.06 | 3-Month lateral base | 960 | 49.69 |
| TTM Technologies | ( TTMI | Quote | Chart | News | PowerRating) |
96 | 17.17 | 3.5-Month lateral base | 752 | 18.41 |
| Mobile Telesystems | ( MBT | Quote | Chart | News | PowerRating) |
75 | 84.90 | 3-Month lateral base | 263 | 87.60 |
| UT Starcom | ( UTSI | Quote | Chart | News | PowerRating) |
62 | 38.36 | 5-Week consolidation ‘right side of base’ b/o within 4 month High level base |
3,018 | 40 |
| NII Holdings | ( NIHD | Quote | Chart | News | PowerRating) |
92 | 76.25 | 2-Month lateral base | 355 | 80.70 |
Stocks Forming A Handle
| Company Name |
Symbol | 12 Month RS |
Price | Technical condition |
Average Volume in 000’s |
Pivot |
| Magma Design | ( LAVA | Quote | Chart | News | PowerRating) |
84 | 22.85 | 2-month cup w/ handle entry | 704 | 24.03 |
| Marvel Enterprises | ( MVL | Quote | Chart | News | PowerRating) |
87 | 28.94 | 3-Month consolidation w/ ‘handle’ entry | 971 | 30.16 |
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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, regardless of price at that time.
| Company Name |
Symbol | 12 Month RS |
Price | Average Volume-50 Day in 000’s |
Pivot | 52-Week High |
| Nextel | ( NXTL | Quote | Chart | News | PowerRating) |
83 | 27.86 | 15,991 | 15.85 | 28.39 |
| Gtech Holdings |
( GTK | Quote | Chart | News | PowerRating) |
64 | 48.80 | 496 | 37.05 or 40.80 |
51.19 |
| Centex | ( CTX | Quote | Chart | News | PowerRating) |
77 | 104.40 | 1,239 | 59.80 & 79.52 |
113.08 |
| Countrywide Financial | ( CFC | Quote | Chart | News | PowerRating) |
75 | 74.66 | 3,057 | 59.16 | 81.81 |
| Whole Foods Market | ( WFMI | Quote | Chart | News | PowerRating) |
54 | 66.45 | 759 | 56.34 | 67.63 |
| Marvel Enterprises | ( MVL | Quote | Chart | News | PowerRating) |
87 | 28.94 | 1,032 | 26.05 | 31.95 |
| Sharper Image | ( SHRP | Quote | Chart | News | PowerRating) |
73 | 32.20 | 332 | 27.85 | 34.10 |
| Garmin | ( GRMN | Quote | Chart | News | PowerRating) |
71 | 53.69 | 590 | 46.85 | 57.84 |
| Zebra Technologies | ( ZBRA | Quote | Chart | News | PowerRating) |
68 | 65.38 | 484 | 56.18 | 67.20 |
| St. Jude Medical | ( STJ | Quote | Chart | News | PowerRating) |
50 | 60.82 | 1,204 | 58.89 | 64 |
| San Juan Basin | ( SJT | Quote | Chart | News | PowerRating) |
64 | 21.67 | 169 | 19.18 and 20.12 | 22 |
| Aaipharma | ( AAII | Quote | Chart | News | PowerRating) |
87 | 25.11 | 584 | 20.15 | 26.41 |
| Biolase Technology | ( BLTI | Quote | Chart | News | PowerRating) |
92 | 19.15 | 888 | 16.13 | 19.16 |
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 |
| Chicago Bridge & Iron | ( CBI | Quote | Chart | News | PowerRating) |
70 | 28.85 | 178 | 28.60 | 30 |
| Altiris | ( ATRS | Quote | Chart | News | PowerRating) |
89 | 36.89 | 334 | 36.15 | 37.42 |