Monday’s Stock Watch

• June 6, 2003
• Chris Tyler

 

Since we last
left off the ETFs have put it a stunningly strong performance, mystifying
those not willing to listen to the charts. The NASDAQ, through Thursday’s trade,
racked up 7 straight days of 2 billion plus volume, with six of those sessions
being to the upside. This action has the weekly indices notching yet another
relative high with the institutional type participation that we love to see.
Volume which was already mentioned, and breadth continue to show a solid willingness by the
Big Boys to put their money to work in the equities market. With that said, once
again Mark Boucher’s Top
RS and ER List continues to dominate over a ‘non existent’ Bottom
RS and ER list, and all of the other statistics that we like to see in a
‘confirmed rally’ like the one we are presently experiencing. 

But, what about turnaround Friday?
Truth be told, with record volume showing classic distribution in the NASDAQ,
which has been our leading index, it might be a little frightening to those who
only like to buy when it’s all smiles on CNBC, only to find out that as the
story wore off, so did prices of their favorite stock. For the rest of us, it’s
the first day of what should be some corrective action, within a series of higher highs, and
higher lows. Until the market tells us differently, we are in potential pullback
mode with one day of distribution. Albeit a big day of stock changing hands, but
that’s o.k., because that’s what “we do” when we have outsized gains.
The market has always been comprised of a series of ebbs and flows, even when
there’s obviously a large bias to not “miss the boat”. It’s the very
reason why we scale out of positions in our winning growth stocks. By taking off
pieces as the stock goes in our favor, we can continue to participate in the
upside as “the ducks are quacking to be fed”, but also be in the
admirable position of being ready for that next basing pattern to establish
itself in our favorite growth stock, as the next series of breakouts and higher
highs presents themselves.

Our list of potential swing trade
setups did quite well, helped out especially by Cognos
(
COGN |
Quote |
Chart |
News |
PowerRating),
AdvancePCS
(
ADVP |
Quote |
Chart |
News |
PowerRating), and Quest Diagnostics
(
DGX |
Quote |
Chart |
News |
PowerRating). All three presented
clean entries, and went on to gains that translated into potential profits of
between one to four times the initial position risk. Depending on an individuals
money management style Cognos and AdvancePCS might still be active positions. Artisan
Components
(
ARTI |
Quote |
Chart |
News |
PowerRating), triggered as well, but unfortunately not every trade
can show green at the end of the day. Let me know if you can find that holy
grail. The only one that I know of is keeping our losses small when we’re wrong,
and applying the same care to our winners, so that ‘they can take care of
themselves’, and take care of us as well. 

Our list of recent breakouts fared
very well this week. Most issues scored fresh 52-Week Highs, and even Endo Pharmaceutical
(
ENDP |
Quote |
Chart |
News |
PowerRating) is
now effectively out of
the dog house as it moved handily away from our pivot zone, and on to fresh
highs. Keep a vigilant eye on your positions as always, but especially since we
have had a substantial run up in both our individual issues, as well as the
broader market. Some of our High RS growth stocks, in particular the schooling
stocks, dropped in their RS rankings this week, with closing prices that suggest
less enthusiasm for some of these stocks during the past week. Don’t wait for your stock to make the largest percentage losers
list. Scale out of some portion when you can, not when you have to, and then
always use some type of trailing protective stop on the balance. Our goal is to
participate in the next Dell or Home Depot as it makes its run, but also be
prudent enough to realize that the market is only human. 

 

	NYSE	NASDAQ
Advancing Issues	1382	1417
Declining Issues	1486	1693
Total Volume	2,249b	2,908b
New 52-week Highs	395	261
New 52-week Lows	7	2

 

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 short term in nature. 

None Today.

Company Name	Symbol	12 Month RS	Price	Pivot +.10	Technical Perspective
Â	Â	Â	Â	Â	Â
Â	Â	Â	Â	Â	Â

 

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	Price Change	Average Volume	Pivot
None	Â	Â	Â	Â	Â	Â

                       

Stocks Forming A Handle

Company Name	Symbol	12 Month RS	Price	Price Change	Average Volume	Pivot
None	Â	Â	Â	Â	Â	Â

           

 

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-65 Day	Pivot	52-Week High
Apollo Group	( APOL | Quote | Chart | News | PowerRating)	79	58.53	2,085M	46.89	60.47
Career EducationÂ	( CECO | Quote | Chart | News | PowerRating)	76	62.80	774K	54.40	65.67
Centex Corp.	( CTX | Quote | Chart | News | PowerRating)	85	80.43	1,255M	59.80	83.54
Coach Inc.	( COH | Quote | Chart | News | PowerRating)	86	52.63	1,015M	28.35	53.45
Hovnanian	( HOV | Quote | Chart | News | PowerRating)	92	61.23	665K	40.90	66.10
Boston Scientific	( BSX | Quote | Chart | News | PowerRating)	86	56.06	3,056M	47.65	58.42
Garmin Ltd.	( GRMN | Quote | Chart | News | PowerRating)	89	50.26	688K	23.46	51.70
International Game Technology	( IGT | Quote | Chart | News | PowerRating)	71	91.50	1,161M	74.84	93.98
New Century Financial	( NCEN | Quote | Chart | News | PowerRating)	94	49.16	726K	34.90	51.10
UCBH Holdings	( UCBH | Quote | Chart | News | PowerRating)	74	27.10	356K	22.60	27.73
Corinthian Colleges	( COCO | Quote | Chart | News | PowerRating)	79	46.60	964K	43.09	49.28
Endo Pharmaceutical	( ENDO | Quote | Chart | News | PowerRating)	89	18.01	513K	14.98	19.19

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.

Company Name	Symbol	12 Month RS	Price	Average Volume-65 Day	Pivot	52-Week High
Â	Â	Â	Â	Â	Â	Â