Monday’s Stock Watch

• May 30, 2003
• Chris Tyler

 

The week may have
been abbreviated due to the holiday on Monday, but
Wall Street was ready for work on Tuesday. A solid percentage day higher on
strong volume sent the The Spyders (SPY) and Nasdaq 100 (QQQ) to their best
levels of the year, while the Diamonds (DIA) had to settle for it’s best finish
in four months. Wednesday was spent testing slightly higher levels before ending
the session in consolidation type fashion, on lighter volume. The wild card of
the week was Thursday’s trade, as heavier trade was witnessed on poor closing
action in the ETFs. The DIAs, always the laggard, led to the downside, with what
looked to be the start of some possible percentage pullbacks off of our newly
established highs. The SPYs lost fractionally on the session, while the QQQs
kept on the ‘green turf’, but also looked tired by the close as it finished off
in a shooting star (candle stick analysis). Friday brought out the ‘Purchasing
Managers’ in droves, as a PMI report led to a trend day higher on the best
volume of the week, as the fund managers were now only concerned with
“shooting for the stars”, and not any fancy technical analysis.

Another week that witnessed higher
highs and higher lows as our established, ‘confirmed rally’ continues to march
on. There looked to be 2 days marked by accumulation, with Friday’s action being
one of the heaviest of the year, and one day of distribution, or digestion if
you may, in Thursday’s trade. The
breadth of Mark Boucher’s Top
RS and ER List continues to dominate over a ‘non existent’ Bottom
RS and ER list, as well as the other usual gauges of market health such as
new 52-Week highs vs. 52-Week lows. The strong continued to ‘build up’ sizable
percentage gains. The very solid Housing
sector
(
$HGX.X |
Quote |
Chart |
News |
PowerRating) tacked on more ‘white sticks’, while the Broker /
Dealers made a sizable percentage run to end up near the top of this weeks
strongest sectors. The
Internet
(
HHH |
Quote |
Chart |
News |
PowerRating) also continued higher, but was marked by a healthy
consolidation at 52-Week Highs, during the past three sessions.

Our list of potential swing trade
setups did quite well, helped out especially by QLogic
(
QLGC |
Quote |
Chart |
News |
PowerRating), and
of course our little friend with the horns. Artisan Components
(
ARTI |
Quote |
Chart |
News |
PowerRating)
and Citrix Systems
(
CTXS |
Quote |
Chart |
News |
PowerRating) also distributed some gains to those so
inclined to trade out of the prior patterns. Citrix established a fresh 52-Week
High, while Artisan has now established an interesting looking Cup & Handle,
for further potential trade opportunities. With all of these swing positions,
the opportunity for some profit taking has been available, and in my opinion
definitely warranted. We always strive to let our profits run, but we do try to
do this through the science of proper money management. Through the use of
scaling out of our winners, and trailing stops we can continue to run with the
bull, without getting mauled by the bear.

The market, while working very
nicely in our favor, is short term overbought, right into daily and weekly chart
resistance levels. We’ve all seen how pullbacks and corrections can lead to
something much nastier if care is not taken, so just a friendly, well placed
piece of advice, to remember that where you end up exiting is what makes the
difference to the bottom line. On that note, there were no stop loss amendments
to our position list, as our list saw over half of the issues trade up to fresh
52-Week Highs. The Commercial Services sector that includes Apollo, Corinthian,
and Career Education played some catch up as two of the three moved into that
cherished list of market performers. Corinthian, which had been on our ‘due
diligence’ list came within .11 of testing its pivot before reversing to close
out the week strong. This action has the stock moving back into our recent
breakouts list. Endo Pharmaceutical remains on our double ‘d’ list as it trades
within a point of its pivot, and has seen a dwindling level of institutional
support as evidenced by an Accumulation / Distribution ranking of D+.

	NYSE	NASDAQ
Advancing Issues	2254	2185
Declining Issues	619	954
Total Volume	2,095b	2,261b
New 52-week Highs	363	220
New 52-week Lows	16	4

 

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. 

Company Name	Symbol	12 Month RS	Price	Pivot +.10	Technical Perspective
Artisan Components	( ARTI | Quote | Chart | News | PowerRating)	91	22.03	22.50	Gap handle pivot play using prior pivot low of 21.25 (-.10) as initial stop loss
Cognos	( COGN | Quote | Chart | News | PowerRating)	61	27.44	28.15	‘micro’ daily cup and ‘pivot’ handle using pivot lows as initial stop
Nextel	( NXTL | Quote | Chart | News | PowerRating)	91	14.99	15.85	high level basing pattern break out
Advancepcs	( ADVP | Quote | Chart | News | PowerRating)	74	33.10	34.46	ascending triangle b/o using pattern support as initial stop loss
Quest Diagnostics	( DGX | Quote | Chart | News | PowerRating)	30	63.36	63.51	7-Month Cup & Handle b/o using 61.90, .09 below prior daily pivot high as initial stop loss

 

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)	82	57.84	2,085M	46.89	58.42
Career EducationÂ	( CECO | Quote | Chart | News | PowerRating)	80	61.39	774K	54.40	62
Centex Corp.	( CTX | Quote | Chart | News | PowerRating)	83	77.64	1,255M	59.80	79
Coach Inc.	( COH | Quote | Chart | News | PowerRating)	88	49.13	1,015M	28.35	49.25
Hovnanian	( HOV | Quote | Chart | News | PowerRating)	92	57.95	665K	40.90	57.95
Boston Scientific	( BSX | Quote | Chart | News | PowerRating)	84	52.10	3,056M	47.65	52.25
Garmin Ltd.	( GRMN | Quote | Chart | News | PowerRating)	89	48.25	688K	23.46	49.13
International Game Technology	( IGT | Quote | Chart | News | PowerRating)	72	88.04	1,161M	74.84	90.45
New Century Financial	( NCEN | Quote | Chart | News | PowerRating)	92	46.80	726K	34.90	47.75
UCBH Holdings	( UCBH | Quote | Chart | News | PowerRating)	73	25.95	356K	22.60	27.67
Corinthian Colleges	( COCO | Quote | Chart | News | PowerRating)	84	47.06	964K	43.09	48.30

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
Endo Pharmaceutical	(ENDP)	91	15.36	513K	14.98	18