Monday’s Stock Watch

• May 9, 2003
• Chris Tyler

 

The ETFs ended the week with slight
gains, tacking on an additional .4 – .8% in our ongoing ‘confirmed rally’. Fresh
relative highs in all of the ETFs, on solid volume and breadth statistics
started the market proxies off on the right foot Monday and Tuesday. Mid-week
brought about an orderly pullback on lighter volume into prior resistance zones.
Friday’s trade ushered in some bargain hunting, specifically on the heels of
positive news out of semiconductor goliath, Intel
(
INTC |
Quote |
Chart |
News |
PowerRating). Though
volume in this session was less than the more recent accumulation days witnessed
en route to multi-month highs, the market breadth statistics clearly favored the
upside as we close out the week on a positive note. For the day the ETFs closed
near their highs, up between 1.25 and 2.25%, with all of our index proxies now
above their major moving averages, in consolidation type patterns.

Market conditions continue to favor
the bulls as the continuation of our uptrend off the March lows persists. A
series of higher highs, and higher lows with stronger volume on up days and
lower volume on pullbacks has been textbook material for bullish market
confirmation. Growth stocks continue to lead the move higher. The technology
arena has held center stage as of late with strong percentage gains in Internet
related issues
(
HHH |
Quote |
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News |
PowerRating) such as Amazon
(
AMZN |
Quote |
Chart |
News |
PowerRating), Netease
(
NTES |
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News |
PowerRating) and
eBay
(
EBAY |
Quote |
Chart |
News |
PowerRating). Biotechnology
(
BBH |
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Chart |
News |
PowerRating), semiconductors
(
SMH |
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Chart |
News |
PowerRating),
Telecom
(
$IXTC.X |
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PowerRating), and Networking
(
NWX.X |
Quote |
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News |
PowerRating) have also
continued to provide sector leadership. Also showing consistent strength this
week were stocks in the housing sector (Centex
(
CTX |
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Chart |
News |
PowerRating) and Hovnanian
(
HOV |
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News |
PowerRating)),
and the Oil Services sector
(
OIH |
Quote |
Chart |
News |
PowerRating). The
breadth of Mark Boucher’s Top
RS and ER List continues to dominate over a ‘non existent’ Bottom
RS and ER list, not so coincidentally.

Stocks on our watch lists continue
to give us positive signs, although it wasn’t without casualty. We saw a string of
new highs established for the week, but one stock has been removed from our
watchlist, and two others are testing prices close to their pivots. Chicos
(
CHS |
Quote |
Chart |
News |
PowerRating)
gapped lower in Thursday’s trade,  more than 7% through our pivot entry,
removing itself from our current watch list. Both Endo Pharmaceuticals
(
ENDP |
Quote |
Chart |
News |
PowerRating)
and Expeditors International
(
EXPD |
Quote |
Chart |
News |
PowerRating) are near their pivots, and require
careful monitoring. The latter is testing, after gapping down (also in
Thursday’s session), while (ENDP) has pulled back to prior highs on very heavy
volume. The
success of our High RS stocks, and other growth stock breakouts are important to watch for the health of the overall
market.

 As always, the search goes on for top stocks meeting our
fundamental and technical criteria. A couple of stocks as of Friday’s close that
look interesting. Both issues are ‘light’ in the classic ROE threshold, but
nonetheless might deserve consideration since they are sector leaders at this
time. Artisan Components
(
ARTI |
Quote |
Chart |
News |
PowerRating), within the semiconductor
manufacturing group has carved out a Cup & Handle High level base for the
past six months, closing slightly above pattern highs. On the weekly time frame
the smaller pattern fore mentioned looks to be ‘the handle’ of a much larger
pattern dating back to January of 2000. Gen-Probe
(
GPRO |
Quote |
Chart |
News |
PowerRating) broke out
of a three month Cup & Handle pattern early last week on a gap higher. The
stock falls under the medical / biotechnology grouping and holds top honors in
its EPS ranking within this arena. The technical action on a pullback off of
established highs looks very strong as evidenced by volume, and by the fact that
support at this weeks lows were ‘put in’ well above the 38% Fibonacci
retracement level (based on Cup lows). Today’s wide range reversal bar higher on
stronger volume is also a sign of institutional support in the issue.

 

                           

 

Watch List Action:

Boston Scientific
(
BSX |
Quote |
Chart |
News |
PowerRating) has been on our list of
stocks forming a handle. With this weeks consolidation action, and some bullish
signs of buy side interest, this one should stay on the monitor for breakouts
above our pivot of 47.65.

                           

 

Breakouts For The Week Ended

Hovnanian
(
HOV |
Quote |
Chart |
News |
PowerRating) is one of two new members
in our Breakouts List. The issue, within the housing sector, broke out of a
handle formation through our pivot of 40.90 to close out the week up nearly 2.5
points from our entry price. Volume was the highest since late January. Corinthian
Colleges
(
COCO |
Quote |
Chart |
News |
PowerRating) broke out during the prior week between our reports. The
stock triggered above our pivot, but well within the ‘pivot zone’ for proper
entry out of patterns.

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	Pivot	52-Week High
Apollo Group	(APOL)	87	56.46	1,940M	46.89	57.42
Career Education Corp.	(CECO)	84	60.79	718M	54.40	62
Centex Corp.	(CTX)	81	67.89	1,291M	59.80	68.24
Coach Inc.	(COH)	91	45.50	1,155M	28.35	45.52
Hovnanian	(HOV)	89	43.31	480K	40.90	43.50
Endo Pharmaceuticals	(ENDP)	91	15.40	413K	14.98	18
Expeditors International of Washington	(EXPD)	71	34.60	1,034M	34.54	38.00
Garmin Ltd.	(GRMN)	94	45.90	620K	23.46	46.15
International Game Technology	(IGT)	82	89.03	1,220M	74.84	89.03
New Century Financial	(NCEN)	84	40.13	487K	34.90	42.25
UCBH Holdings	(UCBH)	82	26.69	378K	22.60	26.77
Corinthian Colleges	(COCO)	88	46.31	1,023M	43.09	48.30

 

Stocks Forming a Handle

Company Name	Symbol	12 Month RS	Price	Average Volume	Pivot
Boston Scientific	(BSX)	88	46.91	2,762M	47.65

Stocks Building A Base

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