The Intermediate-Term Report

  • June 13, 2003
  • Chris Tyler

 

‘I want a new
drug….’ The Huey Lewis song came to mind as the Pharmaceutical sector (PPH)
was one of the weeks big winners. Since
we last left off, the markets have experienced yet another higher high within
our confirmed uptrend. Nice and boring, and just the way we like it. What’s
wrong with a series of fresh benchmarks followed by some good ol’ fashioned
profit-taking? Nothing at all my friends, nothing at all. Monday and Tuesday
sent two of our ETFs, the Spyders
(
SPY |
Quote |
Chart |
News |
PowerRating) and the Diamonds
(
DIA |
Quote |
Chart |
News |
PowerRating)
onto fresh green turf before giving way to some well needed tending, to the
ground underneath. Remember, the seeds have to planted underneath the surface
every so often, if we expect our ETFs to blossom once more. Friday’s action was
a continuation of the fertilization process as the markets continued their
sideways consolidation around the unchanged mark. The net result is very flat
trade for the past two weeks on a closing basis…nice.

Gold fever? Maybe that’s why the
drug stocks were able to jump to the top of the relative strength list before
succumbing to a little headache of their own. Gold & Silver
(
$XAU.X |
Quote |
Chart |
News |
PowerRating)
was a heavy favorite in this weeks trade, as was the ever popular new gold rush,
the Internet sector
(
HHH |
Quote |
Chart |
News |
PowerRating). Some of our more recent favorites such as
the Broker/Dealers
(
$XBD.X |
Quote |
Chart |
News |
PowerRating) and Biotechnology
(
BBH |
Quote |
Chart |
News |
PowerRating)
came under a bit more pressure after scoring fresh highs earlier in the week.
‘Relax already, the charts are still recommending the market, don’t worry about
what your broker is or isn’t recommending.’  Pullbacks are a natural course
for the markets to pursue when digesting gains. When the situation changes to
something that requires more than a swig from the Pepto bottle, you’ll be the
first to know. How do I know that? Well, if you’re diligent enough to be doing
your homework (and this ain’t the worst place to start), you’ll be perfectly
aware of the ‘patient’s condition’, well ahead of the other prognosticators.
You’ll see the health of the market deteriorate beyond the occasional sick day,
into something more serious.

With the large percentage run up
that some of our leading sectors and stocks witnessed, there are going to be
some dramatic ‘pullbacks’ from highs (i.e.
(
USNA |
Quote |
Chart |
News |
PowerRating)), and/or casualties, but
that’s when it’s necessary to emphasize the health of the overall market. This
is especially important when we are analyzing our growth stocks and those
looking to make the grade. As it stands, the current prognosis is still a
healthy report card. After
two weeks of consolidation-type action, Mark
Boucher’s Top
RS and ER List is no longer dominating the ‘non existent’ Bottom
RS and ER list, but  the list of stocks making fresh 52-Week Highs
continues to dominate over those making new yearly lows. So while Mark Boucher’s
list has cooled off, the overall environment is still conducive to looking for
the next breakout candidate. Yes, we have pulled back in some individual issues.
If you haven’t been diligent in taking partial profits, then some of the recent
‘gifts under the trading tree’ have possibly turned into something  other
than a ‘present’, and more like a memory. Remember, it’s always nice to give
back, when you receive so much early on in the season.

Taking partial profits is a sign of
a job well done, but it doesn’t mean that we’re off duty in our search for
strong stocks that meet our specific trade criteria when the market environment
is confirming an established uptrend. By continually doing our work, we’ll be
there ready to trade as the next quality growth stock is ready to breakout. We’ve
had another week of consolidation, during which the vast majority of our stocks
made fresh highs and are still acting well as they pull back off of their best
levels. Two amendments this week. Gtech Holdings
(
GTK |
Quote |
Chart |
News |
PowerRating) rallied about
6% higher, but a wide range bar down has sent the stock on to our list of those
stocks requiring special monitoring. Meanwhile, on a more positive note, Nextel
(
NXTL |
Quote |
Chart |
News |
PowerRating) triggered handily through our pivot point from a consolidation
break out on the weekly time frame to score over 13% above our entry. Kudos, and
welcome to the Recent Breakouts list Nextel.

As I’ve mentioned, a week can do a
world of good, and so it goes for our list of potential swing trade candidates.
This week includes four new entries for potential triggers.

 

NYSE NASDAQ
Advancing
Issues		 1418 1521
Declining
Issues		 1389 1550
Total
Volume		 1.69b 1.74b
New
52-week Highs		 109 137
New
52-week Lows		 12 5

 

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
Emulex
(
ELX |
Quote |
Chart |
News |
PowerRating)		 43 23.74 26.74 7-Month
basing pattern
BEA
Systems
(
BEAS |
Quote |
Chart |
News |
PowerRating)		 72 11.30 12.27 4.5-Month
basing pattern
Kronos
(
KRON |
Quote |
Chart |
News |
PowerRating)		 83 48.22 50.02 Weekly
handle forming
Pixar
(
PIXR |
Quote |
Chart |
News |
PowerRating)		 61 59.68 60.23 False
handle b/o at 52-week highs

 

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		 Pivot
           

                       

Stocks Forming A Handle

Company
Name		 Symbol 12
Month RS		 Price Technical
condition		 Average
Volume		 Pivot
Digital
River
(
DRIV |
Quote |
Chart |
News |
PowerRating)		 91 18.35 8-week
handle		 1,300m 20.20

       

 

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)		 75 61.08 2,085M 46.89 63.35
Career
Education 
(
CECO |
Quote |
Chart |
News |
PowerRating)		 77 66.72 774K 54.40 69.35
Centex
Corp.
(
CTX |
Quote |
Chart |
News |
PowerRating)		 78 79.50 1,425M 59.80 87.50
Coach
Inc.
(
COH |
Quote |
Chart |
News |
PowerRating)		 81 50.85 1,015M 28.35 53.53
Hovnanian
(
HOV |
Quote |
Chart |
News |
PowerRating)		 88 62.12 937k 40.90 70.50
Boston
Scientific
(
BSX |
Quote |
Chart |
News |
PowerRating)		 82 60 3,529M 47.65 65.73
Garmin
Ltd.
(
GRMN |
Quote |
Chart |
News |
PowerRating)		 83 44.10 816k 23.46 51.70
International
Game Technology
(
IGT |
Quote |
Chart |
News |
PowerRating)		 71 95.47 1,174M 74.84 97.97
New
Century Financial
(
NCEN |
Quote |
Chart |
News |
PowerRating)		 79 44.21 726K 34.90 50.84
UCBH
Holdings
(
UCBH |
Quote |
Chart |
News |
PowerRating)		 73 27.90 356K 22.60 29.94
Corinthian
Colleges
(
COCO |
Quote |
Chart |
News |
PowerRating)		 75 48.25 831K 43.09 50.58
Endo

Pharmaceutical
(
ENDP |
Quote |
Chart |
News |
PowerRating)		 89 18.45 645K 14.98 19.45
Nextel
(
NXTL |
Quote |
Chart |
News |
PowerRating)		 95 17.78 23,929M 15.85 18.05

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
 Gtech
Holdings
(
GTK |
Quote |
Chart |
News |
PowerRating)		 61 37.50 640K 37.05 40.70

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