This Week’s Intermediate-Term Report
Another
week has passed since our report last Thursday, and although both the S&P500 and
Nasdaq Composite have moved up approximately 1%–not much has changed
in the opinion of this cautious bull. Both indices remain in their respective
weekly bases within the market’s ongoing confirmed rally. Unfortunately, it is
the Nasdaq and the majority of growth stocks that we follow for solid clues
which for the most part remain entrenched, with few signs of real institutional
conviction. For cautious bulls everywhere, that’s enough evidence to keep us
patiently waiting and stalking our stocks from the sidelines–as hopefully the
next round of high-probability trades re-emerge in the not too distant future.
With the majority of growth stock
issues deeply entrenched in their respective bases and a lagging Nasdaq
Composite showing yet again, two more sessions of distribution, the best thing
that we can do as growth stock investors is to do the proverbial sitting on
thumbs routine while we wait for more constructive price and volume behavior to
appear. The good news thus far is that the Naz has continued to hold technical
supports that were tested a little less than two weeks ago. The index at it’s technical lows is off 7.5% from its 52-week
highs. Price action in that respect is still considered to be corrective and
healthy within the normal course of a bull market, but with volume still
indicating more signs of distribution, and price ultimately needing additional
work in most individual growth stocks–for the time being, waiting for better
opportunities to present themselves within our ongoing ‘confirmed rally’ doesn’t
seem like the worst policy at this juncture.
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. When the breakouts stop
triggering consistently–it’s time to focus your energies on existing positions.
Bottom line–as technicians, we know where we like to make adjustments, either
adding to, or decreasing our portfolio, but it doesn’t mean that the decision is
the same for every trader. While the markets are sailing high, we realize that
between the peaks, troughs do exist, and it’s always in our best interest to
stay prepared for whatever comes our way. When the time comes that the indices
are ‘precariously’ testing levels of support once again, as they always do–many
of the stocks we watch, will actually be breaking out to fresh highs, or ready
to, 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 |
| Guitar Center | ( GTRC | Quote | Chart | News | PowerRating) |
59 | 35.98 | 37 – 37.20 | 3-month Cup and Handle All-Time-Highs |
| Safenet | ( SFNT | Quote | Chart | News | PowerRating) |
68 | 38.82 | 41.90 | 3-Month base w/ 4-week right side of base consolidation trigger |
| Skywest | ( SKYW | Quote | Chart | News | PowerRating) |
67 | 19.79 | 20.80 | 5-Month Cup w/ handle entry |
| California Amplifier | ( CAMP | Quote | Chart | News | PowerRating) |
97 | 14.70 | 16.97 | 2-month lateral base |
| Kensey Nash | ( KNSY | Quote | Chart | News | PowerRating) |
43 | 26.15 | 28.15 | 6-Month Cup w/ handle |
| Cyberguard | ( CGFW | Quote | Chart | News | PowerRating) |
62 | 10.35 | 12.35 | 4-Month 40% deep Cup & Handle weekly base |
| Wabash | ( WNC | Quote | Chart | News | PowerRating) |
93 | 29.34 | 30.83 | 2-Month lateral base |
| Silicon Labs | ( SLAB | Quote | Chart | News | PowerRating) |
80 | 57.99 | 60.02 | 3.5 Month cup w/ ‘high’ handle |
| SC POOL | ( POOL | Quote | Chart | News | PowerRating) |
73 | 36.92 | 37.45 | 4-Month lateral base |
| PETsMart | ( PETM | Quote | Chart | News | PowerRating) |
76 | 26.93 | 27.35 | 4-month cup w/ handle entry |
| Ameritrade | ( AMTD | Quote | Chart | News | PowerRating) |
91 | 17 | 17.77 | 6-week lateral base |
| Amdocs | ( DOX | Quote | Chart | News | PowerRating) |
73 | 28.59 | 29.84 | 6-week lateral base |
IT Watch List Action:
As always, the search goes on for top stocks meeting our fundamental and
technical criteria, but issues may still show ‘flaws.’ The most common ‘flaw’
being ROE, according to strict IBD-style investing . Always do your own
homework before entering a trade .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 |
| Marvell Technology | ( MRVL | Quote | Chart | News | PowerRating) |
71 | 44.55 | 4-Month high level lateral base | 2,512 | 46.73 |
| Dendrite | ( DRTE | Quote | Chart | News | PowerRating) |
57 | 16.40 | 4-Month high level lateral base | 229 | 17.85 |
Stocks Forming A Handle
| Company Name |
Symbol | 12 Month RS |
Price | Technical condition |
Average Volume in 000’s |
Pivot |
| OmniVision | ( OVTI | Quote | Chart | News | PowerRating) |
81 | 29.59 | 3-Month cup and handle | 3,871 | 33.56 to 33.93 |
| Serologicals | ( SERO | Quote | Chart | News | PowerRating) |
72 | 18.78 | 2-month cup and handle | 489 | 19.07 to 19.39 |
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 or a pullback of greater than 25% from highs.
| Company Name |
Symbol | 12 Month RS |
Price | Average Volume-50 Day in 000’s |
Pivot | 52-Week High |
| Centex | ( CTX | Quote | Chart | News | PowerRating) |
80 | 111.70 | 1,548 | 59.80 & 79.52 |
113.08 |
| Countrywide Financial | ( CFC | Quote | Chart | News | PowerRating) |
80 | 92.64 | 2,666 | 59.16 | 93.64 |
| Whole Foods Market | ( WFMI | Quote | Chart | News | PowerRating) |
67 | 77.61 | 687 | 56.34 | 79.24 |
| Marvel Enterprises | ( MVL | Quote | Chart | News | PowerRating) |
78 | 32.25 | 889 | 26.05/30.16 | 35.73 |
| Sharper Image | ( SHRP | Quote | Chart | News | PowerRating) |
75 | 37.06 | 364 | 27.85 | 39.92 |
| Zebra Technologies | ( ZBRA | Quote | Chart | News | PowerRating) |
68 | 71.50 | 348 | 56.18 | 72.51 |
| St. Jude Medical | ( STJ | Quote | Chart | News | PowerRating) |
63 | 74.78 | 1,659 | 58.89 | 76.10 |
| Biolase Technology | ( BLTI | Quote | Chart | News | PowerRating) |
80 | 17.88 | 891 | 16.13 | 21.39 |
| NII Holdings | ( NIHD | Quote | Chart | News | PowerRating) |
96 | 109.42 | 398 | 80.70 | 111 |
| Mobile Telesys | ( MBT | Quote | Chart | News | PowerRating) |
88 | 114.40 | 255 | 87.60 | 115.85 |
| Coach | ( COH | Quote | Chart | News | PowerRating) |
79 | 43.31 | 1,693 | 40.94 | 43.50 |
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 |
| na | na | na | na | na | na | na |