This Week’s Intermediate-Term Report
As this report is
being written on Thursday evening, not a whole lot has happened in the Naz,
S&P500, or leading growth stock issues to change this cautious bull’s
mind that more solid technical work still needs to be seen before we can enter
another conducive, high-probability environment for our style of trading. For
the week, the broader S&P500 is off a fractional .13%, but the closing price
also marks an almost identical level that was claimed five weeks ago—putting
this index in a lateral consolidation of approximately 3.5% for that time
period. Our normally leading Nasdaq, with the majority of growth stock issues is
off another .65% and remains below key MAs, congestion highs–but even more
important, has shown no institutional support in recent days for price to move
aggressively higher.
With the majority of growth stock
issues deeply entrenched in their respective bases and a lagging Nasdaq
Composite that has shown another two 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, while trading lower this week,
did successfully test a key zone of support. The bad news thus far is that two
sessions later, the volume off of those supports has been well-below average and
makes the pullback off of those levels look more like an opportunity to clear
the sheets of any holdings, rather than looking for fresh opportunities within
growth issues. 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) |
68 | 36.36 | 37.20 | 3-month high level weekly basing pattern w/ All-Time-High triggers |
| Safenet | ( SFNT | Quote | Chart | News | PowerRating) |
71 | 38.35 | 41.90 | 3-Month base w/ 4-week right side of base consolidation trigger |
| Skywest | ( SKYW | Quote | Chart | News | PowerRating) |
68 | 19.25 | 20.80 | 5-Month Cup w/ handle entry |
| California Amplifier | ( CAMP | Quote | Chart | News | PowerRating) |
97 | 15.31 | 16.97 | 9-Week bullish gap lateral base |
| Kensey Nash | ( KNSY | Quote | Chart | News | PowerRating) |
52 | 27.01 | 28.15 | 6-Month Cup w/ handle |
| Scientific Games | ( SGMS | Quote | Chart | News | PowerRating) |
89 | 16.51 | 18.01 | 2-Month high level double bottom base |
| Cyberguard | ( CGFW | Quote | Chart | News | PowerRating) |
72 | 10.70 | 12.35 | 4-Month 40% deep Cup & Handle weekly base |
| Standard Pacific | ( SPF | Quote | Chart | News | PowerRating) |
71 | 50.99 | 51.60 | 3-Month lateral base |
| Wabash | ( WNC | Quote | Chart | News | PowerRating) |
94 | 28.89 | 30.83 | 2-Month cup w/ ‘high’ handle |
| Silicon Labs | ( SLAB | Quote | Chart | News | PowerRating) |
78 | 56.62 | 60.02 | 3.5 Month cup w/ ‘high’ handle |
| SC POOL | ( POOL | Quote | Chart | News | PowerRating) |
70 | 35.90 | 37.45 | 4-Month lateral base |
| Patina Oil & Gas | ( POG | Quote | Chart | News | PowerRating) |
70 | 50.24 | 50.85 | 7-Week cup and handle b/o |
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 |
| Coach | ( COH | Quote | Chart | News | PowerRating) |
72 | 39 | 2.5-Month lateral base | 1,926 | 40.94 |
| Marvell Technology | ( MRVL | Quote | Chart | News | PowerRating) |
64 | 42.88 | 3.5-Month high level lateral base | 2,512 | 46.73 |
| Hot Topic | ( HOTT | Quote | Chart | News | PowerRating) |
70 | 29.58 | 4-Month base on base pattern | 809 | 32.40 |
| Dendrite | ( DRTE | Quote | Chart | News | PowerRating) |
59 | 16.84 | 3.5 Month base | 229 | 17.85 |
Stocks Forming A Handle
| Company Name |
Symbol | 12 Month RS |
Price | Technical condition |
Average Volume in 000’s |
Pivot |
| Integra Life Sciences | ( IART | Quote | Chart | News | PowerRating) |
52 | 33.19 | 3-Month cup and handle | 250 | 33.96 |
| OmniVision | ( OVTI | Quote | Chart | News | PowerRating) |
79 | 29.24 | 3-Month cup and handle | 4,093 | 33.56 to 33.93 |
| Serologicals | ( SERO | Quote | Chart | News | PowerRating) |
74 | 18.66 | 7-Week cup and handle | 489 | 18.81 or 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 |
| Nextel | ( NXTL | Quote | Chart | News | PowerRating) |
71 | 25.90 | 12,334 | 15.85 | 29.37 |
| Centex | ( CTX | Quote | Chart | News | PowerRating) |
76 | 104.15 | 1,429 | 59.80 & 79.52 |
113.08 |
| Countrywide Financial | ( CFC | Quote | Chart | News | PowerRating) |
80 | 88.07 | 2,452 | 59.16 | 91 |
| Whole Foods Market | ( WFMI | Quote | Chart | News | PowerRating) |
63 | 76.74 | 718 | 56.34 | 78.28 |
| Marvel Enterprises | ( MVL | Quote | Chart | News | PowerRating) |
82 | 32.78 | 923 | 26.05/30.16 | 35.30 |
| Sharper Image | ( SHRP | Quote | Chart | News | PowerRating) |
76 | 36.10 | 340 | 27.85 | 39.92 |
| Zebra Technologies | ( ZBRA | Quote | Chart | News | PowerRating) |
59 | 67.58 | 362 | 56.18 | 71.30 |
| St. Jude Medical | ( STJ | Quote | Chart | News | PowerRating) |
63 | 73.22 | 1,292 | 58.89 | 76.10 |
| Biolase Technology | ( BLTI | Quote | Chart | News | PowerRating) |
85 | 18.91 | 760 | 16.13 | 21.39 |
| NII Holdings | ( NIHD | Quote | Chart | News | PowerRating) |
95 | 101.80 | 354 | 80.70 | 106.48 |
| Mobile Telesys | ( MBT | Quote | Chart | News | PowerRating) |
84 | 104 | 240 | 87.60 | 109.25 |
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 |