This Week’s Intermediate-Term Report
Last week I
stated that it was a neutral market based on price and volume statistics, but
with bases starting to form in many growth stock issues, we should stay prepared
to trade. Unfortunately, I also placed an
even greater emphasis on how quickly conditions could very well change,
and that any potential triggers should be taken with tighter risk parameters
set. With the Nasdaq finishing off the week down a nasty 6.32%, let’s just say
that it was a good week to heed caution if the horns were donned early in the
week.
Seriously, who knew how quickly ‘the
smart money’ buyers–that had just given a boost to many of our stocks, would be
so quick to become ‘the smart money’ sellers? This action of course, puts most
of our stocks either in jeopardy of breaking their respective basing patterns,
or simply broken at this juncture–with major repairs needed before we’ll see
those names again. Four sessions of hard sell-side distribution, of which three
are definitely classified as such by the rules of engagement, and we, as growth
stock investors, are left to do the proverbial sitting on thumbs routine. Fresh
purchases, unless you happen to be a reversal swing trader–are out of the
picture for the time being. The market is by most every technical definition,
‘well-oversold’–putting quite a few of our growth issues near pattern supports,
and giving the reversal players out there, their own opportunities in the
short-term. As far as our own niche within the trading universe, preservation of
cash and management of existing positions are the reality of the day, until
conditions within the indices and our select group of growth stocks, make a turn
for the better.
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 | 3- Month RS |
ADX/DMI |
Price | Pivot +.10 |
Technical Perspective |
| St. Jude Medical | ( STJ | Quote | Chart | News | PowerRating) |
81 | 25/up | 76.31 | 78.93 | 8-Week cup and handle |
| Ace Cash Express | ( AACE | Quote | Chart | News | PowerRating) |
62 | 14/down | 30.50 | 32.70 | 2-Month ‘W’ base w/ pivot |
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 |
| First Cash Financial | ( FCFS | Quote | Chart | News | PowerRating) |
92 | 22.69 | 8-Week lateral base | 242 | 25.13 |
Stocks Forming A Handle Or Pivot Base
| Company Name |
Symbol | 12 Month RS |
Price | Technical condition |
Average Volume in 000’s |
Pivot |
| H D F C Bank | ( HDB | Quote | Chart | News | PowerRating) |
71 | 29.01 | 3-Month ‘W’ bottom w/ 8% pivot | 61 | 32.07 |
| Engineered Support Systems | ( EASI | Quote | Chart | News | PowerRating) |
80 | 48.65 | 4.5-Month ‘W’ bottom w/ 10% pivot | 304 | 55.59 |
| Integra Lifesciences | ( IART | Quote | Chart | News | PowerRating) |
49 | 32 | 5.5-Month ‘W’ w/ 3% pivot | 183 | 33.96 |
| Sonic Solutions | ( SNIC | Quote | Chart | News | PowerRating) |
84 | 18.03 | 3-Month ‘W’ base forming w/ 8.5% pivot | 297 | 20.60 |
| eResearch | ( ERES | Quote | Chart | News | PowerRating) |
89 | 31.48 | 3-Month base w/ handle | 977 | 35.72 |
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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.
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| Company Name |
Symbol | 12 Month RS |
Price | Average Volume-50 Day in 000’s |
Pivot | 52-Week High |
| Zebra Technologies | ( ZBRA | Quote | Chart | News | PowerRating) |
78 | 73.29 | 344 | 56.18 | 76.68 |
| St. Jude Medical | ( STJ | Quote | Chart | News | PowerRating) |
74 | 76.31 | 1,500 | 58.89 | 79.03 |
| NII Holdings | ( NIHD | Quote | Chart | News | PowerRating) |
94 | 35.05 | 907 | 26.90 | 41.95 |
| Whole Foods Market | ( WFMI | Quote | Chart | News | PowerRating) |
80 | 79.99 | 735 | 56.34 | 81.07 |
| Guitar Center | ( GTRC | Quote | Chart | News | PowerRating) |
81 | 41.52 | 252 | 37 – 37.20 | 41.83 |
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 |