This Week’s Intermediate-Term Report

• September 12, 2003
• Chris Tyler

Much
better…Since we
last left off the ‘mooovement’ to higher ground has been tempered by a multiday
consolidation/pullback within our ‘confirmed uptrend.’ Two of
our three market proxies started off the week at fresh 52-week highs before
giving way to a bull already in ‘pause mode’ from the prior week. This action
has resulted in, more or less, eight days total of retrenching, and what looks to
be a potential platform for higher trade after a week of, all said and done,
essentially unchanged prices in our ETF friends.

Last week we stated that: ‘The technical evidence remains
compelling (if in reading my report you hadn’t figured it out by now). But, the
three days of consolidation work that our index friends put in late last week
might be prone to some further profit-taking that looks more like an actual
pullback. With Fibonacci ‘clusters’ of overhead resistance right above our most
recent highs, channel resistance in our upward trending market proxies, and
probably a few less ‘shorts’ to push the market higher, the higher probability
bet comes in the form of a small percentage pullback towards some key technical
levels. Fibonacci retracements from the August pivot lows, prior price
congestion acting as support, as well as some key exponential moving averages (EMAs)
give us something to work with…’

Oh my, and how the market delivered the
goods. 2% to 2.5% percentage pullbacks to key technical zones comprised of the
20-Day EMAs, daily price pivots, and our Fibonacci supports off August pivot
lows all came into play during the last three days of the week as we made
classic intraday technical tests of our awareness zones.

During the past week, the one
nagging factor would be that some ‘concerning evidence’ comes in the form of
distribution days gaining ground within our three-week count cycle (a la IBD).
Our market leader the Nasdaq, and home to many of our growth stocks has notched
three days thus far. The Dow’s count is also at three, while the S&P 500
cash is showing two days of distribution. Personally, it’s a small concern, but
considering that accumulation days still outweigh decisive selling on the part
of institutions by anywhere from 1.67:1 to 2:1, and that the ‘hardest’ selling
came on what could most likely be labeled ‘a fear induced’ sell-off due to the
tragic anniversary of 9/11 this past week, and I’ll give you my token, ‘so far,
so good’, humble opinion.

Since the price consolidation work
looks good, but the necessary volume is still needed to thrust ‘us’ higher, we
need to still be aware of potential high-probability support zones that confirm
our bull market. The levels laid out last week are still in effect after our
highest levels were tested during the past three sessions. Actually some of the
numbers are to be revised upwards based off of our moving averages and slightly
higher 52-week highs from Monday, that ultimately affect our Fibonacci support
levels: Fibonacci retracements from the August pivot lows, prior price
congestion acting as support, as well as some key exponential moving averages (EMAs)
give us something to work with, and look forward to within the ebbs and flows of
our ‘confirmed rally.’

For the ETFs, the ‘slightly revised’ preliminary support zones that I’ve mapped out within the current ‘healthy market environment’ are: The Q’s
(
QQQ |
Quote |
Chart |
News |
PowerRating):
32.75 – 33 confirmed by the 20-Day EMA, a 38% Fibonacci retracement off
the August pivot lows (FRA), prior highs, daily price pivots, and approximately a 5% pullback from
highs. 31.60 – 32.10 comprises the 50-Day EMA, both the 50 and 62% FRA,
prior price supports, and an approximate 7% pullback off of highs.

For the
S&P 500 ETF
(
SPY |
Quote |
Chart |
News |
PowerRating): 101 – 101.62 shows the 20-Day EMA, a 38% FRA, and
a 2% pullback from highs. 99.75 – 100.15 encompasses the 50-Day EMA, the
50% FRA, and a 3% pullback from highs, and ‘daily price pivots’.

And lastly, for the glittering Dow
Jones
(
DIA |
Quote |
Chart |
News |
PowerRating): 93.80 – 94.25 is confirmed by the 20-Day EMA, the 38% FRA, a 2.5% pullback from
highs, and daily pivot lows. 92.50 – 93.25 has the technical support
of the 50-Day EMA, both the 50 and 62% FRA levels, prior price supports, and an
approximate 4% to 5% pullback from highs.

These initial levels of technical
support are how most technicians define a healthy market environment. The
characteristics include indices that pullback no more than 10% from their
respective highs and show less than four to five sessions of distribution,
within a ‘confirmed rally’, not unlike that which we have seen the past several
sessions.

As the ebbs of the market balance
out the normal current within our ‘confirmed uptrend’, there will be those
periods where our list of high-quality growth stocks will also give way to
less-than-stellar results. Our own personal risk tolerance levels within these
market waves will 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’, but good enough for many folk to take their chances for at
least the start of a ‘quick day trip or so’, and see where the currents take
them. The past week has seen our market climate typified by the latter, and as
such, some stocks worked, others didn’t, and some didn’t bother to leave the
proverbial dock.

With the most recent action, the
skies (conditions) look more promising as we set sail into Monday’s session.
With some fresh rations (new growth stock names) and other familiar staples that
we’ve continued to keep on board, we look forward to the next leg of our
journey.

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, at time of entry, short term in nature.

None Today.

Company Name	Symbol	12 Month RS	Price	Pivot +.10	Technical Perspective
Integra Lifesciences	( IART | Quote | Chart | News | PowerRating)	71	28.25	30.04	1.5 year Cup and Handle
Hutchinson Technology	( HTCH | Quote | Chart | News | PowerRating)	74	34.17	34.90	2-Month Cup & Handle daily chart
Documentum	( DCTM | Quote | Chart | News | PowerRating)	53	21.15	22.10	13-week Cup & Handle daily chart
EarthLink	( ELNK | Quote | Chart | News | PowerRating)	66	8.42	8.70	3-Month Cup & Handle daily chart
E*trade	( ET | Quote | Chart | News | PowerRating)	86	9.73	10.74	20-Month Cup w/ weekly handle trigger
Syntel	( SYNT | Quote | Chart | News | PowerRating)	83	26.38	27.35	4-Week ‘High Level’ Handle base
Entegris	( ENTG | Quote | Chart | News | PowerRating)	74	15.07	15.69	14-Week ‘shake-n-bake’ High-level base
M I Schottenstein	( MHO | Quote | Chart | News | PowerRating)	52	41.58	46.50	12-Week High-Level base

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 in 000’s	Pivot
Apollo	( APOL | Quote | Chart | News | PowerRating)	55	62.37	2.5 Month high level base	2,000	67.38
Nextel	( NXTL | Quote | Chart | News | PowerRating)	86	19.20	8-Week High Level base ala Daily Cup & Handle	20,463	19.95 or 20.63
Sharper Image	( SHRP | Quote | Chart | News | PowerRating)	68	27.87	8-Week High Level base ala Daily Cup & Handle	265	31.25
Gilead Sciences	( GILD | Quote | Chart | News | PowerRating)	82	67.15	9-Week High Level Base	3,437	70.71
*Talx	( TALX | Quote | Chart | News | PowerRating)	84	24.31	13-Week High Level Base	254	27.10
*American Healthways	( AMHC | Quote | Chart | News | PowerRating)	89	38.21	9-Week Cup & Handle Base with two daily pattern entries	296	40.95 or 42.10
Eon Labs	( ELAB | Quote | Chart | News | PowerRating)	74	38.12	10-Week High Level Double bottom base	255	40.83

*TALX & AMHC
ROEs’ at 11% and 14% are lower than typical 15% to 17% threshold that many IT
investors accept.

Stocks Forming A Handle

Company Name	Symbol	12 Month RS	Price	Technical condition	Average Volume in 000’s	Pivot
Fresh DelMonte	( FDP | Quote | Chart | News | PowerRating)	59	26.28	10-Month Cup and Handle	380	29.10 or 29.80
Constellation Brands	( STZ | Quote | Chart | News | PowerRating)	35	30.03	Weekly one year Cup and Handle	874	31.90 to 32.10
*Axcan Pharmaceutical	( AXCA | Quote | Chart | News | PowerRating)	62	14.48	16-Month Cup and Handle(14week)	121	14.86 to 15.92

*Axcan Pharmaceutical
ROE at 8% is lower than typical 15% to 17% threshold that many IT investors
accept.

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-50 Day in 000’s	Pivot	52-Week High
Apollo Group	( APOL | Quote | Chart | News | PowerRating)	66	66.39	1,776	46.89	67.30
Career Education	( CECO | Quote | Chart | News | PowerRating)	89	47.96	1,500	27.20	47.96
Coach Inc.	( COH | Quote | Chart | News | PowerRating)	78	57.33	826	28.35	59.39
Boston Scientific	( BSX | Quote | Chart | News | PowerRating)	69	61.40	3,861	47.65	67.18
International Game Technology	( IGT | Quote | Chart | News | PowerRating)	67	26.89	2,300	18.71	27.60
UCBH Holdings	( UCBH | Quote | Chart | News | PowerRating)	72	32	300	22.60	33.55
Corinthian Colleges	( COCO | Quote | Chart | News | PowerRating)	73	57.59	689	43.09	59.43
Nextel	( NXTL | Quote | Chart | News | PowerRating)	79	19	17,800	15.85	20.53
Gtech Holdings	( GTK | Quote | Chart | News | PowerRating)	65	41.36	604	37.05 or 40.80	43.50
Centex	( CTX | Quote | Chart | News | PowerRating)	53	72.72	1,395	59.80	87.50
Endo Pharmaceuticals	( ENDP | Quote | Chart | News | PowerRating)	83	18.49	702	14.98	19.45

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
Digital Insight	( DGIN | Quote | Chart | News | PowerRating)	82	22.13	512	22.38	24.55