This Week’s Intermediate-Term Report
The ever fragile
egg that at times seems to reflect the market, and investors appetite for it,
was last seen to be served up kind of scrambled.
For the week our two major index proxies, the S&P500
and the Nasdaq Composite–while moving in tandem, did in fact put in mixed or
scrambled performances. The broader market, represented by the S&P established
fresh 52-week highs on a “Follow-Thru-Day.” The Nasdaq however, was unable to
hold onto its own gains and still remains well-entrenched below prior highs,
finishing the week down fractionally at .51%. For cautious bulls ready to
trade—depending on how and what type of eggs you prefer, the past week was a
great example of how an egg once taken by investors can end up looking either
sunny side up, such as the case for our broader index this week, or potential
scrambled, as was the case for the tech laden Nasdaq. Our ‘specialty’ egg while
still possibly tasty to nibble on during the week—was, in the end, definitely
a different texture as any consumer can attest too.
The past week did offer
opportunities for growth stock traders, although the scope of triggers was
limited in names usually associated with our ‘usually’ leading Nasdaq Composite.
Names such as Thor Industries (THO) and Arrythmia Research (HRT), from my own
list on this past report, and others such as Dick’s Sporting Goods (DKS) and
Sportman’s Guide (SGDE ), names that were discussed in our members chat
during the week, was where investors’ crosshairs were focused during this latest
hunting season. This brings up a very good point about not keeping on market
blinders, and always being ready to trade quality issues that are setting up in
a healthy market environment. You should be especially excited by the prospect
at hand if it is in fact an unfamiliar name–because these are the types of
issues that ultimately have what it takes to be the next Dell, before Dell was a
household word.
While the Nasdaq Composite did
finish the week off slightly, volume statistics for the week were in favor of
higher prices as measured by the thrust bar higher on above-average trade, and
the subsequent pullback on much lighter trade. On a three week measurement
basis, the numbers are still skewed towards distribution, but this is akin (in
my humble opinion) to saying, ‘hey get out your umbrella, because it rained last
week.’ The fact at this point is that technical supports have held, and the
Nasdaq Composite was limited to a 6.5% corrective move from its highs. Our job
is to focus on what the market is telling us now, in the present, about clues to
near term price performance. The strength in the S&P is obvious, as price and a
FTD have further confirmed a reason to look for high-quality triggers. The
Nasdaq while lagging, did show a similar price and volume performance. With
technical lows in place, and individual names still setting up–that is enough
reason to stay ready. This does not of course mean to trade with reckless
abandon should a quality stock trigger–but, as long as price supports hold, and
volume statistics don’t continue to deteriorate further, then it remains an
environment for which you should look to take the quality trades that are
setting up on an individual basis.
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) |
67 | 35.78 | 37.20 | 3-month high level weekly basing pattern w/ All-Time-High triggers |
| Safenet | ( SFNT | Quote | Chart | News | PowerRating) |
69 | 41.08 | 41.90 | 3-Month base w/ gap pivot entry |
| Skywest | ( SKYW | Quote | Chart | News | PowerRating) |
58 | 19.50 | 20.80 | 5-Month Cup w/ handle entry |
| California Amplifier | ( CAMP | Quote | Chart | News | PowerRating) |
97 | 14.36 | 16.97 | 7-Week bullish gap lateral base |
| Integrated Silicon | ( ISSI | Quote | Chart | News | PowerRating) |
96 | 17.07 | 19.97 | 3-Month high level base |
| Dendrite Intl. | ( DRTE | Quote | Chart | News | PowerRating) |
53 | 15.67 | 17.58 | 3-Month Cup w/ gap handle |
| Kensey Nash | ( KNSY | Quote | Chart | News | PowerRating) |
42 | 26.30 | 28.15 | 6-Month Cup w/ handle |
| Scientific Games | ( SGMS | Quote | Chart | News | PowerRating) |
88 | 16.91 | 18.01 | 2-Month high level double bottom base |
| Inter Parfums | ( IPAR | Quote | Chart | News | PowerRating) |
96 | 26.31 | 29.40 | 2-Month high level base |
| Petroleum Development Corp | ( PETD | Quote | Chart | News | PowerRating) |
94 | 23.08 | 25.77 | 2-Month high level double bottom base |
| Gevity HR | ( GVHR | Quote | Chart | News | PowerRating) |
90 | 23.86 | 25.45 | 2-Month lateral base |
| eCollege | ( ECLG | Quote | Chart | News | PowerRating) |
93 | 21.70 | 23.35 | 3-Month Cup w/ handle trigger |
| Cyberguard | ( CGFW | Quote | Chart | News | PowerRating) |
78 | 11.67 | 12.35 | 4-Month 40% deep high level weekly base |
| Standard Pacific | ( SPF | Quote | Chart | News | PowerRating) |
65 | 49.16 | 51.60 | 3-Month 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 |
| Coach | ( COH | Quote | Chart | News | PowerRating) |
75 | 38.35 | 2.5-Month lateral base | 1,926 | 40.94 |
| Marvell Technology | ( MRVL | Quote | Chart | News | PowerRating) |
67 | 43.30 | 3.5-Month high level lateral base | 2,512 | 46.73 |
| Cal-Maine Foods | ( CALM | Quote | Chart | News | PowerRating) |
99 | 37.24 | 7-Week high level base | 724 | 44.59 |
| Netsmart Technology | ( NTST | Quote | Chart | News | PowerRating) |
95 | 17.91 | 2-Month lateral base | 198 | 19.95 |
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) |
47 | 31.82 | 3-Month cup and handle | 250 | 33.96 |
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) |
77 | 27.11 | 12,334 | 15.85 | 29.37 |
| Centex | ( CTX | Quote | Chart | News | PowerRating) |
71 | 99.81 | 1,429 | 59.80 & 79.52 |
113.08 |
| Countrywide Financial | ( CFC | Quote | Chart | News | PowerRating) |
79 | 88.74 | 2,452 | 59.16 | 89.90 |
| Whole Foods Market | ( WFMI | Quote | Chart | News | PowerRating) |
57 | 74.50 | 718 | 56.34 | 75.65 |
| Marvel Enterprises | ( MVL | Quote | Chart | News | PowerRating) |
80 | 31.46 | 923 | 26.05/30.16 | 35.30 |
| Sharper Image | ( SHRP | Quote | Chart | News | PowerRating) |
76 | 35.36 | 340 | 27.85 | 39.92 |
| Zebra Technologies | ( ZBRA | Quote | Chart | News | PowerRating) |
66 | 69.68 | 362 | 56.18 | 71.30 |
| St. Jude Medical | ( STJ | Quote | Chart | News | PowerRating) |
63 | 74 | 1,292 | 58.89 | 76.10 |
| Biolase Technology | ( BLTI | Quote | Chart | News | PowerRating) |
85 | 18.45 | 760 | 16.13 | 21.39 |
| NII Holdings | ( NIHD | Quote | Chart | News | PowerRating) |
95 | 102.53 | 354 | 80.70 | 106.48 |
| Magma Designs | ( LAVA | Quote | Chart | News | PowerRating) |
85 | 27.25 | 564 | 24.03 | 28.88 |
| Mobile Telesys | ( MBT | Quote | Chart | News | PowerRating) |
85 | 102.10 | 240 | 87.60 | 105.40 |
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 |
| Pacific Sunwear | ( PSUN | Quote | Chart | News | PowerRating) |
74 | 24.56 | 1,645 | 24.66 | 25.54 |
| Verint Systems | ( VRNT | Quote | Chart | News | PowerRating) |
61 | 26.64 | 116 | 27.55 | 27.98 |