This Week’s Intermediate-Term Report
Who me, the
cautious bull worry–absolutely.
As this report is
being written on Thursday evening, today’s action stands alone as a
reason to stress caution, and keep the profits real on any outstanding growth
stock positions that may exist. After attempting a breakout from a multi-day
consolidation, and some ‘moovement’ in the direction of its bovine, but broader
compadre, the S&P500 cash–Thursday turned into an engulfing nightmare for the
tech-heavy Naz’, and many of its growth stock components. This disappointing
market action occurred on heavy enough volume to qualify as a downside
Follow-Thru-Day in the Nasdaq–and makes this cautious bull feel anything but
‘CALM’ about the short-term prospects for growth stock breakouts.
The S&P500 did in fact notch fresh
highs this week, and remains less than a percentage point from those levels.
However, it is the Nasdaq, and its many individual growth stock names that have
quickly dashed hopes for a possible retest of highs in the coming days. The
Nasdaq it will be pointed out, is still above range lows as well as its 50-Day
MAs, but I suspect that these levels may in fact be quickly tested, based on
today’s technical action in many growth stock names. I’ll use Marvell Technology
(MRVL) as my poster child for bad behavior, as it has been a member of stocks
ready to trigger (on this report) for a couple of weeks now. Today’s move down
of over 8% from opening highs, after a solid move yesterday on volume thru key
congestion within its weekly base, underscores this cautious bull’s ‘reason to
be.’
Many other names were hit in today’s
session, and now also look to be well-entrenched within existing basing
patterns. Instead of being ready to breakout, many are much closer to existing
daily and weekly chart supports. The good news is that most still are in their
respective basing patterns. As implied though, most of these issues have work
ahead of them, if they are to be ideal breakout candidates in the coming days.
Let’s just hope that the damage is repairable, and our leading issues ultimately
maintain their technical supports while the market attempts to work itself out
in orderly fashion within the confines of our ongoing rally.
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) |
61 | 34.69 | 37.20 | 3-month high level weekly basing pattern w/ All-Time-High triggers |
| Safenet | ( SFNT | Quote | Chart | News | PowerRating) |
69 | 38.94 | 41.90 | 3-Month base w/ gap double pivot entry |
| Skywest | ( SKYW | Quote | Chart | News | PowerRating) |
67 | 19.67 | 20.80 | 5-Month Cup w/ handle entry |
| California Amplifier | ( CAMP | Quote | Chart | News | PowerRating) |
97 | 14.12 | 16.97 | 8-Week bullish gap lateral base |
| Integrated Silicon | ( ISSI | Quote | Chart | News | PowerRating) |
97 | 16.95 | 19.97 | 3-Month high level base |
| Kensey Nash | ( KNSY | Quote | Chart | News | PowerRating) |
45 | 25.95 | 28.15 | 6-Month Cup w/ handle |
| Scientific Games | ( SGMS | Quote | Chart | News | PowerRating) |
88 | 16.65 | 18.01 | 2-Month high level double bottom base |
| Petroleum Development Corp | ( PETD | Quote | Chart | News | PowerRating) |
94 | 23.08 | 25.77 | 2-Month high level double bottom base |
| Cyberguard | ( CGFW | Quote | Chart | News | PowerRating) |
74 | 11.18 | 12.35 | 4-Month 40% deep high level weekly base |
| Standard Pacific | ( SPF | Quote | Chart | News | PowerRating) |
61 | 49.13 | 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) |
78 | 39.99 | 2.5-Month lateral base | 1,926 | 40.94 |
| Marvell Technology | ( MRVL | Quote | Chart | News | PowerRating) |
63 | 43.31 | 3.5-Month high level lateral base | 2,512 | 46.73 |
| Netsmart Technology | ( NTST | Quote | Chart | News | PowerRating) |
94 | 15.76 | 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) |
38 | 30.79 | 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) |
78 | 27.55 | 12,334 | 15.85 | 29.37 |
| Centex | ( CTX | Quote | Chart | News | PowerRating) |
70 | 101.82 | 1,429 | 59.80 & 79.52 |
113.08 |
| Countrywide Financial | ( CFC | Quote | Chart | News | PowerRating) |
80 | 88.21 | 2,452 | 59.16 | 91 |
| Whole Foods Market | ( WFMI | Quote | Chart | News | PowerRating) |
62 | 77.22 | 718 | 56.34 | 78.28 |
| Marvel Enterprises | ( MVL | Quote | Chart | News | PowerRating) |
79 | 31.35 | 923 | 26.05/30.16 | 35.30 |
| Sharper Image | ( SHRP | Quote | Chart | News | PowerRating) |
77 | 35.73 | 340 | 27.85 | 39.92 |
| Zebra Technologies | ( ZBRA | Quote | Chart | News | PowerRating) |
63 | 68.34 | 362 | 56.18 | 71.30 |
| St. Jude Medical | ( STJ | Quote | Chart | News | PowerRating) |
63 | 73.74 | 1,292 | 58.89 | 76.10 |
| Biolase Technology | ( BLTI | Quote | Chart | News | PowerRating) |
89 | 20.03 | 760 | 16.13 | 21.39 |
| NII Holdings | ( NIHD | Quote | Chart | News | PowerRating) |
95 | 101.69 | 354 | 80.70 | 106.48 |
| Magma Designs | ( LAVA | Quote | Chart | News | PowerRating) |
85 | 26.92 | 564 | 24.03 | 28.88 |
| Mobile Telesys | ( MBT | Quote | Chart | News | PowerRating) |
87 | 107.82 | 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 |