One Piece Of The Puzzle
This market
acts amazing! The major indices have reflected an almost perfect bull
market since they confirmed the rally that began on Sept. 24. The only exception
was one minor distribution day on 10/9, which was difficult to interpret, given
the Columbus Day holiday.
So why is it so difficult to make
money?! As far as I am concerned, we are seeing one heck of a bounce in a bear
market thus far. Investors who have held mutual funds and stocks alike are
getting back some of the losses they have incurred. But the ultimate
confirmation of a bull market has yet to show its head: solid
growth companies successfully breaking out of sound bases to new highs.
77 to 61 was the New High to New Low list yesterday, Oct. 15 for the
NYSE, Nasdaq and AMEX. Finance, Medical and retails stocks posted the majority
of the new highs, but have yet to offer companies that can sustain continuous
price run-ups in their stocks by heavily accelerating earnings. Until quality
companies show themselves and break out, the current rally is suspect, in my
book. All I can tell so far is that one piece of the puzzle is in place as the
major indices posted yet another day of accumulation: The
market has cleared the way for new purchases in companies that fulfill the
remaining fundamental and technical criteria.
Cardinal Health
(
CAH |
Quote |
Chart |
News |
PowerRating) is forming a
handle in what appears to be a double-bottom base with a pivot point of 76.75.
St. Jude Medical
(
STJ |
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Chart |
News |
PowerRating) broke through the handle portion of its 12-week base
today, on volume 200% above average. Both stocks sport strong fundamental
characteristics, but not outstanding. Earnings growth over the past four
quarters is a little light.
Cooper Companies
(
COO |
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Chart |
News |
PowerRating) attempted a
breakout today, but volume was not there to support it.
Cerner
(
CERN |
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News |
PowerRating) is
working on the handle of its 11-month base, but lacks some of the necessary
fundamentals such as Return on Equity. After two good days on heavy volume, US
Physical Therapy
(
USPH |
Quote |
Chart |
News |
PowerRating)) showed that it is not quite ready to move much
higher quite yet, as it declined in very heavy trade.
Epiq Systems
(
EPIQ |
Quote |
Chart |
News |
PowerRating) has been
working up the right side of its multi-month cup. As this one sets up, keep a
close eye on fundamentals, as they appear to be deteriorating and may not be up
to the task, (ROE is only 12%). Multimedia Games
(
MGAM |
Quote |
Chart |
News |
PowerRating) broke out of a
double-bottom base on 10/10 and is consolidating the gains in a three-day, very
tight handle. Unfortunately, the group, Leisure-Gaming, has been steadily
falling on the industry tables and may cause this breakout some trouble down the
road. Lastly, AFC Enterprises
(
AFCE |
Quote |
Chart |
News |
PowerRating) has made a big move out of a 5-½
month base, but on extremely light volume.
At this time, insist on following the
rules. It is no time to take unnecessary risks. Express Scripts
(
ESRX |
Quote |
Chart |
News |
PowerRating) and
Cryolife
(
CRY |
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Chart |
News |
PowerRating) are two examples of what the current market is capable of,
and both examples can cause damage to an undisciplined account.
Good Trading,