Something Of Value
As many of you know, money
managers who trade on an intermediate term strategy are momentum growth traders. My question to you is “Are growth stocks the place to be
looking for trading opportunities?” Lets go to the video tape and take a look at the Relative
Percent Change (RPC)chart comparing the S&P Barra Growth Index and the
S&P Barra Value Index.
This chart clearly shows that the
Value Index is out performing the Growth Index. So should we be looking for some
value stocks? I would think so, if we find stocks that meet our criteria.
Household International
(
HI |
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Chart |
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PowerRating) is one
of the stocks in the S&P Barra Value Index. Looking at sequential sales
growth (8.66%, 5.99% and 5.01%). Although these are not the numbers you would go for if you were
strictly a Growth stock trader, but it is showing positive growth.
Household looks poised to test its
high of its eight week base.
I remember speaking to a Money Manager
friend of mine earlier this year about the current market environment at the
time. He said ” I am glad that this market is behaving the way it is.
People have had a free ride in this raging bull market and those who just picked
stocks on the whim won’t be able to make 50,80,200 percent returns a year like
they had in the past. A more realistic return is now warranted”. I remember
this vividly only because at Tradingmarket2000, Mark Boucher also said something
similar.
Toll Brothers
(
TOL |
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Chart |
News |
PowerRating) is creeping up
the right side of a multi-week base and looks poised to test its old highs.
Corinthian Colleges
(
COCO |
Quote |
Chart |
News |
PowerRating) looks
poised to test its highs, although it lost some ground in today’s session.
Among Exchange Traded Funds which
gained in the session. The Biotechnology Holdrs
(
BBH |
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News |
PowerRating) gained 3.1%.
The Pharmaceutical Holdrs
(
PPH |
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PowerRating)
put in a good show as it closed higher 2.9%.
The Consumer Staple Select Sector
(
XLP |
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PowerRating)
edged higher 2.8%
Funds losing ground were the Internet
Infrastructure Holdrs
(
IIH |
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PowerRating) which tumbled 11.4%.
The Internet Holdrs
(
HHH |
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Chart |
News |
PowerRating) lost
7.7% and the B2B Holdrs
(
BBH |
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Chart |
News |
PowerRating) fell 7.8%.
It just dawned on me that I have not
mentioned turnaround stocks. We also should be
looking for potential stocks which are showing positive signs of turnaround and coming
back into favor. It makes sense to do so with the current market as we have the
time to locate these stocks to find potential winners. For those who want to learn more on how
to find these stocks, check out Loren Fleckenstein’s lesson on
Selecting
And Trading Turnaround Stocks.
Remember that all securities are
risky. In any trade, you should always reduce your risk by adjusting position
size and placing open protective stops where you will sell your long or
cover your short in case the market turns against you. For an introduction to
combining price stops with position sizing, see Loren’s lesson, Risky
Business.
Greg
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