Wednesday’s Stock Watch
The major indexes are in
the red for the week, as Monday’s key reversal day had the Dow and
S&P 500 turn tail at their 200-day moving averages. Though slight gains were
made for Monday, we should count the high volume move as a sign of heavy
dumping.
With the situation in Iraq apparently under control
by coalition forces, it appears the markets may have gone through a "buy the
war, sell the peace" scenario. A longer term trend for Iraq or the markets is
not yet discernable, and not necessarily related. Volume patterns for the past
month most certainly favor the bulls, though the 200-day moving average is a
clear barrier. The markets may very well pull back at these levels, though if
the buyers return we need to be on the lookout for leadership.
We have added four new selections to our watch
lists. Three are former members of this report, and new is NCEN. Stocks on our
"breakout" list have been hanging in there. We will be watching for distribution
days as warnings.
From Tuesday’s action:
Market breadth was negative, with NYSE
declining issues over advancing issues by a ratio of 1.24, and down volume over
up volume by a 1.79 ratio. Nasdaq declining issues over advancing issues came in
at 1.25, and down volume beat up volume by a 2.37 ratio.
Dow Jones Industrial Average
(
$INDU.X |
Quote |
Chart |
News |
PowerRating)
closed -0.01%
at 8,298.92. The S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) closed
-0.18%
at 878.29.
The Nasdaq
(
$COMPQ |
Quote |
Chart |
News |
PowerRating) closed
-0.47%
at 1,382.94.
1,357
1,371
Declining Issues
1,704
1,726
430,093,000
379,081,000
Declining Volume
753,306,000
883,525,000
Total
Volume
1,197,589,000
1,286,374,000
Highs
4
5
9
9
Strongest Sectors:
Telecoms (fiber optics), Internet (service providers), Media (cable/satellite),
Internet (e-commerce), Semiconductors, Medical (generic drugs).
Watch List Action:
New to our "handles" list, New Century Financial Corp
(
NCEN |
Quote |
Chart |
News |
PowerRating), has
been pulling back from nine month highs, is trading above all its major moving
averages, and has a 12-month RS of 91. This specialty finance company
originates, purchases, sells, and services sub-prime mortgage loans. The company
meets all of our fundamental criteria, and we’re going to set a pivot buy for
the stock at 34.90.
Also new to our "handles" list is our old friend Corinthian Colleges
(
COCO |
Quote |
Chart |
News |
PowerRating).
The stock continues to meet our fundamental requirements, and is now poised to
breakout with a pivot buy at 42.04. Ideally we would prefer to see a more
orderly base here, but the post-secondary education sector continues to be hot,
and we’re going to see what this one can do.
Recent Breakouts
size=2>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.
| color=#ffffff size=2>Company Name | color=#ffffff size=2>Symbol | color=#ffffff size=2>12 Month RS | color=#ffffff size=2>Price | color=#ffffff size=2>Price Change | color=#ffffff size=2>Average Volume | Pivot | 52-Week High |
Apollo Group | ( APOL | Quote | Chart | News | PowerRating) | 87 | 50.72 | +0.92 | 1,940,400 | 46.89 | 52.50 |
Coach Inc. | ( COH | Quote | Chart | News | PowerRating) | 93 | 39.00 | +0.46 | 1,154,900 | 28.35 | 39.99 |
Expeditors International of Washington | ( EXPD | Quote | Chart | News | PowerRating) | 83 | 35.66 | -0.07 | 1,034,900 | 34.54 | 38.00 |
Garmin Ltd. | ( GRMN | Quote | Chart | News | PowerRating) | 95 | 35.18 | -0.28 | 517,400 | 23.46 | 37.20 |
International Game Technology | ( IGT | Quote | Chart | News | PowerRating) | 88 | 82.42 | +0.24 | 1,307,900 | 74.84 | 87.20 |
UCBH Holdings | UCBH Holdings | 86 | 47.90 | +0.59 | 155,600 | 45.20 | 48.70 |
Stocks Forming a Handle
| color=#ffffff size=2>Company Name | color=#ffffff size=2>Symbol | color=#ffffff size=2>12 Month RS | color=#ffffff size=2>Price | color=#ffffff size=2>Price Change | color=#ffffff size=2>Average Volume | Pivot |
Chicos FAS | ( CHS | Quote | Chart | News | PowerRating) | 88 | 21.49 | -0.61 | 1,393,700 | 22.95 |
Career Education Corp. | ( CECO | Quote | Chart | News | PowerRating) | 85 | 49.76 | -0.69 | 816,700 | 52.70 |
Corinthian Colleges | ( COCO | Quote | Chart | News | PowerRating) | 84 | 38.85 | -0.09 | 1,023,500 | 42.04 |
New Century Financial | ( NCEN | Quote | Chart | News | PowerRating) | 91 | 32.75 | -0.87 | 1,422,000 | 34.90 |
UCBH will be moving up to the "breakout" list.
Stocks Building A Base
color=#ffffff size=2>Company Name | color=#ffffff size=2>Symbol | color=#ffffff size=2>12 Month RS | color=#ffffff size=2>Price | color=#ffffff size=2>Price Change | color=#ffffff size=2>Average Volume | Pivot |
Hovnanian | ( HOV | Quote | Chart | News | PowerRating) | 84 | 37.50 | 37.50 | 487,800 | 40.29 |
If you are new to the "IT" strategy, be sure to
take a look at our
intermediate-term online trading course.
Intermediate-Term Traders
Report is posted on
Tuesdays and Fridays. For other intermediate-term commentary, be sure to read
Mark Boucher (Fridays),
Tim Truebenbach (Tuesdays and Thursdays), and
Gary Kaltbaum (Mondays and Thursdays).