Articles from Apr 2007

Market Monitor

Market rallied with number of stocks making wild moves. But 4% plus breakout levels did not even cross 200. 4% plus breakdowns were 68. On real push ups the figures tend to extremely lopsided.

The action still continues to be dominated by large caps. Large caps gapping up on earnings is the trend in this season. But large caps do not just gap and go. They simply do not have the potential to make 50% kind of moves in a month unless takeovers are involved.

The small caps are the ones which offer best risk rewards and the Russell Index seems to have stalled, so if the overall move has more upside at some stage small caps should catch fire. Keep a close watch on Russell for clues.


Market Monitor


Total 4% plus bullish breakouts = 186

Total 4% plus bearish breakouts = 68

65 day bullish/bearish ratio = 995/240

Stocks up 50% or more in a month = 6

Stocks up 25% or more in a month = 83

Number of stocks with 100% plus move = 423

Number of stocks up 200% or more = 99

4% plus signals for 100plus universe = 44

4% plus signals for 200plus universe =9



Breakouts

AMZN,Amazon.Com Inc (Google  Yahoo  Earnings  Chart
ARRY,Array Biopharma Inc (Google  Yahoo  Earnings  Chart
BCSI,Blue Coat Systems Inc (Google  Yahoo  Earnings  Chart
BDSI,Biodelivery Sciences Intl Inc (Google  Yahoo  Earnings  Chart
BSQR,bSquare Corp (Google  Yahoo  Earnings  Chart
BTJ,Bolt Technology Corp (Google  Yahoo  Earnings  Chart
BVX,Bovie Medical Systems (Google  Yahoo  Earnings  Chart
CHAP,Chaparral Steel Company (Google  Yahoo  Earnings  Chart
DXPE,Dxp Enterprises Inc (Google  Yahoo  Earnings  Chart
FEIC,Fei Company (Google  Yahoo  Earnings  Chart
GRIL,Grill Concepts Inc (Google  Yahoo  Earnings  Chart
GTI,Graftech Intl Ltd (Google  Yahoo  Earnings  Chart
IDSA,Industrial Svcs Of Amer (Google  Yahoo  Earnings  Chart
IGLD,Internet Gold-Golden (Google  Yahoo  Earnings  Chart
IOC,Interoil Corporation (Google  Yahoo  Earnings  Chart
JAS,Jo-ann Stores Inc (Google  Yahoo  Earnings  Chart
LBY,Libbey Inc (Google  Yahoo  Earnings  Chart
LEA,Lear Corp (Google  Yahoo  Earnings  Chart
LNET,Lodgenet Entertainment (Google  Yahoo  Earnings  Chart
LQDT,Liquidity Services (Google  Yahoo  Earnings  Chart
MCF,Contango Oil & Gas (Google  Yahoo  Earnings  Chart
MEH,Midwest Express Holding (Google  Yahoo  Earnings  Chart
METH,Methode Electronics Cl A (Google  Yahoo  Earnings  Chart
NXST,Nexstar Broadcasting Group (Google  Yahoo  Earnings  Chart
OMCL,Omnicell Inc (Google  Yahoo  Earnings  Chart
PARD,Poniard Pharmaceuticals (Google  Yahoo  Earnings  Chart
PERY,Perry Ellis Int'l (Google  Yahoo  Earnings  Chart
ROCM,Rochester Medical Corp (Google  Yahoo  Earnings  Chart
RVBD,Riverbed Technologies Inc (Google  Yahoo  Earnings  Chart
SGG,Sgl Carbon Aktiengesells (Google  Yahoo  Earnings  Chart
SUF,SulphCo Inc (Google  Yahoo  Earnings  Chart
TSO,Tesoro Corp (Google  Yahoo  Earnings  Chart
TVL,Lin Tv Corp (Google  Yahoo  Earnings  Chart
VHI,Valhi Inc (Google  Yahoo  Earnings  Chart
VLCM,Volcom Inc (Google  Yahoo  Earnings  Chart
VOLV,Ab Volvo Adr (Google  Yahoo  Earnings  Chart
VYYO,Vyyo Incorporated (Google  Yahoo  Earnings  Chart
WNR,Western Refining Inc (Google  Yahoo  Earnings  Chart
XNPT,XenoPort Inc (Google  Yahoo  Earnings  Chart

Episodic Pivots

When programs kick in, they can create wild moves. Some of the action today clearly smelled of program buying at work.Some moves are old fashioned, red hot momentum on low float stocks.
There are couple of good moves in the list, where the moves are just beginning and the stocks have clear earnings catalyst. The blowout moves in some stocks at the top of the range are also worth getting in to with tight stop, strictly for short term trade.
Anyway in such a momentum blowout , tight stops is ideal, because if a stock can not make a move in such market conditions, there are better uses for your capital.

AACC,Asset Acceptance Capital Corp (Google  Yahoo  Earnings  Chart
AMZN,Amazon.Com Inc (Google  Yahoo  Earnings  Chart
ATAC,Aftermarket Tech Corp (Google  Yahoo  Earnings  Chart
BDSI,Biodelivery Sciences Intl Inc (Google  Yahoo  Earnings  Chart
BHI,Baker Hughes Inc (Google  Yahoo  Earnings  Chart
BTJ,Bolt Technology Corp (Google  Yahoo  Earnings  Chart
CHAP,Chaparral Steel Company (Google  Yahoo  Earnings  Chart
CHRW,C.H. Robinson Worldwide (Google  Yahoo  Earnings  Chart
DCBK,Desert Community Bank (Google  Yahoo  Earnings  Chart
DXPE,Dxp Enterprises Inc (Google  Yahoo  Earnings  Chart
FONRD,Fonar Corp (Google  Yahoo  Earnings  Chart
IDSA,Industrial Svcs Of Amer (Google  Yahoo  Earnings  Chart
KTO,K2 Inc (Google  Yahoo  Earnings  Chart
LQDT,Liquidity Services (Google  Yahoo  Earnings  Chart
MBLX,Metabolix Inc (Google  Yahoo  Earnings  Chart
MCF,Contango Oil & Gas (Google  Yahoo  Earnings  Chart
NCX,Nova Chemicals (Google  Yahoo  Earnings  Chart
OSG,Overseas Shipholding Grp (Google  Yahoo  Earnings  Chart
PRAA,Portfolio Recovery Assoc (Google  Yahoo  Earnings  Chart
QPSA,Quepasa Corporation (Google  Yahoo  Earnings  Chart
RVBD,Riverbed Technologies Inc (Google  Yahoo  Earnings  Chart
TDY,Teledyne Technologies (Google  Yahoo  Earnings  Chart
TFSM,24/7 Real Media Inc (Google  Yahoo  Earnings  Chart
TSO,Tesoro Corp (Google  Yahoo  Earnings  Chart
WIRE,Encore Wire Corp (Google  Yahoo  Earnings  Chart
XNPT,XenoPort Inc (Google  Yahoo  Earnings  Chart

To buy or not to buy breakouts

A reader asked why I prefer breakouts and why not buy retracements on 100% plus or IBD 200.

As I have said earlier the exact entry methods play small role in why the concept like 100% plus or IBD 200 works. The vehicle selection in both the cases increases probability of success irrespective of your entry. Those stocks for a specified period have high probability of going up.

But buying breakouts has higher probability of success on such stocks than retracements. There are number of ways to look at it. Prices move in spurts. So a 4% plus move leads to few weeks of move in intended direction. When a stock goes up it attracts more attention and more buyers. That is the visibility effect.

When you are buying breakouts , you are paying for confirmation. Your stops are wider as compared to retracement entry. The risk in breakout buying is , it will fail. The risk in retracement buying is also that it will fail to signal reversal and in fact might be a start of long down trend.

In both entries if it is successful, your trade is profitable. The advantage of retracement is you will quickly move in to profits if the trend resumes. Irrespective of method, you will get stopped out on your stop.

To design retracement based entries, you need to think a logical entry point. You need to use a leading indicator to signal this. Unfortunately there are no perfect indicator.

I have tried many retracement based methods on both the list. Some things which work are based on liquidity going down to signal entry. Especially if you are looking for very short duration trades on 100 % plus or IBD list, you can try entry a day after lowest volume on 20 days. (v=minv20)

I personaly find breakout easier to trade.

RVBD Riverbed Technologies



RVBD might possibly be good earnings trade. I took a small position pre market and will watch it to add to it.

RVBD had 340% EPS growth and 212% sales growth. Plus its earnings were 140% above estimate. The price coming in to earning was going nowhere.

Episodic Pivots

Earnings and earnings surprises lead to some Episodic Pivots. What determines the probability of stocks making an up more or down move such Episodic Pivots is a function of prior price action coming in to earnings, earnings acceleration or earnings surprise, forward guidance, valuation, fund holdings, and so on.

More important than that is where is the earnings in reference to the stocks earnings cycle. Is this a first major earnings acceleration/ surprise after many quarters of below par growth or is this a 8th or 12 th earnings acceleration. The second important consideration is where is the stock in its price appreciation cycle. Earnings acceleration/surprises early in a stocks price life cycle are good from trading perspective. It gets you in to a trade early in a long duration rally.

Earnings acceleration/surprise late in the cycle are slightly tricky to trade as they have both possibilities. It can lead to blowout runaway move or it can lead to reversal after one day gap up. Technicians call them island reversals.


ENR,Energizer Holdings (Google  Yahoo  Earnings  Chart
ESRX,Express Scripts Inc (Google  Yahoo  Earnings  Chart
HTI,Halozyme Therapeutics Inc (Google  Yahoo  Earnings  Chart
LBY,Libbey Inc (Google  Yahoo  Earnings  Chart
MHS,Medco Health Solutions (Google  Yahoo  Earnings  Chart
PCAR,Paccar Inc (Google  Yahoo  Earnings  Chart
RE,Everest Re Group Ltd. (Google  Yahoo  Earnings  Chart
RGR,Sturm Ruger & Co Inc (Google  Yahoo  Earnings  Chart
SNA,Snap-On Inc (Google  Yahoo  Earnings  Chart
TO,Tech-Ops Sevcon Inc (Google  Yahoo  Earnings  Chart
TRCR,Transcend Services Inc (Google  Yahoo  Earnings  Chart
TRT,Trio-Tech Internat (Google  Yahoo  Earnings  Chart
WGOV,Woodward Governor Co (Google  Yahoo  Earnings  Chart
WHR,Whirlpool Corp (Google  Yahoo  Earnings  Chart

Market Monitor

Market is vulnerable to correction. Number of down breakouts have increased and there is sharp deterioration in stocks up 25% or more in month.

Market Monitor


Total 4% plus bullish breakouts = 114

Total 4% plus bearish breakouts = 76

65 day bullish/bearish ratio = 950/245

Stocks up 50% or more in a month = 4

Stocks up 25% or more in a month = 58

Number of stocks with 100% plus move = 421

Number of stocks up 200% or more = 91

4% plus signals for 100plus universe = 26

4% plus signals for 200plus universe = 9



4% plus breakouts on 100% plus universe
DLX,Deluxe Corp (Google  Yahoo  Earnings  Chart
FRPT,Force Protection Inc (Google  Yahoo  Earnings  Chart
HTI,Halozyme Therapeutics Inc (Google  Yahoo  Earnings  Chart
INSW,Insweb Corp (Google  Yahoo  Earnings  Chart
JST,Jinpan Internat Ltd (Google  Yahoo  Earnings  Chart
LBY,Libbey Inc (Google  Yahoo  Earnings  Chart
LJPC,La Jolla Pharmaceutical (Google  Yahoo  Earnings  Chart
OMCL,Omnicell Inc (Google  Yahoo  Earnings  Chart
RGR,Sturm Ruger & Co Inc (Google  Yahoo  Earnings  Chart
SGEN,Seattle Genetic (Google  Yahoo  Earnings  Chart
SPAR,Spartan Motors Inc (Google  Yahoo  Earnings  Chart
SPEC,Spectrum Control Inc (Google  Yahoo  Earnings  Chart
SUF,SulphCo Inc (Google  Yahoo  Earnings  Chart
TBSI,TBS International Limited Class A (Google  Yahoo  Earnings  Chart
TRCR,Transcend Services Inc (Google  Yahoo  Earnings  Chart
TRT,Trio-Tech Internat (Google  Yahoo  Earnings  Chart
TWIN,Twin Disc Inc (Google  Yahoo  Earnings  Chart

Why no newsletter

I get lot of emails asking for a newsletter. I do not have any newsletter and no intention of starting one in near future. My intention has always been to make profit from trading. There are at least 2-3 newsletters for every trader currently.

Newsletter involves lots of work plus marketing. Marketing is 90% of the effort in newsletters. Besides that it requires lot of day to day administration. I can make more money in trading than running a newsletter.

Second most successful traders who start newsletter see their trading results go
down.As newsletter becomes more successful the writers trading returns deteriorate. The newsletter income creates a sense of assurance which leads to losing focus on trading. Possibly you lose the killer instinct to eke out living from trading.

Third when you get in to newsletter you start picking safer stocks, so as not to loose your face and your risk taking ability decreases. That is also one of the reason newsletter writers externalize the problem, blaming market conditions. So in essence they cover their ass.

Newsletter writing is the safer option, trading is the more riskier and more profitable option.

Later: Why coaching and mentoring does not work in trading .....

Market Monitor

Markets changed tone a bit with small caps experiencing number of breakouts. But momentum has deteriorated as indicated by both 50% plus in month and 25% plus in month. Many breakouts are not following through.


Market Monitor


Total 4% plus bullish breakouts = 105

Total 4% plus bearish breakouts = 42

65 day bullish/bearish ratio = 964/236

Stocks up 50% or more in a month = 5

Stocks up 25% or more in a month = 61

Number of stocks with 100% plus move = 445

Number of stocks up 200% or more = 91

4% plus signals for 100plus universe = 34

4% plus signals for 200plus universe = 5



4% plus moves on stocks up 100% plus
AKS,Ak Steel Holding Corp (Google  Yahoo  Earnings  Chart
ARQL,Arqule Inc (Google  Yahoo  Earnings  Chart
CITP,Comsys It Partners Inc (Google  Yahoo  Earnings  Chart
CNH,Cnh Global Nv (Google  Yahoo  Earnings  Chart
CYNO,Cynosure Inc (Google  Yahoo  Earnings  Chart
FRPT,Force Protection Inc (Google  Yahoo  Earnings  Chart
FTEK,Fuel Tech Inc (Google  Yahoo  Earnings  Chart
FTK,Flotek Industries Inc (Google  Yahoo  Earnings  Chart
IDSA,Industrial Svcs Of Amer (Google  Yahoo  Earnings  Chart
IIG,Imergent Inc (Google  Yahoo  Earnings  Chart
INXI,INX Inc (Google  Yahoo  Earnings  Chart
ISTA,Ista Pharmaceuticals Inc (Google  Yahoo  Earnings  Chart
KRSL,Kreisler Manufacturing (Google  Yahoo  Earnings  Chart
LNX,Lenox Group Inc (Google  Yahoo  Earnings  Chart
MEDI,Medimmune Inc (Google  Yahoo  Earnings  Chart
MTOX,Medtox Scientific (Google  Yahoo  Earnings  Chart
NFI,Novastar Financial Inc (Google  Yahoo  Earnings  Chart
NGA,N Amer Galvanizing & Coatings (Google  Yahoo  Earnings  Chart
PRGX,Prg-schultz Intl Inc (Google  Yahoo  Earnings  Chart
PRKR,Parkervision Inc (Google  Yahoo  Earnings  Chart
RYI,Ryerson Inc (Google  Yahoo  Earnings  Chart
SGEN,Seattle Genetic (Google  Yahoo  Earnings  Chart
SLP,Simulations Plus Inc (Google  Yahoo  Earnings  Chart
TBSI,TBS International Limited Class A (Google  Yahoo  Earnings  Chart
USAP,Universal Stain & Alloy (Google  Yahoo  Earnings  Chart
VII,Vicon Industries Inc (Google  Yahoo  Earnings  Chart

Episodic Pivots

Major rallies start with a catalyst. Often major rallies start with high volume gain days. Some of these stocks have the catalyst to launch multi month move. Catalyst like recent earnings, earnings momentum, earnings/sales acceleration, new product introduction, sector rally, insider buying , regulatory approvals, etc. are capable of triggering long duration or high magnitude rallies. Crammer mention, Barron's mention, analyst upgrade, etc have poor chances of follow up.

BOL,Bausch & Lomb Inc (Google  Yahoo  Earnings  Chart
CMI,Cummins Inc (Google  Yahoo  Earnings  Chart
CYPB,Cypress Bioscience Inc (Google  Yahoo  Earnings  Chart
DNDN,Dendreon Corporation (Google  Yahoo  Earnings  Chart
EROC,Enroc Inds Inc (Google  Yahoo  Earnings  Chart
FLOW,Flow International Corp (Google  Yahoo  Earnings  Chart
GNTX,Gentex Corp (Google  Yahoo  Earnings  Chart
IDSA,Industrial Svcs Of Amer (Google  Yahoo  Earnings  Chart
IPX,Interpool Inc (Google  Yahoo  Earnings  Chart
KRSL,Kreisler Manufacturing (Google  Yahoo  Earnings  Chart
LNX,Lenox Group Inc (Google  Yahoo  Earnings  Chart
MBLX,Metabolix Inc (Google  Yahoo  Earnings  Chart
MEA,Metalico Inc (Google  Yahoo  Earnings  Chart
MTOX,Medtox Scientific (Google  Yahoo  Earnings  Chart
NGA,N Amer Galvanizing & Coatings (Google  Yahoo  Earnings  Chart
SYNL,Synalloy Corp (Google  Yahoo  Earnings  Chart
VGZ,Vista Gold Corp (Google  Yahoo  Earnings  Chart
WSCI,Wsi Industries Inc (Google  Yahoo  Earnings  Chart

Market Monitor

Divergence between Nasdaq and Small Caps and rest of market continues. The large cap earnings and guidance have been good and that is getting reflected in the price moves in them, But large caps do not make the aggressive moves I look for unless they are rallying from multi year weakness.

Market Monitor


Total 4% plus bullish breakouts = 138

Total 4% plus bearish breakouts = 34

65 day bullish/bearish ratio = 971/223

Stocks up 50% or more in a month = 5

Stocks up 25% or more in a month = 62

Number of stocks with 100% plus move = 442

Number of stocks up 200% or more = 89

4% plus signals for 100plus universe = 30

4% plus signals for 200plus universe = 4



4% plus Breakouts

ALGN,Align Tech Inc (Google  Yahoo  Earnings  Chart
CHB,Champion Enterprises Inc (Google  Yahoo  Earnings  Chart
DXPE,Dxp Enterprises Inc (Google  Yahoo  Earnings  Chart
EXM,Excel Maritime Carriers (Google  Yahoo  Earnings  Chart
GES,Guess? Incorporated (Google  Yahoo  Earnings  Chart
GLDN,Golden Telecom Inc (Google  Yahoo  Earnings  Chart
GPK,Graphic Packaging Intl (Google  Yahoo  Earnings  Chart
IGLD,Internet Gold-Golden (Google  Yahoo  Earnings  Chart
IIG,Imergent Inc (Google  Yahoo  Earnings  Chart
ITMN,Intermune Inc (Google  Yahoo  Earnings  Chart
JAS,Jo-ann Stores Inc (Google  Yahoo  Earnings  Chart
KALU,Kaiser Aluminum Corp (Google  Yahoo  Earnings  Chart
MEA,Metalico Inc (Google  Yahoo  Earnings  Chart
NVR,Nvr Inc (Google  Yahoo  Earnings  Chart
NXST,Nexstar Broadcasting Group (Google  Yahoo  Earnings  Chart
OMCL,Omnicell Inc (Google  Yahoo  Earnings  Chart
POZN,Pozen Incorporated (Google  Yahoo  Earnings  Chart
PTI,Patni Computer Systems Ltd ADR (Google  Yahoo  Earnings  Chart
PTT,Vcg Holding Copr (Google  Yahoo  Earnings  Chart
REGN,Regeneron Pharm Inc (Google  Yahoo  Earnings  Chart
RZ,Raser Technologies Inc (Google  Yahoo  Earnings  Chart
SYNL,Synalloy Corp (Google  Yahoo  Earnings  Chart
ULTR,Ultrapetrol Ltd (Google  Yahoo  Earnings  Chart


Possible long trades
ALGN,Align Tech Inc (Google  Yahoo  Earnings  Chart
GES,Guess? Incorporated (Google  Yahoo  Earnings  Chart
GLDN,Golden Telecom Inc (Google  Yahoo  Earnings  Chart
NVR,Nvr Inc (Google  Yahoo  Earnings  Chart


Episodic Pivots
ARWR,Arrowhead Research Corp (Google  Yahoo  Earnings  Chart
CTIB,Cti Industries Corp (Google  Yahoo  Earnings  Chart
DFR,Deerfield Triarc Capital Corp (Google  Yahoo  Earnings  Chart
FCPO,Factory Card & Party Outlet (Google  Yahoo  Earnings  Chart
GCO,Genesco Inc (Google  Yahoo  Earnings  Chart
GOOG,Google (Google  Yahoo  Earnings  Chart
HUBG,Hub Group Inc (Google  Yahoo  Earnings  Chart
ISRG,Intuitive Surgical Inc (Google  Yahoo  Earnings  Chart
MEA,Metalico Inc (Google  Yahoo  Earnings  Chart
MLM,Martin Marietta Material (Google  Yahoo  Earnings  Chart
NSTK,Nastech Pharmaceuticals (Google  Yahoo  Earnings  Chart
NVR,Nvr Inc (Google  Yahoo  Earnings  Chart
OLED,Cambridge Display Tech (Google  Yahoo  Earnings  Chart
OO,Oakley Inc (Google  Yahoo  Earnings  Chart
SAIA,Saia Inc (Google  Yahoo  Earnings  Chart
TGE,TGC Industries Inc (Google  Yahoo  Earnings  Chart

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