I made a blog post on ADVS 10 days ago recapping the coverage on MSW. I showed you how the stock was on the move and how the 200-d moving average play was making the anticipated move that I researched in early April.

As I wrote on the first day of coverage, and reiterated several times since, the short term target was a move above $34. Advent Software smashed earnings yesterday with a four fold increase and then awarded investors with a 12.17% advance on huge volume (volume was up 374% larger than the 50-d m.a.). The stock is now up 24% in less than a month on the MSW Index. I advise that protection be placed to ensure that your gains will be captured. I myself have placed a retracement stop (explained in a previous post and on the position sizing calculator).

Added to the MSW Index on 4/1/06:
“ADVS – 28.42, I bought the stock myself. I don’t know if it will work out but I placed money on the idea and have rules to protect the downside. As you have been noticing, I have been making several 200-d m.a. momentum buys in recent months. A twelve month price target will be from $38-$40 (FYI: I got in lower than the Index price as I bought on Thursday).

It will be interesting to see where the stock goes from here as I am looking at a short term target of $34 and a longer term target above $38 towards $40.”

Piranha

If you ever wanted to understand money management techniques used by professional traders, I highly recommend that you read the book Trade Your Way to Financial Freedom by Van K. Tharp. The position sizing calculator that I uploaded to this blog is based from the book and several of the money management techniques I describe derive from the fundamentals outlined by Dr. Tharp. Other techniques such as technical analysis, fundamental analysis, market psychology and historical wisdom come from the small selection of books that I highly recommend: Recommended Stock Market Books.

I read a fabulous post on another blog yesterday that jumped right into the key money management subjects covered by Dr. Tharp. Trader Mike is a day trader, something I am not, but I respect the way he handles his trading and actually share many common techniques although in different time frames. I don’t know much about day trading but I understand money management and this post may help many of you delve deeper into the study of proper money management techniques. The blog post, My Path to 100 R in Profits from Day Trading , also shares a bit of his psychological thought process as the he explains why his returns were hurt slightly at one point last last year and how he will correct that going forward.

Whether you day trade, trend trade, swing trade or even buy and hold for longer periods of time; proper money management techniques are a must and understanding your own investor psychology is key to becoming successful. Enjoy!

Piranha

LifeCell (LIFC) raised its outlook for 2006 and earned $4.1 million, or 12 cents per share, up 91% from $2.1 million, or 7 cents per share, during the same period a year ago. Sales also jumped 54% to $30.7 million from the same period last year. Analysts (or talking heads) expected earnings of 9 cents per share with sales of $29.5 million.

I have been covering LIFC on the MSW index since February 4, 2006 at $22.13 with a breakout point of $24. As you can read below, we have been watching the flat base setup above the 200-d moving average over the past two months. Patience paid off once again as the stock broke-out today; up over 16% on volume six times the 50-day average.

Another text book breakout during the current earnings season! The MSW Index is on fire in 2006. The general market analysis will be provided tonight since I was excited over the breakout of LIFC.

The history of my coverage on the MSW Index is located below:

4/22/06
LIFC - 23.17, A 4.75% gain this week as the stock moved up on higher volume than the previous week but stayed below average. The ideal entry and buy signal is still a strong move above $24. Rating: Hold

4/15/06
LIFC - 22.12, Now a 14 week sideways flat base with the breakout on a move above $24 and a breakdown on a move below $20 (and the 200-d m.a. Rating: Hold

4/8/06
LIFC - 21.79, I consider this a 13 week sideways flat base with the breakout on a move above $24 and a breakdown on a move below $20 (and the 200-d m.a. Rating: Hold

4/1/06
LIFC - 22.55, I said it was a trend buy last week as it produced a return of 6.27% if you bought while it walked along the 200-d m.a. Still in buy territory with the next important move above $24.05. Rating: Hold - buy

3/25/06
LIFC - 21.22, Walking along the 200-d m.a. (this is a stock that can be bought now as a trend-buy using the moving average). Rating: Can enter now at moving average (also building irregular base). Be careful with the medical stocks I have been screening lately!!!

3/18/06
LIFC - 21.45, Walking along the 200-d m.a. (this is a stock that can be bought now as a trend-buy using the moving average). Rating: Can enter now at moving average (also building irregular base).

3/11/06
LIFC - 21.30, Down 4% for the week with a 4% recovery on Friday on volume near average. Support was received above the 200-d m.a. this week with a close on Friday slightly above the 50-d m.a. Rating: Building a base

3/5/06
LIFC - 22.32, A nice 5.28% gain this week on volume that was above average but below last week’s tally. A double top breakout buy occurs with a move above $24. Rating: Building a base

2/25/06
LIFC - 21.20, Down slightly this week but still trading above the 50-d m.a. with the recent up-trend intact. Rating: Building a base

2/18/06
LIFC - 21.29, A 3.10% move higher with the pattern still V-shaped base and a suggested buy above $24 on the P&F chart. Rating: Building a base

2/11/06
LIFC - 20.65, The stock never gave a buy signal and is in a V-shaped base with a suggested buy above $24 on the P&F chart. Rating: Building a base with a target of $40 in 2006

2/4/06
LIFC - 22.13, The stock makes the MSW Index as it gained 7.95% on the largest daily volume in months. Its chart pattern can be considered a cup shape but the P&F suggest a buy above $24. Rating: Building a base with a target of $40 in 2006

Weight among investors that is! NutriSystem Inc. (NTRI) is up more than 33% today after the company easily beat earnings from the same period last year. Numbers reported yesterday showed an increase in earnings from $0.10 to $0.60 while revenue increased from $34.7 million to $146.7 million. Was this a surprise to MSW? Not really, considering the close coverage of the stock over the past couple of months. I have been covering the stock on the MSW index since February 25, 2006 with a target breakout area of $50 and a breakdown area of $35 (a number that was never hit).

After today’s advance on huge volume (I wrote about the after hours trading in last night’s daily screen), the stock now shows a 57% gain in two months on the MSW Index, adding another success story in the early months of 2006.

Below: Read the weekly analysis carefully and you will see that I called this one perfectly as it led up to today’s breakout explosion. By the way, the options I spoke about on 3/11/06 were worth $9.60 per contract back then – they jumped to $32 per contract today (a 233% advance in six weeks). As recently as April 15, 2006, I wrote this: “The good news: if it breaks $50, the buy is even stronger this time around. The more times it tests resistance, the stronger the potential breakout becomes.”

Finally, visit the blog post I wrote right here on Market Talk back on February 22, 2006:
Consider Timing when Buying a Stock

4/22/06
NTRI - 50.50, We broke above the $50 resistance level but reversed from the high and closed at $50.50. The stock was up 11.43% for the week on the largest weekly volume since February. Rating: Hold

4/15/06
NTRI - 45.32, After reaching $49, the stock couldn’t penetrate or even challenge the resistance level. The good news: if it breaks $50, the buy is even stronger this time around. The more times it tests resistance, the stronger the potential breakout becomes. Rating: Hold

4/8/06
NTRI - 46.95, The small gain turned into a loss as Thursday and Friday sent the stock lower as it neared the resistance level and the top of our trading range. The next buy opportunity is a strong move above $50. Rating: Hold

4/1/06
NTRI - 47.52, NutriSystem crossed above the $44.80 area without a problem and is now looking to make a new high breakout. Volume is up with a 9.62% gain this week but I would like the stock to slow down before making the possible move above $50. Patience in this stock may pay off as I maintained coverage during the correction. Rating: Breakout buy above $50

3/25/06
NTRI 43.35, Back above the 50-d m.a. as the stock continues to make small gains quietly. Up 7% this week. It will be interesting to see if the stock can cross above $44.80 (the next peak number). Rating: Buy on new high (above $46 to $50)

3/18/06
NTRI - 41.04, Up 7% this week as the options are looking good. September 06 calls are the selection but I wish I had longer options because I would be in those. Still trading in range $44.80 is the next critical number to pass) Rating: Buy on new high (above $46 to $50)

3/11/06
NTRI - 38.14, I see something interesting here: Still trading in the range but the lows are becoming “higher lows”. Hit $32.37 in December, $35.01 in February and has only reached a low of $37.10 this month. If it doesn’t break lower than $35.01, the trend may resume higher. The P&F chart shows the higher lows formation. Rating: Buy on new high (above $46 to $50) – I’m looking at options here.

3/4/06
NTRI - 40.16, Gave back 6.47% of the 10% advance from the prior week but volume was lower (still above average). A breakdown is a move below $35. Rating: Buy on new high

2/25/06
NTRI - 42.94, Up over 10% as it recovered its moving average. I wrote a detailed blog on the stock earlier in the week and continue to remain on the bullish side. A buy happens with a new high above $50 on above average volume. At this time, it officially reenters the MSW Index. A breakdown is a move below $35. Rating: Buy on new high

Piranha

I harp on this subject over and over but I do so for a reason. Most investors are still scared to buy stocks that are priced above $50 or $100 per share. They continue to reason with themselves that they could buy 1,000 shares of a $10 stock rather than 100 shares of a $100 stock. They like the idea that they own 1,000 shares and they focus on the possibility that the stock could double from $10 to $20 a lot easier than $100 to $200. I guess the joke is on them and I know that this is one of the reasons why many of these people continue to fail at investing in the stock market. It all boils down to false perceptions and lack of experience.

If you search this blog or the MSW archives, you will see that I have been covering Tenaris (TS) and Hansen Natural (HANS) for about a year. Every chance I get, I talk about these stocks because I have owned them both (multiple times). Most recenely, I wrote a blog post on March 3, 2006 that spoke about this same topic and compared the gains/losses in Tenaris and Sirius (a beloved lower priced stock that does nothing). In that last post, I showed you how Tenaris moved from $123 to $179 while Sirius moved from $7.12 to $5.08 in a three month period of time (ending 3/3/06). Since March 3, 2006, Tenaris has moved from $179 to $241 while Sirius has moved from $5.08 to $4.81 yet many of the Sirius speculators still believe that SIRI is the better investment over time. Really? They continue to sit there and WAIT for something to happen while other higher quality companies and stocks contine to push higher making their investors solid gains.

Another stock I wrote about on March 3, 2006 was Hansen Natural (HANS) when it was priced at $98.79 (a pre-split adjusted price of $197.58). I bought the stock near $66 (pre-split adjusted) and couldn’t care how large the prior advance was because the trend was still higher and I wanted to make a profit based on my analysis (not the height of the price). HANS is now trading at $140.05 (a 42% advance) in seven weeks (this comes after the several hundered percent advance over the past two years). Keep in mind that the pre-split adjusted price is now $280.10. The stock has gone from $66 to $280 since I first purchased it eleven months ago (no I haven’t owned it the entire way but I did establish postions at two ideal entry areas). Tenaris has gone from $50 to $241 over the past 12 months.

Another great example is Chicago Merchantile Exchange (CME); it has traveled from $200 to $500 over the past twelve months. You may say I am only picking out a few higher priced examples but that statement would be ignorant sicne I specialize in stocks traveling through the $60-$100 range and see dozens of stocks make the trek in a few months.

The morale of this post: Don’t ever make an investment decision based on the height of the price because you may miss a huge winner. Stocks can move from $100 to $200 just as fast as they move from $10 to $20; especially if the $100 stock is in a strong up-trend and the $10 stock is sub-par or trading in a downtrend. Take a look at the charts

Piranha