Stock of the Day - Update
Rochester Medical (ROCM)
Monday’s Closing Price: ROCM - $16.44

Sector: Health Care
Industry: Health Care Supplies
52-week Price: $6.85 - $29.76

Well, ROCM is now up almost 20% from its low last week and I don’t own shares!

Why? I had to sell based on my setup. See the trade setups below which turned out to be WRONG. I COMPLETELY understand why they were wrong and it was staring me in the face the entire time; after Dankkir noted the un-filled gap on the charts that I essentially ignored. Well, if we waited more patiently and placed the position when the gap filled, we would still be holding into today’s action with an approximate gain of 16% and earnings due to be released after the market close. I can’t tell you if I would have held through earnings today.

I made a mistake, closed my loss and went back and studied what I did wrong. Therefore, I will be prepared to look for these things in the next opportunity. I placed my first trade over 10 years ago but I still make small careless mistakes but the most important thing was that I didn’t allow it to hurt me! I followed my rules!

This should have been the ideal trade setup:
Ideal Trade Set-up:
Ideal Entry: $14.14 (area where gap was closed)
Risk is set at 1.0% maximum of total portfolio or $1,000 of $100k
Stop Loss is 8% or $13.01 (below the gap area)
Number of Shares: 884
Position Size is $12,500
Risk is $1.13
Target is $21
Risk-to-Reward is 6-to-1

Potential Trade Set-up #1 – WRONG!:
Ideal Entry: $15 (currently $15.14)
Risk is set at 1.0% maximum of total portfolio or $1,000 of $100k
Stop Loss is 5% or $14.25
Number of Shares: 1,333
Position Size is $20,000
Risk is $0.75
Target is $21
Risk-to-Reward is 8-to-1

Potential Trade Set-up #2 WRONG!:
Ideal Entry: NOW (currently $14.75)
Risk is set at 1.0% maximum of total portfolio or $1,000 of $100k
Stop Loss is 5% or $14.01
Number of Shares: 1,356
Position Size is $20,000
Risk is $0.74
Target is $21
Risk-to-Reward is 8-to-1

*This trade setup could have worked with a 10% stop loss.*

The pictures below are of me, my wife, my dog, my family and my friends. The photos range in age from 5 years ago to a few months ago.

As crude rises, a majority of the market’s oil leading stocks are heading in the opposite direction. This is interesting and I really started to take a deeper look this weekend after Howard mentioned this on his “Time to Golf” post:

“Oil stocks are being murdered, despite robust per barrel prices. This tells me, someone wants to raise cash–in a very big way.”

I have owned and followed Petrochina on this blog throughout 2007 and can’t ignore the quick 10% correction it has made over the past couple of weeks.

All of the leading stocks listed below are making the same type of pattern correction as the price of crude continues to increase. It’s very interesting and I agree with Howard that someone big is selling into the strength. Other than that possible observation, I really don’t have much more to say on the subject so I will let the charts do the talking.

Read more »

It was a wild and crazy week and several of these bloggers can give you an idea, a recap or a breakdown of what actually happened.
Enjoy and have a great Weekend!

• Deep Market Thoughts:
  “Because I think (opinion, not fact) the market is extremely rigged, I also have learned to take the longest possible view. I have the best chance of being correct and will keep my costs down. Not that complicated.”
• Market Metldown:
  What’s happening now? I cannot stress enough that the action did not cause severe technical damage on the charts. There is a clear support zone right below price action that could thwart the selling momentum in the short-term, but should this level fail, bears would gain authority and further deteriorate the rising market.
• Weak Home Sales, Tightening Credit Standards = Multiple Mortgage Apps:
  Based on our interviews with our Real Estate clients (commercial builders, RE brokers) and especially residential Mortgage Brokers, there appears to be a dramatic rise in multiple applications for both new purchases, refis, and home equity lines.
• Blood In The Streets! Bears Piss Themselves While Celebrating! It’s “Buy Time!”:
  There are only 118 of the S&P 500 stocks above their 50 dma, and only 267 of them above their 200 dma. The last three times that happened were near the bottoms of the corrections of Apr 2005, Oct 2005, and Jun 2006.
• Is T2108 Already Indicating a Bottom?:
  Aside from the glaring negative divergence in T2108 what really struck me about T2108’s chart is that it’s already below its *magical* 20. As I’ve posted many times before, 20 on T2108 is typically a sign a of a decent bottom and a buy signal.
• When Traders Lose Confidence - Part One: Gaining Perspective:
  “Were you wrong, or were you trading poorly?” It’s a key question. There will always be risk and uncertainty in markets.
• When Traders Lose Confidence - Part Two: Changing Your Self-Talk:
  Confidence is not something we have, like money or a car; it is something we do. Confidence is our appraisal of our capacities relative to the challenges we anticipate.
• The Return of the Absolute VIX:
  Fast forward to the present and here we are with a VIX in the 20s and suddenly the old numbers may have some meaning.
• Relief Rally:
  Today we got the much anticipated relief rally… to the downside. Relief from the never ending barrage of “Dow 14,000″ blurbs and flashing alerts from CNBC.
• IBD100 Strikes Again:
  Stocks with the very best fundamentals function like an early warning system for the stock market. Until they sell off in heavy volume, a rally almost always keeps moving higher.

Stock of the Day
Omniture, Inc
Thursday’s Closing Price: OMTR - $25.96

Sector: Technology
Industry: Business Software and Services
52-week Price: $7.35 - $26.28

Market Wire: Omniture, Inc. (OMTR), a leading provider of online business optimization software, today announced results for its second quarter ended June 30, 2007. Omniture reported another record revenue quarter, with second quarter GAAP revenue of $33.5 million, an increase of 78 percent over the second quarter of 2006 and 15 percent over the first quarter of 2007. Non-GAAP revenue for the quarter was $34.1 million.

My Take:
The charts look great, especially when compared to many of the market leaders over the past week or so. The weekly chart shows a strong price and volume move into new all-time high territory while the point and figure chart shows several consecutive ascending triple top breakouts.

I have also been looking deeper into the numbers with this stock. Revenues are steadily increases quarter over quarter and year over years (as you can see in the breakdown below). Earnings were negative last year but fell within analyst expectations and are expected to turn positive going forward from an actual loss of ($0.08) in 2006 to a profit of $0.65 by 2009. A typical CANSLIM type stock usually rises in price as earnings make strong gains from year to year. Net income was still negative last year but the negative numbers decreased by 55% as it heads to positive territory. Overall, things are looking positive both fundamentally and technically so I will now setup an ideal trade opportunity.

Potential Trade Set-up:
I would risk 1% of the total portfolio
My ideal entry would be near $24
Set a stop loss of 10% or near $21.60 ($19.89 would be the best area with a lower entry)
Target price will be about $35 (complete speculation)
At $35, the risk-to-reward will be just above 4-to-1
At $30, the risk-to-reward declines to 2.5-to-1

So, a $100,000 account will give you
Entry: near $24
1% Risk: $1,000
Stop Loss: 10%
Position Size: $10,000
Shares: 417
Stop Loss: $21.60
Target: $30-$35

Institutional Analysis:
Held by Institutions: 45 %
Money Market: 56
Mutual Fund: 82
Other: 4

Shares Held: 30.33M
Shares Held Previous Period: 24.25M

Shares Bought: 14.94M
Shares Sold: 8.85M
Value of Shares Bought: $278.0M
Value of Shares Sold: $165.0M

Read more »