Health Care and Pharmaceutical stocks look to be making a bottom (maybe only a short term bottom) with higher lows and higher highs. I am not ready to jump on board and throw a party because the Health Care and Pharmaceutical tracking indexes and Healthcare iShares listed below are still trading below both their 50-d and 200-d moving averages. Long term they don’t look so hot but short term traders may think differently, profits can be had if you are willing to take a risk in this market. Unlike the Airline Indexes profiled last week, these indexes are lacking a 10/30-week moving average crossover which also tells me it’s early to jump on board.

In any event, the short term daily charts display churning in what seems to resemble a bottom even though the longer term weekly charts leave a lot less to be desired. As with the airlines indexes, the overall market health is still very weak so don’t buy blindly but keep health care and pharmaceutical stocks on your watch list for now. All bottoms must start somewhere and these indexes look to be turning higher or at least establishing a flat trading zone before picking the next direction.

($RXP) Health Care, $1200.25
($DRG) Pharmaceutical Index – AMEX, $260.68
(IYH) Healthcare iShares, $51.59

Several of the stocks listed below are components or holdings of one or more of the indexes and iShares listed above.

Read more »

Although the NASDAQ was down 2.22% and the Dow was down 1.99% on Tuesday, the stocks listed below sport some of the best relative strength ratings and best looking charts that I can find (looking at the charts from a trend trading perspective). The three stocks below have increasing earnings, increasing revenue, increasing fund sponsorship and are all fairly new to the market

The market is not in great shape so I don’t recommend buying blindly but do keep an eye on these candidates as their relative strength ratings have been impressive during turbulent times. APEI is the most interesting to me at this time.

American Public Education Inc. (APEI)
Industry: Services : Schools
Price: $47.74
Price Below 52-wk High: 10.33%
Market Cap: 850M
EPS Growth (MRQ): 23%
EPS Growth (TTM): 105%
EPS Rating: 99
Relative Strength Rating: 98

Earnings:
2010: 1.60E
2009: 1.13E
2008: 0.80E
2007: 0.64

Genoptix Inc. (GXDX)
Industry: Healthcare : Healthcare Facilities
Price: $38.40
Price Below 52-wk High: 7.94%
Market Cap: 637M
EPS Growth (MRQ): N/A
EPS Growth (TTM): N/A
EPS Rating: 80
Relative Strength Rating: 98

Earnings:
2010: 1.65E
2009: 1.11E
2008: 1.16E
2007: 0.78

Read more »

Are the airlines starting to lift off even though the rest of the market is in shambles?
Let’s take a look and tell me what you think.

AMEX Airline Index AMEX ($XAL): $22.89
Dow Jones US Airlines Index ($DJUSAR): $65.75

The airlines have made a recent 10/30 week moving average crossover to the upside so I have decided to take a deeper technical look. The group is up more than 63% since the beginning of July, the bottom of their recent decline also known as the pivot reversal. The group was up more than 80% in August (from the low) but then retreated in September and October but the key to this pullback is the fact that it made a higher low than the pivot reversal in July. The next key will be to make a higher high than the peak of $28.22 reached in August (this would show strength).

I’m not a bottom picker and I am definitely not a big fan of the airlines but I love to spot trends and hop on while they are getting started (if the ‘M’ in CANSLIM is cooperating – it’s not right now). I don’t like the airlines because they can be influenced negatively by a number of factors, including but not limited to a terrorist attack. Let’s not forget to mention the fact that they are not great businesses and have been looked upon as “loser stocks” by some industry veterans. Position sizing, risk management and hard stops won’t help in disaster situations when you are holding shares from this industry and that scares me (risky).

The AMEX Airlines Index components are made up of the following stocks:
(Name, ticker symbol and weighting)
Delta Air Lines, DAL, 14.52%
Ryanair Holdings Ads, RYAAY, 9.13%
Jetblue Airways, JBLU, 8.22%
Alaska Air, ALK, 7.87%
UAL Corp, UAUA, 7.86%
Lan Airlines SA, LFL, 7.39%
US Airways Group Inc., LCC, 7.37%
Skywest Inc., SKYW, 7.14%
Contl Airlines, CAL, 6.53%
Southwest Airlines, LUV, 6.41%
Amr Corp., AMR, 6.25%
Gol Linhas A.I. S.A., GOL, 6.18%
Tubosdeaceromex Adr, TAM, 5.12%

Of the thirteen stocks listed above, it seems that the larger established companies are the stocks with the best charts (in my opinion of course). Take a look but proceed with caution in this market:

Read more »

Stock of the Day - Update
Titan Machinery Inc. (TITN)
Friday’s Closing Price: TITN - $22.40

Titan Machinery Inc., which runs construction and agriculture equipment store,s raised its full-year guidance for revenue and earnings per share earlier this week. Its fiscal second-quarter profit more than doubled as all three of the company’s businesses posted revenue growth. Net income for the three months ended July 31 jumped to $3.3 million from $1.4 million a year earlier and revenue surged to $134.9 million from $85.8 million.

The stock has been holding up rather well despite the weakness in the current market (Thursday aside). Its relative strength rating is within the top 1-2% of all stocks trading and the EPS rating is in the top 1% of all stocks trading. Overall, TITN is a stock that I wouldn’t mind adding shares here at the long term moving average. Disclosure: I do own shares at this time.

Past (TITN) Titan Machinery Inc. Blog Posts

• 6/24/08: Money Makers: IPI and TITN
  

  I have been away for the past few days but IPI and TITN continue to make new highs. The two stocks are up 49% and 69% respectively.

• 6/2/08: Top Rated Stocks
  

  “TITN – 24.30, Titan Machinery Inc. is still making new all-time highs but did run into some selling pressure near the $26 level. The trend is higher and I am holding until told otherwise by the charts.”

• 5/19/08: Portfolio Stocks on the Move
• 4/25/08: Portfolio Snapshot: Growth
• 4/29/08: Young Stocks Moving on Volume
• 4/21/08: Titan Machinery (TITN)
  

  Potential Trade Set-up:
  Entry: $21.00
  Risk is set at 1.0% of total portfolio or $1,000 of $100k
  Stop Loss is 10% or $18.90
  Number of Shares: 476
  Position Size is $10,000
  Risk is $2.10
  Target is unknown (too little information)

• 2/25/08: Stocks Catching my Eye - TITN: $19.70
  

  “MTL is no longer a buy since it has become extended but TITN and RIO may be setting up for new 52-week highs.”

The secret to winning big in the market is not to be right all the time but to lose the least amount of money possible when you are wrong. As long as you win larger than you lose, you will be a profitable trader at the end of each year. Pride, ego and stubbornness prevents a trader from reaching the levels that very few can master.

To become a profitable trader, you must:

• 1. Manage Risk: Learn to trade a manageable portion of you portfolio (I recommend to risk less than 2% of you overall portfolio equity on each trade). Always establish a risk/reward ratio before making a trade. Without the ratio, how do you know your risk?
• 2. Understand Position Sizing: All traders must learn to know “how much” to trade on each position. Do not overtrade or you will runt he risk of ruin. Position sizing is rule number one of managing risk.
• 3. Cut Losses: Do not allow losses to run wild. You must learn to cut losses and understand that losses are a part of the game, a large part of the game. Check you ego of winning at the door. We are here to make money, not go undefeated. Play sports if you want to keep score with a record rather than your bankroll.
• 4. Learn when to Sell: You must learn when to sell. Selling is more important than buying as it ties directly to risk management. Use stops if you haven’t yet developed the discipline to get out at your predetermined stop or profit goal.
• 5. Average up in Price: I will never hesitate to add shares in a stock that is moving higher (see Mastercard) but I always avoid averaging down. Remember, cut losses and never throw good money after bad because we know that’s a quick way to the poorhouse.
• 6. Have Patience: It takes years to master trading as an advanced skill; even then, you are never done learning or adapting.
• 7. Buy 52-week Highs, not 52-Week Lows: Don’t be afraid to buy stocks making new highs. The garbage sits at the bottom of the market along with poor earnings, weakness and further downward pressure. Buy strength and the momentum moving higher. Stocks are typically priced at the levels they trade for good reason. This applies to most premium items in life.
• 8. Ignore the Talking Heads: Do not listen to the stories, gossip and rumors flying around on network television, stock forums or the major financial newspapers. It a surefire route to bad information and clueless advice. Do your own research; you’ll come out much further ahead. This applies to crappy blogs and internet sites as well.
• 9. Understand Technical Analysis: Fundamental analysis is a solid part of my trading system but technical analysis brings in the dough. You must learn, understand and use technical analysis on a daily basis. Fundamental analysis tells me what and technical analysis tells me when, where and how.
• 10. Control Emotions: Enough said – You must control your emotions or the game is over! Understand you!