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Health Care and Pharmaceutical Bottom?

November 17, 2008 by 1 Comment

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.

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Filed Under: Sectors & Industries, Stocks

Three Stocks to Watch

November 12, 2008 by 4 Comments

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

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Filed Under: Stocks

Airlines Lifting Off?

November 10, 2008 by 5 Comments

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:

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Filed Under: Stocks

Follow-through not Likely

November 7, 2008 by 5 Comments

The market gave us 133 new lows on the NYSE and 163 on the NASDAQ, the most we have seen since last Monday, negative if you ask me. Declining issues led advancing issues by a 5-to-1 margin on the NYSE and an almost 4-to-1 ratio on the NASDAQ (two consecutive poor days after a week of positive readings).

The Dow was down 4.9% today giving us a weekly decline of 6.7% and a year-to-date drop of 34.4% (hopefully your retirement accounts are doing better, comparatively). The index did not undercut the pivot reversal low but today did mark the 8th day of a potential rally follow-through. The odds of a sustainable rally have dropped considerably since we are no longer within the 4-7 day range (a range that historically shows the greatest odds of a sustainable rally). Yes, a rally can occur within 4-10 days but the odds of it maintaining the trend lessens with each passing day. In addition, the major indexes are all trading below their 50-d and 200-d moving averages, a major red flag for any potential up-trend.

The US dollar was up slightly today and is one of the few areas of our market with a year-to-date gain, 12.2% to be exact. The dollar is actually up more than 15% since the 10/30 week moving average crossover buy signal that I highlighted in US Dollar Buy Signal on 8/24/08. I originally highlighted a possible turn of trend back in December of last year in a post titled US Dollar Snapshot.

I am not the only one that saw a bottom in the US dollar but I may be one of the few that believe this trend can last for some time. It will have many ups-and-downs but the chart of the Euro tells me that their currency is now in a confirmed long term downtrend. The 200-d moving average is now facing down, a very negative sign (the 50-d m.a. is also trending below the 200-d m.a.).
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Filed Under: Currency, General Market

Vote 2008

November 4, 2008 by 1 Comment

Wall Street might be looking for an Election Day rally today as Dow futures rose 178, or 1.91 percent, to 9,510, Standard & Poor’s 500 index futures rose 21.30, or 2.20 percent, to 990.80, while Nasdaq 100 index futures rose 27.50, or 2.05 percent, to 1,369.00 ahead of the opening bell.

The Stock Trader’s Almanac (2009) shows the following impact of presidential elections on the stock market (based on 96 years of historical data):

  • Post-election years have been worse for Republicans.
  • Mid-term years have been inferior under Democrats.
  • November is much better in election years when the incumbent party is ousted.
  • Markets fare better under Democrats while the dollar is stronger under Republications.
  • The combination of a Democratic president and a Republican Congress has delivered the best market results.
  • The first two years of a presidents’ term market performance lags behind the last two.

4-year Presidential Cycle – Historical Gains
Year/ Total Gain/ Average Gain/ Up years vs. Down years

  • Post Election year: 67.3% total gain, 1.6% average gain, 19 up years vs. 24 down years
  • Mid-term year: 176% total gain, 4.0% average gain, 26 up years vs. 18 down years
  • Pre-election year: 464% total gain, 10.5% average gain, 33 up years vs. 11 down years
  • Election year: 288.3% total gain, 6.7% average gain, 29 up years vs. 14 down years

I don’t know what today will bring but please head out and VOTE!

Filed Under: Misc.
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