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Top 10 Stocks to Watch: Trend Buys

March 23, 2007 by 6 Comments

The stocks listed today are some of the top candidates on my buy list for trend opportunities over the next several months. Each of these stocks has been screened numerous times on the MSW Index in 2007 and will be featured on the NEW MarketStockWatch.com that will be released in late April.

I am changing the MSW format to a service that generates revenues strictly from advertising rather than subscriptions. I am excited to release my research such as daily screens, weekly screens, the MSW Index and the MSW Portfolio to everyone for free. I will have the new site up and running when I return from my trip to Hawaii in April. I am looking forward to the trip to clear my head from the recent events in my life and to start a new venture for my equity research company.

I would like to thank the 700+ members that signed up for at least a trial subscription to MSW over the past two years; it was a great ride and I enjoyed every minute of it! Don’t worry, the new version of MSW will be even better as I will move to a blog format so I can incorporate images easier and post on a more frequent basis with total control of the site.

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Now, here are the top 10 stocks I am watching for my own Portfolio (in no special order):

  • EDU – 43.69, the stock has been acting excellent over the past several weeks during the market drop as it actually offered a key entry above $34 to start the month. The MSW Index stop loss area was $30 so EDU is very much a candidate. The ideal entry is near the 50-d m.a.
  • CBEY – 29.03, the stock has been consolidating over the past four months without violating the 200-d m.a. so that is positive but recent volume has been increasing on distribution days. It is a buy if it holds support above the 200-d m.a.
  • FTI – 69.26, the stock came to the MSW Index as a possible $60-$100 candidate and has held up very well in March with an 8% gain and a 17% gain in 2007. Ideal trend buys above the moving averages or the $64 support area.
  • ICON – 21.22, the stock hasn’t moved much over the past couple of months but the consolidation is welcomed after the large two year run from $4 to $23 (475% gain). My ideal area to grab shares is along the 200-d m.a. and I will wait for this potential opportunity (I will not chase).
  • NMX – 136.31, I purchased the stock in January at $119 but I sold after the large declines in exchange stocks for a small profit earlier this month. That’s too bad because it is now back above $136 and showing solid action on the weekly chart. I am looking to reestablishes shares with $130 as the current pullback target.
  • KNOT – 23.54, a very interesting stock that is currently catching support along the 200-d m.a. for the third time in two years. The huge distribution from February concerns me so I will need to see some up-ticks accompanied by strong volume before I enter.
  • COGO – 17.80, the stock recently offered an entry along the 200-d m.a. but I couldn’t take advantage of the trade setup due to personal circumstances (my father’s death). I am not one to trade during extreme emotional events. Anyway, I am looking for a new setup to form before grabbing shares as I won’t chase a poor risk-to-reward setup. The triple top breakout was above $17 on the point and figure chart
  • ZUMZ – 41.83, the stock is now acting well after being placed onto the MSW Index at $35.81 with an original buy at $32 and a target of $40 (this was accomplished). The stock started to make my screens just when WallStrip was making a video on the company. Weekly accumulation versus distribution looks solid. We now need a new setup to form in order to grab shares or add to an existing position.
  • LVS – 91.25, the stock was a superstar in my own personal portfolio last year and has since been sold but I am now interested in a new position as it looks to be holding support above the long term 200-d moving average. I would like to see stronger volume during up-weeks before taking this venture once again.
  • HWCC – 25.34, a new candidate to the MSW Index in March as the stock shows excellent “young growth stock” characteristics and a chart pattern that is trending higher with an ideal entry above the 50-d m.a. or near support at $23.

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To see all of these charts and much more (90 charts in all), visit my personal chart’s page over at StockCharts.com. I do need to update my annotations but give me some time because I am just getting back into the research this week.

Enjoy the Weekend!

Filed Under: Stock Screens, Stocks

Moving Average Trend Buys

March 22, 2007 by 2 Comments

The stocks listed below are all trading within 10% of the 200-day moving average and have been leaders over the past year. Fundamentals are better than the majority of the peers in their industry groups and the technicals show potential opportunities. Many of the possible opportunities will struggle if the market takes a turn for the worse so please understand the “general market trend”.

They are not recommened buys so please do you own due diligence!
This screen is performed nightly looking for stocks that are trading higher within the set parameters. These include fundamentally sound stocks with increasing earnings, a gain during the day today and preferably a move on above average volume.

A Few Interesting Stocks within 10% of the 200-d m.a.:

  • BIDU – 100.97, the recent $60-$100 candidate has corrected from highs near $134 to catch some support at the long term moving average. The point and figure chart suggests positive action if the stock holds support

    032107_bidu1.png

  • SHLD – 179.16, the stock is consolidating once again but my ideal entry would be closer to the 200-d m.a. near $165.

    032107_shld.png

  • DLLR – 25.39, the first correction to the 200-d m.a. since 2006. It will become an ideal trend buying opportunity if the support is held. Look for the RS line to reverse back to the up-side

    032107_dllr1.png

  • ANDE – 42.54, the stock is trading flat to slightly higher over the past few months. Any rebound could take the stock back towards $60 (a nice risk-to-reward ratio)

    032107_ande1.png

  • CSH – 42.50, the recent superstar stock is finally touching the 200-d m.a. for the first time since 2005. Any support in this area is a solid trend buy

    032107_csh1.png

  • HITT – 41.07, the stock is forming a basing pattern above the 200-d m.a. which shows some strength. The point and figure chart shows a negative trend forming but a move above $45 will reverse that outlook

    032107_hitt1.png

  • CRVL – 31.85, the stock made a tremendous run from $11 to $49 but has recently corrected to the 200-d m.a. near $30. I am not sure if this is a dead cat bounce but support in this area will signal a potential basing pattern and possible opportunity

    032107_crvl1.png

  • EZPW – 15.54, the stock has caught some support three times over the past two months at the 200-d m.a. but volume has been weak. Possibly a cup or saucer shaped pattern above the long term average

    032107_ezpw1.png

Filed Under: Stock Screens

Digesting Huge Profits with Jones

March 21, 2007 by 3 Comments

Stock of the Day – Update
Jones Soda Co.
Wednesday’s Intra-day Price: JSDA – $19.87

The stock is now up 154% since the original blog analysis!

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This is a quick update of a stock that has been covered numerous times over the past 6-7 months on the blog.

Here are the three latest entries:
January 19, 2007
Jones Soda Company JSDA

The fundamental numbers of JSDA are not in the same league as HANS but the chart does catch my attention. If HANS makes another run, JSDA and FIZ may tag along for the ride. If a risk/reward ratio of 3:1 or better develops, I will grab shares and!

52% gain since this post two months ago.

December 18, 2006
Stock Predictions for 2007 – Oh NO!

“JSDA – 10.03, as mentioned last week, Jones is a low priced sister stock of Hansen Natural (HANS) which has potential of a nice move and possible up-trend in 2007. The Ideal entry area is along the 200-d m.a. with shorter term entry points along the 50-d m.a. and above $10.50 on the point and figure chart”

98% gain since this post three months ago.

August 18, 2006
Ten Stocks under $10

“JSDA – 7.80, risky as it tests its 200-d m.a. The sister stock of HANS may have downward pressure if Hansen Natural continues to stumble below its 200-d m.a. Stocks move in packs so be wary if HANS breaks down further”

154% Gain since this post seven months ago

Filed Under: Stocks

Industry Analysis Using Investor’s Business Daily

March 20, 2007 by Leave a Comment

Using industry analysis can play a very important role when looking for quality stocks to place into your portfolio or looking for laggards to sell. As we know, sister stocks travel in groups and 50% to 75% of a stock’s move can be attributed to the industry group itself. Therefore, it is a smart idea to study which groups are the strongest and which groups are falling out of favor.

Looking below, we can see that several Oil & Gas related industry groups are topping the charts along with metal related groups over the past week. They are the groups making the strongest advances over the past five trading days according to the data from IBD. I do gather the majority of my data from the electronic version of Investor’s Business Daily and have been a member since 2001.

When viewing the strongest one week and year-to-date moves, we can see that growth stocks are not leading the market as industrial related industries are making the best gains. Oil, metals, machinery, energy and trucks are populating my screens which tell me that the market is in defensive mode, not offensive and that is why much of my account is in cash (among other reasons).

Top 10 One Week Industry Moves:
Diversified Operations
Metal Ores – Gold/Silver
Oil & Gas – Field Servic
Oil & Gas – US Expl Pro
Utility – Electric Power
Metal Prds – Fasteners
Comml Svcs – Printing
Tobacco
Food – Misc Preparation
Oil & Gas – Drilling

Top 10 Year-to-Date (YTD) Industry Moves:
Oil & Gas – Machinery
Energy – Other
Auto/Truck – Original Eqp
Machinery – Farm
Oil & Gas – US Integrat
Machinery – Constr/Mining
Trucks & Parts – Hvy D
Comml Svcs – Schools
Machinery – Tools & Re
Elec – Parts Distributors

It is also important to follow the weaker industries so you can determine the overall market trends and trade according to the stocks in favor. Several hi-tech growth industries have fallen to the bottom of the pile over the past week and for the year. Multiple computer and internet related industries are leading the market to weakness as retail and finance are not far behind. Of course I can’t forget to mention that the residential building industry has lost its recent steam but seems to be gaining some support near multi-year lows. This could be a buying opportunity area for longer term value investors if support holds.

Bottom 10 One Week Industry Moves:
Bldg – Resident/Comml
Soap & Clng Preparat
Retail – Consumer Elec
Internet – Content
Retail/Whlsle – Jewelry
Retail – Leisure Products
Finance – Investment Bkrs
Telecom – Equipment
Leisure – Hotels & Mot
Bldg – A/C & Heating

Bottom 10 Year-to-Date (YTD) Industry Moves:
Computer – Peripheral Eqp
Computer Sftwr – Desktop
Finance – Investment Mgmt
Retail/Whlsle – Cmptr/Cell
Bldg – Resident/Comml
Finance – Investment Bkrs
Retail – Consumer Elec
Retail – Leisure Products
Medical – Ethical Drugs
Computer-Manufacturers

Filed Under: Education, General Market, Sectors & Industries

Paper Trading: Nothing to Lose, Nothing to Learn

March 19, 2007 by 7 Comments

With nothing on the line, emotions fall to the wayside and you will probably miss the opportunity to learn something about yourself. Trading in the market is essentially learning about yourself and how you react to positive and negative situations. A great speculator once said that the market is an expensive place to find out who you are. However, you will never find out who you are by trading a paper account or virtual portfolio.

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Paper trading seems to be the most over emphasized technique offered by market theorists, educational elite, market novices and/or market frauds. While learning the pure basics, I can see why a novice investor may want to paper trade; to see the results of the developing system but I will warn that these results are completely false. The results will not contain the emotional decisions that go along with risking your own cash. Anyone and I mean anyone can paper trade successfully.

It’s simple: place a trade and hope it goes up and if it doesn’t, you have no worries because you can’t lose. Therefore, you are apt to forget about sell stops, position sizing, risk-to-reward ratios and you will never experience the pressures of an up and down market when your position shows a profit or loss. The emotional imbalance that occurs when you really start to lose money is not present. Don’t fool yourself by believing the results of your paper trading or virtual portfolio. These things may give you some confidence in your system but they don’t prove a damn thing in the real world. The real world, specifically the stock market, is run by emotional human beings. People make decisions that are irrational and base their trading decisions on fear and greed. Paper trading lacks fear and greed because there is no gain and no loss; therefore there is no consequence to deal with.

We should all know by now that emotions are tied to our decisions in the markets so we can only get accurate results through actual trading. Learn to ignore the talking heads on TV that claim they are up over 1000% trading a fake account. What really makes me laugh is the person that sets up a virtual trading scenario and then allows each participant to trade $500,000 or more in their account. If you are going to trade a fake account, at least keep it authentic so you can try to learn something within the scope of reality; potentially money management.

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I setup one virtual trading competition a few years back and I only allowed each participant to start with $10,000, a reasonable amount, an amount that most people start trading with. Traders are undercapitalized with $10,000 but most people start trading with this amount. The competition was fun but it was not real for me or the others. I didn’t care what risks I took and I never had a problem pulling the trigger which does happen in real life. I did try to keep my trades in line with my real life account but it varied slightly. I witnessed other traders making 20 trades per day or 20-50 trades per week. This is not real because the commissions alone, even with a discount broker will wipe you out (we weren’t day trading in this competition). I did allow margin but I saw investors abusing the fake power of leverage in their virtual account, again, playing the game for fun instead of learning something valuable.

Professors and the like teach theories while investors actually do the trading! Why would I waste my time playing for fake money when I can learn and do for real? If you want to test a system, open an account with real money, even a minimal amount and give it a try. Make sure you use enough money to allow emotions to be attached to your decisions. Without the emotional attachment, you are cheating yourself and your potential results.

This article was originally written by me back in 2005 under a title: Trade for Real

I updated the article to my current beliefs and renamed it after some excellent advice from Copyblogger during a recent exercise: Headline Remix Madness – Part Two

Filed Under: Education, General Market, Psychology
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