Bulkowski’s Watch List

Written by Thomas N. Bulkowski and copyright © 2008-2010 by Thomas N. Bulkowski. All rights reserved.

The following is my watch list of securities that I am interested in buying. Since I am so selective, I may not buy any of them, but these are the closest ones to making the grade.

Consider these stocks as just the first cut in a long process of elimination. They have not been filtered for anything other than I find them interesting, so you should do additional research before trading them. I am not recommending that you buy any of these stocks. No stocks that I currently own appear in the list unless otherwise noted and unless I bought it after the last update. See the privacy statement and disclaimer for more information.

I have a computer program that builds this list by finding the most recent chart pattern in the file. That may or may not be the one I am interested in, so keep that in mind. This list is updated whenever a change occurs and time allows. Stocks may appear or disappear without this list being updated.

Removal Philosophy

Finally, there are two reasons for a security listed in the Additions section to not appear in the list. The first is that I bought it. Stocks I own, as I mentioned above, will not appear in this list. I don't want to be accused to touting stuff I own.

Second, is that I conducted more research or something happened in the markets to make me remove the security from my shopping list. It fell out of favor for whatever reason. I don't disclose the reason for removal (I used to), because maintaining the list is just too much trouble. Even updating it when I add a stock is a pain.

Watch List

If no securities appear in the list, then I don’t see anything worth buying. Click on the symbol for a more detailed discussion of the security. This list is automatically generated, so the patterns found here are the most recent ones located in the stock, but are not necessarily the ones I am looking at. Read the list of additions for a more accurate picture.

Industry: Apparel

Industry RS rank: 24 out of 51

Stock RS rank: 485 out of 670

Latest close as of 08/25/2010: $7.27

1 Month average volatility: $0.33. Volatility based stop (assuming an upward breakout): $6.24 or 14.2% below the close.

Change year to date: -31.80%

Volume: 194,200 shares

3 month average volume: 249,365 shares

Based on up closes since the 2009 bear market ended, the day with fewest up closes is Friday, and the most up closes is Wednesday.

 

Chart pattern: Pipe bottom reversal pattern from 06/28/2010 to 07/06/2010

Performance rank: 2 out of 23.

Breakout is upward 100% of the time.

Average rise: 45%.

Break-even failure rate: 5%.

Throwbacks occur 44% of the time.

Price meets the measure rule target 83% of the time.

Additions

8/26/10: I added Stein Mart (SMRT) to my watch list. The stock has retraced 62% of the prior move up, so if the retail environment improves, this could return to the old high. That's a tall order in this economy, so I'll probably just watch it climb from the sidelines like I did last time.

7/23/10: I added KB Home (KBH) as a risky play. The home building industry is suffering and expected to continue to do so. However KBH has made a straight-line run down with a double bottom chart pattern reversal at the bottom, confirmed as a valid pattern. This suggests a strong move back up to about 16, maybe 20. I'm going to wait for a retrace of today's strong move up to buy. If it drops below the bottom of the double bottom, then sell immediately. I've had trouble making money in housing stocks, so my guess is this one will be a failure. Having said that, my position size is smaller than I originally wanted, especially since many analysts don't like the stock either. This could be a worthwhile long-term play, but only if it lifts off from the small base it's forming now.

7/8/10: I added Baxter International (BAX) to my shopping list because of the swift and sharp drop during April followed by a reversal pattern. I might ride this one back up to 58-60. In this list is Genworth (GNW). I recently SOLD this one but am tracking it to see how it behaves. I also added Global Industries (GLBL) but it's high risk. I'm going to wait until earnings are announced August 2, which may send the stock to a new low. If so, I'll wait for a lower bottom. Upside is a return to 9, or 100% gain from where it's at now.

6/17/10: I removed BP from the list. I don't like the upside potential of this one. It's not clearly defined and it could be years before this makes a meaningful and substantial move upward.

6/11/2010: I added BP (BP) to the list because it's fallen so far that when they do plug the leak, this will get a huge bounce. If they don't eliminate or cut the dividend, then that's a plus, too. The yield is almost 10%, about double what an electric utility pays. Risks are that public opinion will force a dividend cut and the government could mandate that BP stop working in the US. I don't think the latter concern is a real one since BP owns half of the Alaska pipeline and employs 30,000 workers in the US. But they could cut the dividend and use the $10B in cash that would free up for the spill. If they DO cut the dividend, then this might be a buy after that...

4/13/2010: I added NCI Building System (NCS) to my watch list because of the flat base with price rising above the 30-wk simple moving average. It's risen too fast to buy now, so I'll wait for a retrace and re-evaluate then.

3/23/2010: I added Arrowhead Research (ARWR) based on publication of their latest research. Their Calando Pharmaceuticals subsidiary is in Phase I trials with a cancer treatment mechanism but it is years away from commercialization yet it holds great promise. The stock is cheap, so cheap that it is under de-listing status. I expect price to retrace the large move up, so I won't buy at this price and any position I take will be tiny for a long-term hold.

I've been playing with Stan Weinstein's method of buying stocks, and found a number of stocks that look interesting. I added CRDN, EXPD IN, KSWS, KBH, MHO, MDC, PHM, RGS, RYL, ZZ, SOLF, TOL, WRB. All of these show the 30-week moving average trending upward after a large decline. Price is recovering and will be above the moving average or is already there. I haven't looked at what the profit potential is nor have I looked at the fundamentals. Be careful with these.

2/2/10: I added United States Oil (USO). This will be a buy if price can close above 42, the recent tops, on good volume. This can move up to 48 (overhead resistance from 2006 to 2007 then using a Fib retrace of the recent move down from the 2008 high, shows values of 82.50, 71, and 60. Long term target would be 60 to 71. Home construction index fund (ITB) gained 5% today, suggesting the market believes housing construction will recover. Long term, this could hit 32 from the current 13.

1/26/10: I added Somaxon Pharmaceuticals (SOMX) to my watch list. In the next 2 months, I expect the FDA will approve their drug for insomnia. The drug may not put you to sleep quickly but it's supposed to keep you asleep. This is a high risk play, since the FDA has turned them down twice before for the same drug.

1/5/10: I went shopping for new securities to buy and found three: XLF, UNG, and IAT. All are exchange traded funds. IAT and XLF have gone horizontal for the last few months. UNG is awaiting a confirmed double bottom. Once price rises enough, it will confirm that the downtrend is over and it will be time to buy. On the longer chart, it shows a nice rounded turn.

-- Thomas Bulkowski