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.
Definitions RS is relative strength (where 1 is best). For others, see the glossary.’Breakout is upward/downward 100% of the time’ means price breaks out up/down by definition, not by statistically measuring the rate. All numbers assume a bull market and are based on the breakout direction that occurs most often.
Builders FirstSource, Inc (BLDR)
Industry: Retail Building Supply
Industry RS rank: 12 out of 45
Stock RS rank: 159 out of 551
Latest close as of 05/15/2008: $7.43
1 Month average volatility: $0.34. Volatility based stop: $6.55 or 11.9% below the close.
Change year to date: 2.91%
Volume: 153,600 shares
This security may be thinly traded (less than 100,000 shares)!
Chart pattern: Pipe top reversal pattern from 01/28/2008 to 02/04/2008
Performance rank: 4 out of 21. Breakout is downward 100% of the time. Average decline: 20%. Break-even failure rate: 11%. Pullbacks occur 41% of the time. Price meets the measure rule target 70% of the time.
Cache (CACH)
Industry: Apparel
Industry RS rank: 32 out of 45
Stock RS rank: 452 out of 551
Latest close as of 05/15/2008: $12.75
1 Month average volatility: $0.42. Volatility based stop: $11.82 or 7.3% below the close.
Change year to date: 36.51%
Volume: 118,600 shares
3 month average volume: 318,300 shares
Chart pattern: Pipe bottom reversal pattern from 04/07/2008 to 04/14/2008
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.
Coach Inc. (COH)
Industry: Apparel
Industry RS rank: 32 out of 45
Stock RS rank: 166 out of 551
Latest close as of 05/15/2008: $37.45
1 Month average volatility: $1.27. Volatility based stop: $33.84 or 9.6% below the close.
Change year to date: 22.47%
Volume: 5,219,100 shares
3 month average volume: 7,366,771 shares
Chart pattern: Triple top reversal pattern from 02/04/2008 to 02/27/2008
Performance rank: 7 out of 21. Breakout is downward 100% of the time. Average decline: 19%. Break-even failure rate: 10%. Pullbacks occur 61% of the time. Price meets the measure rule target 40% of the time.
Dell Inc. (DELL)
Industry: Computers and Peripherals
Industry RS rank: 25 out of 45
Stock RS rank: 483 out of 551
Latest close as of 05/15/2008: $20.63
1 Month average volatility: $0.48. Volatility based stop: $19.04 or 7.7% below the close.
Change year to date: -15.83%
Volume: 27,095,700 shares
3 month average volume: 30,024,237 shares
Warning: the quarterly earnings announcement is due within the next 3 weeks (but verify to be sure), so consider avoiding a trade.
Chart pattern: Horn bottom reversal pattern from 02/04/2008 to 02/19/2008
Performance rank: 14 out of 23. Breakout is upward 100% of the time. Average rise: 35%. Break-even failure rate: 9%. Throwbacks occur 29% of the time. Price meets the measure rule target 76% of the time.
Encore Wire Corp (WIRE)
Industry: Metals and Mining (Div.)
Industry RS rank: 10 out of 45
Stock RS rank: 56 out of 551
Latest close as of 05/15/2008: $24.41
1 Month average volatility: $1.04. Volatility based stop: $21.94 or 10.1% below the close.
Change year to date: 53.33%
Volume: 877,000 shares
3 month average volume: 459,018 shares
Chart pattern: Rectangle top continuation pattern from 03/31/2008 to 04/11/2008
Performance rank: 12 out of 23. Breakout is upward 68% of the time. Average rise: 39%. Break-even failure rate: 9%. Throwbacks occur 64% of the time. Price meets the measure rule target 80% of the time.
Friedman Industries Inc (FRD)
Industry: Building Materials
Industry RS rank: 31 out of 45
Stock RS rank: 413 out of 551
Latest close as of 05/15/2008: $6.11
1 Month average volatility: $0.20. Volatility based stop: $5.57 or 8.8% below the close.
Change year to date: -3.78%
Volume: 6,300 shares
This security may be thinly traded (less than 100,000 shares)!
Chart pattern: Broadening bottom reversal pattern from 04/07/2008 to 05/06/2008
Performance rank: 17 out of 23. Breakout is upward 53% of the time. Average rise: 27%. Break-even failure rate: 10%. Throwbacks occur 41% of the time. Price meets the measure rule target 59% of the time.
Georgia Gulf (GGC)
Industry: Chemical (Basic)
Industry RS rank: 9 out of 45
Stock RS rank: 538 out of 551
Latest close as of 05/15/2008: $4.27
1 Month average volatility: $0.40. Volatility based stop: $3.30 or 22.7% below the close.
Change year to date: -35.50%
Volume: 652,600 shares
This security may be thinly traded (less than 100,000 shares)!
Chart pattern: Dead-cat bounce from 05/07/2008 to 05/07/2008
Kulicke and Soffa (KLIC)
Industry: Semiconductor Cap Equip.
Industry RS rank: 19 out of 45
Stock RS rank: 232 out of 551
Latest close as of 05/15/2008: $6.81
1 Month average volatility: $0.29. Volatility based stop: $6.15 or 9.6% below the close.
Change year to date: -0.73%
Volume: 514,800 shares
3 month average volume: 1,136,094 shares
Chart pattern: Big W reversal pattern from 03/13/2008 to 03/31/2008
Breakout is upward 71% of the time. Average rise: 31%. Break-even failure rate: 11%. Throwbacks occur 32% of the time. Price meets the measure rule target 42% of the time.
LSB Industries Inc (LXU)
Industry: Building Materials
Industry RS rank: 31 out of 45
Stock RS rank: 431 out of 551
Latest close as of 05/15/2008: $19.02
1 Month average volatility: $0.85. Volatility based stop: $16.70 or 12.2% below the close.
Change year to date: -32.60%
Volume: 213,300 shares
3 month average volume: 259,869 shares
Chart pattern: Pipe bottom reversal pattern from 04/21/2008 to 04/28/2008
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.
MSCI Hong Kong Index fund (EWH)
Industry: Investment Co. (Foreign)
Industry RS rank is unavailable.
Latest close as of 05/15/2008: $19.93
1 Month average volatility: $0.32. Volatility based stop: $18.98 or 4.8% below the close.
Change year to date: -9.12%
Volume: 2,672,800 shares
3 month average volume: 8,148,795 shares
Chart pattern: Head-and-shoulders bottom reversal pattern from 02/22/2008 to 04/14/2008
Performance rank: 7 out of 23. Breakout is upward 100% of the time. Average rise: 38%. Break-even failure rate: 3%. Throwbacks occur 45% of the time. Price meets the measure rule target 74% of the time.
North American Galvanizing and Coatings (NGA)
Industry: Building Materials
Industry RS rank: 31 out of 45
Stock RS rank: 383 out of 551
Latest close as of 05/15/2008: $6.62
1 Month average volatility: $0.31. Volatility based stop: $5.71 or 13.7% below the close.
Change year to date: 9.06%
Volume: 79,700 shares
3 month average volume: 86,995 shares Based on the average volume, this security may be thinly traded (less than 100,000 shares)!
Chart pattern: Rectangle top continuation pattern from 02/11/2008 to 05/08/2008
Performance rank: 12 out of 23. Breakout is upward 68% of the time. Average rise: 39%. Break-even failure rate: 9%. Throwbacks occur 64% of the time. Price meets the measure rule target 80% of the time.
NVidia Corp (NVDA)
Industry: Semiconductor
Industry RS rank: 44 out of 45
Stock RS rank: 486 out of 551
Latest close as of 05/15/2008: $23.78
1 Month average volatility: $0.93. Volatility based stop: $20.06 or 15.7% below the close.
Change year to date: -30.10%
Volume: 28,855,500 shares
3 month average volume: 13,825,689 shares
Chart pattern: Head-and-shoulders top reversal pattern from 03/25/2008 to 04/10/2008
Performance rank: 1 out of 21. Breakout is downward 100% of the time. Average decline: 22%. Break-even failure rate: 4%. Pullbacks occur 50% of the time. Price meets the measure rule target 55% of the time.
PowerShares Dynamic Energy (PXE)
Industry: Oilfield Svcs/Equipment
Industry RS rank: 5 out of 45
Latest close as of 05/15/2008: $28.89
1 Month average volatility: $0.70. Volatility based stop: $27.04 or 6.4% below the close.
Change year to date: 13.87%
Volume: 70,800 shares
3 month average volume: 51,605 shares Based on the average volume, this security may be thinly traded (less than 100,000 shares)!
Chart pattern: Head-and-shoulders bottom reversal pattern from 11/27/2007 to 03/20/2008
Performance rank: 7 out of 23. Breakout is upward 100% of the time. Average rise: 38%. Break-even failure rate: 3%. Throwbacks occur 45% of the time. Price meets the measure rule target 74% of the time.
Steelcase (SCS)
Industry: Furn/Home Furnishings
Industry RS rank: 43 out of 45
Stock RS rank: 481 out of 551
Latest close as of 05/15/2008: $12.32
1 Month average volatility: $0.38. Volatility based stop: $11.29 or 8.3% below the close.
Change year to date: -22.37%
Volume: 514,400 shares
3 month average volume: 722,815 shares
Chart pattern: Triple bottom reversal pattern from 04/03/2008 to 04/23/2008
Performance rank: 7 out of 23. Breakout is upward 100% of the time. Average rise: 37%. Break-even failure rate: 4%. Throwbacks occur 64% of the time. Price meets the measure rule target 64% of the time.
Vertex Pharmaceuticals (VRTX)
Industry: Biotechnology
Industry RS rank: 26 out of 45
Stock RS rank: 168 out of 551
Latest close as of 05/15/2008: $27.86
1 Month average volatility: $1.19. Volatility based stop: $24.57 or 11.8% below the close.
Change year to date: 19.93%
Volume: 1,671,400 shares
3 month average volume: 2,528,577 shares
Chart pattern: Diamond top reversal pattern from 04/04/2008 to 05/05/2008
Performance rank: 7 out of 21. Breakout is downward 69% of the time. Average decline: 21%. Break-even failure rate: 6%. Pullbacks occur 57% of the time. Price meets the measure rule target 76% of the time.
Additions
5/14/08: I added Kulicke and Soffa (KLIC) to my shopping list, perhaps as a buy candidate. It had a strong quarter which pushed price upward. Now it is
consolidating the gains. My guess is the upward breakout from this consolidation region could see the stock move up to 8.50 from a buy-in price of about 7+. The breakout could breakout downward,
in which case look for a 38% retrace of the prior up move (about 6.23), or even lower. It might be a buy at that point, too.
5/7/08: Coach Inc (COH). The stock has formed a nice knot of congestion after a strong but brief run-up. I expect price to breakout upward from this
pause and rise to 46 from the current 35.11. Along the way, if faces overhead resistance setup by a gap in mid October at 39-40, round number resistance at 40, and prior valleys
at the same price (about 40).
5/7/08: Friedman Industries (FRD). The rounding bottom is tempting because of the flat base congestion near 5. The industry
is weak but a rise to 6 then 7, 8, and 9 is possible. Current close is 5.38. Downside is a resumption of the drop. A volatility stop at 4.71 limits the loss to a rather large 12.5%.
5/7/08: NVidia Corp (NVDA). An Eve & Eve double bottom has confirmed with price forming a knot of congestion. An upward breakout
from this knot could send price from 22.01 to 25 in short order with a peak at 27. A long shot would be a rise to 30. Downside would be below the current knot, say, 21.47 but a volatility
stop says to place it no closer than 20.21 or down 8.2%. The industry is very weak, ranking 47 out of 48, where 1 is best. The quarterly report is due any day now, so I would wait for that,
perhaps with a buy stop in place to capture the start of any up move.
5/6/08: I added LSB Industries (LXU). The stock has completed an Eve & Eve double bottom and a Big W. I do not intend to buy this stock, just watch it to see if it climbs back up to overhead resistance at 23 from the current close of 16.63.
4/22/08: I added Steelcase (SCS) to my shopping list. The stock has made a swift decline in March (due to a weak quarterly earnings report) and is now forming an
Adam & Adam double bottom and a Big W. I do not intend to buy this stock because the industry strength ranks 45 out of 48,
where 1 is best. But I can see the stock rocket back upward to 14 from the current close of 11.31 (as of 4/21/08), and I want to see if it does. If that happens, then it would strengthen
my belief that a quick rise often follows a quick decline, as the Big W predicts.
4/16/08: I added Great Plains Energy (GXP) because of the upward breakout from a symmetrical triangle. The utility stock yields about 6.5% and with an anticipated
recovery to 27 and then 29, it was worth a look. FULL DISCLOSURE: In fact, I bought some this morning (4/17).
4/16/08: I added Delphi Financial Group Inc. (DFG). This stock shows a confirmed head-and-shoulders bottom with an upward breakout. I was tempted to buy the stock
but the loose price action made me hesitate and with an expected retrace of the prior up move in the markets yesterday (on 4/16...I am writing this on 4/17), it will pay to wait. Industry
relative strength rank is poor, too, at 35 out of 48 where 1 is best.
4/16/08: I added MSCI Australia Index fund (EWA). This shows a complex head-and-shoulders bottom with price near the neckline. It may breakout upward soon, confirming
the pattern as valid and bullish. Even though this traded over 1 million shares on 4/16, the price movement is loose looking but that is typical for foreign based securities and ETFs. The recent gap up in the
stock suggests price will pullback some but who can tell with these things?
4/16/08: I added MSCI Hong Kong Index fund (EWH). I traded this once and got burned so I am gun shy about trying this one again. It shows a head-and-shoulders
bottom, unconfirmed as yet. I would wait for price to climb above the congestion region at the price of the left armpit before taking a position. I want to make SURE that price is climbing
before I buy.
4/16/08: I added MSCI Japan Index Fund (EWJ). This is teetering on confirming an Adam & Adam double bottom but there is overhead resistance
(at 13.25 in December 2007) blocking much of an upward move along with a down-sloping trendline. Both of those make me nervous.
4/16/08: I added Timken Co (TKR). The large head-and-shoulders bottom confirmed with an upward breakout from a tight congestion (flag) on 4/16. I thought of
buying this one but decided not to. I see it is down this morning (4/17), so it is retracing its 4.4% gain yesterday. Industry relative strength is weak at 36 out of 48, where 1 is best.
4/16/08: I added PowerShares Dynamic Energy (PXE). I want to watch this one and maybe buy if price throws back to the neckline of a head and shoulders
bottom.
4/16/08: I added Vertex Pharmaceuticals (VRTX). The high and tight flag is an interesting one even though I do not like to trade drug stocks because they
tend to dead-cat bounce too often. The tight consolidation region may mean that should price breakout upward, it could be in for a good run.
4/2/08: M/I Homes (MHO). The chart does not provide a pretty picture but I can see an entry at 19, at the top of the recent congestion zone, followed by a rise
to 26, for a tasty gain of over 35%. Downside would be 15.69, near the bottom of the congestion region.
3/29/08: Nicor (GAS). This one has a nice and tight symmetrical triangle in March after a steep plunge. My guess is an upward breakout from this pattern will lead the stock
back up to 40+ from the current price of 33. That would be a rise of over 20%. The industry relative strength is ranked 2 out of 48, where 1 is best, but I would want to know why it dropped
in February (certainly the earnings release helped drive the stock lower) before I invested. Still, this is a very appealing trading opportunity but high risk, due to weak earnings. Another
bad quarter could send the stock moving lower.
Ross Stores (ROST). Shows a busted triple top (the 3 peaks in February) with a throwback occurring now. After the throwback completes, this could return to
33 but my guess is price will continue lower. Why? Because the industry is ranked 45 out of 48 for relative strength and no one is buying clothes. Nevertheless, the company reported better
than expected earnings on March 19 (based on price action, not the actual numbers). I do not like the loose price movement with wild swings all over the place. The stock is trading at
29+ now, so upside is 14%.
LSI Logic (LSI). Shows a long rectangle top from mid January after it reported earnings that surprised the Street (meaning price gapped up on January 23).
An upward breakout from this rectangle could have legs, returning price to 7 - 8 area from the current 5. If you were to buy on the breakout (5.56), that would mean a rise of at least
25% if it hits 7, or 44% if it hits 8. The industry is weak, ranking 47 out of 48 where 1 is best for price relative strength. Earnings are due out in about a month and maybe that will
provide the lift. If so, it will probably gap up but a bad report could send this back down to 4. Ouch.
3/28/08: I added Beacon Roofing Supply (BECN) because of the Adam & Adam double bottom in March. I expect a retrace of the strong move up
(starting on 3/24) that appeared after the second bottom. If price retraces 38%, that would place price at 8.75, below the mid point of the congestion zone in February. A 50%
retrace would stop near the confirmation price of the double bottom, 8.50.
Builders FirstSource (BLDR) shows a weird looking head-and-shoulders bottom from November onward. A line drawn along the peaks and
valleys starting in December shows a symmetrical triangle. The peaks along the top line up quite nicely. If price closes above this trendline, then it might be a
good play, but it is
in a industry that is suffering (hence, that’s why price is so low). That means you should take extra caution here and with BECN, described above. I do not like loose patterns
like we see here in BLDR but I do like the strong downtrend from July onward. It leads me to believe that price will rebound to 16, maybe within a year from the current price of 7.42.
I think the rise would be a rocky one with earnings suffering along the way and that may lead to dead-cat bounces.
AC Moore Arts & Crafts (ACMR). Before Michaels Stores went private, this chain used to compete with it. I like the strong drop here during February,
but that was also a dead-cat bounce. More DCBs occur in the next 3 to 6 months, so this is a risky play. On March 21, earnings were released and price shot up the next trading day and
is now forming a
flag. If price breaks out upward from the flag, then this could be a buy, but I would check on how business is doing. In a recession or economic slowdown, people
will not be buying crafts but struggling to buy food.
3/22/08: I added Hershey Foods HSY) because it has formed three rising valleys. Higher lows suggest that price has turned. While I think their products are over
priced, many do not and the stock may represent a good value. New management, new board, but same old problems.
3/22/08: I added Beazer Homes (BZH) to the list. As I remarked in my blog, many of the housing stocks are showing head-and-shoulders bottoms,
and it might represent a long-term value play, depending on what the fundamentals say. Price has closed above the neckline, so that is a buy signal. Whether it represents a trend change only
time can answer that. On January 3, 2007, the stock was at 46.29 and it bottomed at 4.53 in January 2008, a decline of 90% in a year. Maybe the stock and the company have been punished
enough. The flat base is almost mouth watering. Since price zipped up 15% on Friday, wait for a retrace before buying.
3/22/08: Sara Lee (SLE) shows a small head-and-shoulders bottom. DA Davidson upgraded it twice within a week (3/3 and 3/12) but JP Morgan downgraded it on 3/19.
The thing is, the downgrade had almost no effect on the stock price. In fact, it broke out higher. This suggests an up move to me. I might take a bite of this one with a target of 16. Downside
would be a drop to 12.29, below the head low and out of range from a volatility stop standpoint, a potential drop of 7.6% from the 13.31 close. That’s almost 3:1 ratio but the
head-and-shoulders is a small pattern and this could form a double bottom. Others in the industry appear to be on the verge of moving up as well, so that is good news.
3/1/08: I added two stocks,Bare Escentuals (BARE) and Newport Corp. (NEWP). BARE shows price returning to the confirmation price
of a Eve & Adam double bottom. If price reaches the congestion area at 25-26 and looks to perk up, it might be a buy. On a longer view, this also looks to be
a Big W configuration, meaning it had a sharp and tall decline in July leading to the sideways movement since.
Newport is a weird looking head-and-shoulders bottom. The left shoulder is higher than the right. IF, and that’s a big if, price moves up and closes
above the neckline, it could be a buy with a potential rise to 13. My guess is that price will continue lower, perhaps forming a double bottom instead. I would wait for a move above the
right shoulder high as the entry signal. That means buy at 11.17 (2 pennies above the peak).
2/22/08: EMC Corp (EMC). I added this stock because it looks to be forming a descending triangle (red lines).
Price at A is not a minor low (turning point), so this pattern could morph into a falling wedge.
A head-and-shoulders bottom occurred earlier but it was a dud, and there is a question as to whether or not price closed above the green
neckline. Price has to close above the neckline or else it’s not a head-and-shoulders bottom.
My expectations for this stock is that price will pierce through the lower triangle trendline and then
quickly reverse, completing a pullback and then continuing to bust out the other side (out the top of the pattern as the red line shows).
Busted descending triangles make for wonderful buys because they have a tendency
to continue upward. But in this market?
2/21/08: Kennametal (KMT). I added the stock today after the close because it is making a ascending triangle after a swift and steep decline.
Price poked out above the trendline today before running for cover like a ground hog seeing its shadow. Guess that means there will be another 6 weeks of bear market. That’s
a joke, so don’t take it literally.
2/20/08: U.S. Concrete (RMIX). I added this stock back into the watch list after having removed it recently. Why? Because it looks sooo pretty! Shown in red
is a high and tight flag. That is the name of the pattern, regardless of whether or not it actually shows a flag. This one has a pennant in place of a flag.
Many times you will not be able to pin a label on the flag portion of the HTF. It will just be a loose collection of price bars. Anyway, the "flag" portion of this HTF shows
a nice and tight grouping of candles (lots of overlap from candle to candle and little meandering) and HTF patterns with that configuration tend to perform better than
do those with loose consistency.
If price can pierce overhead resistance I show as a green line, setup by prior peaks, then this might stand a chance of performing well.
In this market, I suspect that the
pattern will fail to reach the average 69% rise above the breakout price before changing trend because of general market turbulence. The industry, cement and aggregates,
has a relative strength reading of 41 out of 49, where 1 is best, so it’s dreadful. The stock has a relative strength of 521 out of 546 (1 is best)
as of yesterday’s close, so it too is not performing well. OK, it sucks. Maybe that’s why I removed it once already (the reason was the industry was being taken
down by the troubles in the housing market).
Removals
5/12/08: Dress Barn, (DBRN). Whatever interested me in the stock has disappeared and since the industry is weak, I am removing it.
Beacon Roofing, (BECN) looked like it was making a rounding bottom but the quarterly report saw price open far lower, at
9.36 but close up 27 cents at 11.17. Although this shows strength, as a rounding bottom the picture is one of large price swings from peak to valley and it is not one I want to be involved
with.
Sara Lee, (SLE) has to go. It showed promise with a large and weird looking head-and-shoulders bottom with a left
shoulder in January and right shoulder in April, but the quarterly report dropped price dramatically. This is an example of why it pays to wait for the quarterly report to occur before
buying a stock (I will not touch a stock 3 weeks before the report).
MSCI Japan Index fund, (EWJ). The price of this is just too loose and with overhead resistance I do not like the ETF.
5/1/08: I removed Timken Co, (TKR) because the stock’s head-and-shoulders bottom completed and the stock showed a nice run up.
There is nothing else to watch.
4/24/08: I removed AC Moore Arts and Crafts (ACMR) because the stock dead-cat bounced in February, an event I did not notice at first.
Since the industry is ranked 38 out of 48, where 1 is best, this stock could DCB in the coming quarters.
4/24/08: I removed Delphi Financial Group (DFG) because the stock dead-cat bounced yesterday after the announcement of earnings. By
dead-cat bounced, I mean price plunged, busting the head-and-shoulders bottom.
4/16/08: I removed Hershey Foods (HSY) because performance of the stock is not what I expected. Other than a three rising valley chart pattern, there was
not much to follow on this one and with the recent plunge, to the bottom of an up-sloping channel, I lost interest.
4/16/08: I removed Ross Stores (ROST). This is a busted triple top, meaning it has broken out upward instead of downward but the price action is loose
and volatile in an industry that ranks 44 out of 48, where 1 is best.
4/16/08: I removed Charlotte Russe (CHIC). Although I like the Dutch auction that removed a significant portion of the outstanding shares (16%),
the stock has tumbled in a weak industry (44 out of 48, where 1 is best). This may be a good selection once the industry and the stock turn around.
4/16/08: I removed LSI (LSI). This stock is forming a long rectangle and that usually means a strong move providing the breakout is upward. I am
not sure an upward move is in the cards for this stock. Industry relative strength is ranked at 47 out of 48 where 1 is best, so look for continued underperformance.
3/22/08: I removed Hecla Mining (HL) because it has tumbled after I sold, confirming that dumping it was the right move.
3/11/08: I removed Bare Escentuals (BARE) from my shopping list. Why? Because the Dow was up 3.5% today (416 points), the S&P was up 3.7%,
and this stock had the audacity to drop 3.8%. I want something like HHGP, which I own, and which climbed 20% today.
3/10/08: I removed Newport Corp (NEWP) because price failed to stop at the price of the first bottom low, and busted what looked like a
head-and-shoulders bottom that failed to form a right shoulder.
3/8/08: I removed the following stocks:
Chicos FAS Inc (CHS). This has formed a double top and the industry is weak.
Baxter International (BAX). Downward breakout from a symmetrical triangle.
Pioneer Drilling (PDC). I don’t understand why this is going up. Fundamentals do not support it (dropping rig day rates and utilization).
Kulicke and Soffa (KLIC). Weak semiconductor industry and downward breakout from a symmetrical triangle.
3/3/08: Beacon Roofing Supply (BECN). The stock, along with the weak industry, no longer shows promise. I was hoping for a pullback to the
symmetrical triangle and then for an upward breakout but with the decline so large, that seems doubtful. Since the industry relative strength is 47
out of 49, even an upward breakout would have a difficult time going anywhere.
2/21/08 Trex (TWP), USG Corp (USG), U.S. Concrete (RMIX). All of these stocks are related to the building industry which is doing poorly and probably will
continue to struggle. I had high hopes that RMIX would break out upward, but it tumbled yesterday. Bare Escentuals (BARE), and yes, that is how they spell it,
looks to be retracing a good portion of the strong up move from the second bottom of an Eve & Adam double bottom. I had hoped that it would power upward and complete a Big W, but it
looks as if I will have to wait for that. Earnings are due out on February 26, so maybe that will change the outlook.
2/19/08 Alaska Air (ALK). I am removing the stock because I can see this taking forever to make a good move up. There are other industries that are performing better with less risk.
2/19/08: Incyte (INCY). The only reason this is an ascending triangle is the long spike at the start of the pattern. With the drug stocks number 5
for the most likely to dead-cat bounce, I am removing it from the list.
2/19/08: Stillwater Mining (SWC). This has completed a hight-and-tight flag and is now rocketing upward. I missed it because I was too chicken to believe this would do well. I hope someone bought it. I won’t
chase it now.
2/17/08: KLA-Tencor (KLAC) was on my shopping list as was Kulicke and Soffa (KLIC). I show KLAC because of the potential upside move. Price made a quick decline in late December and has been consolidating.
This consolidation, if you look at it through rose colored glasses from about a mile away, appears to be a diamond bottom. It’s not a good example of a diamond because the bottom is too
flat. The thinking behind placing this stock on my shopping list was that price would quickly rise back to the launch price (overhead resistance or the congestion area from which it dropped,
in December, at around 47-49. Friday, the stock dropped again and it looks to be ready to drop below the base of the pattern. If that were to occur, you’d want to sell any long holdings.
The semiconductor equipment industry is ranked 47 out of 49, so it’s almost in last place. That suggests the stocks will remain losers for a time to come. In short, I fear that another
swift decline will follow to complete a measured move down. However, it could find support here and then zoom up, so for those risk adverse, the stock might
be worth a look. 2/19/08: The stock dropped again so I’m removing it from my list. Sigh.
Downside would be a drop below 40, say place a stop at 39.93 (to allow round number support at 40 to turn the stock). Upside would be a return to 47. From a current price of
40.89, that’s about $1 risk for $6 reward or about 14%. Not bad. I may have to reconsider this one...
2/17/08 Steelcase, SCS. This is a head-and-shoulders bottom. The armpit of the left shoulder is equal in price to the right shoulder, which I find aesthetically appealing. Other than that,
the price structure is too loose.
2/17/08: I am removing the three home builders on the list: Beazer Homes (BZH), Pulte (PHM), and Ryland (RYL). Beazer is holding up, meaning price could break out upward from the flag portion of
the hight-and-tight flag (HTF), but probably won’t because of industry weakness (ranks 48 out of 49 industries for price relative strength). This one could face a liquidity
problem if home sales weaken. Pulte has broken out downward from the HTF’s flag. Ryland has completed a throwback to the breakout of a head-and-shoulders bottom or triple bottom, but
is continuing down.
2/17/08: Newell Rubbermaid (NWL). I show this as a triple bottom but it is better listed as a complex head-and-shoulders bottom as it stands today. The picture is one of two heads and two arms. The pattern just bothers me for some reason. You could also call this a double bottom, maybe Eve & Eve. I don’t like the loose price
structure, so I am removing it.
2/17/08: Pactiv (PTV). This is a congestion area in the last month perched atop an Eve & Adam double bottom. This could break out upward but looks to be moving down.
With the price not trending much in the past, meaning it looks loose, I don’t see much upside. Overhead resistance near 32 may cause problems if price doesn’t stop before then. By
loose, compare PTV with a chart of BLG on the log scale. Both have trended down but BLG shows less wobbling and more trending. PTV is all over the place and if you buy the stock, that is probably the
kind of ride you will experience.
2/17/08: Charming Shoppes (CHRS). I don’t see any reason for including it on the list except that price has tumbled from a high of 15.57 in November 2006 to a recent low of 4.01.
2/17/08: ADC Telecommunications (ADCT). I don’t like the industry for some reason. It is well down the pack at 38 out of 49 in industry relative strength.
This Adam & Adam double bottom holds promise with a strong decline leading to it (suggesting a quick rise) but price looks loose. I guess loose is my key word
for today. Price broke out upward, threw back, and is now continuing down. If it were to break out upward again, I could see it rise to 15 before it hits resistance.
2/17/08: Alberto-Culver (ACV). This looked like a promising setup with a nice tight congestion area, posing as a pennant. However, price broke out upward and then collapsed. My guess
is that price will continue lower to 26 or below before resuming the climb. It would probably stall at the pennant area, though.
2/16/08: Coldwater Creek (CWTR). Even though the stock is showing a high-and-tight flag, I am removing it from the shopping list because the stock has dead-cat bounces within
the last 6 months. Since one DCB tends to follow another, this is a higher risk stock than other opportunities.
2/14/08: Patterson-UTI (PTEN). A head-and-shoulders bottom formed as shown in the accompanying figure. Price broke through the
green neckline and threw back to point C before moving up. With news today that the company had difficulty finding work for
their rigs because of a glut of them, and coupled with the strong upswing since C, I fear that price will retrace between 38% to 62% of the AB move. In
other words, this is not a buy on both a fundamental and technical basis, so I'm removing it from my shopping list.
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