DON'T MISS OUT ON THE NEXT F.I.T. STOCK READY TO FLEX SOME MUSCLES. JOIN NOW!
F.I.T. STOCKS
Finding High Quality Growth Stocks that Build Healthy Investment Habits.
Market Update
MARKET HEALTH: We are in a CORRECTION!
What a difference a week makes. Two weeks ago it was Up, Up and Away! All of the major indexes had jumped to new highs. Old resistance had become new support. The markets were looking healthy. Last week told a whole different story. The major indexes were unable to hold their new support and quickly sold off on big volume. Currently, all of the big three indexes have sunk below their 10 week moving averages which is equivalent to the 50 day moving average. The big volume sell offs tell us institutions are getting out. The DOW, S&P, and Nasdaq all plunged more than 4% for the week. The major cause of the break down appears to be the worry over the credit market, which in turn has unsettled big investors.
The key, now, is to monitor the daily price and volume movement of the major indexes for signs of new life. Watch your stocks closely as well. Stick with your sell rules unless your stocks are still showing signs of strength ( selling off in light volume ) otherwise take your healthy profits. If you want to build healthy investment habits, now is the time to monitor the markets and your stocks closely, not to panic. We want to keep our healthy gains, stick with our sell rules, and watch the market daily for signs of more distribution or signs of new life.
Lets take a look at the charts of last weeks market action in the S&P and the Dow.
* Technical Charts Courtesy of Bigcharts.com *
On this daily chart of the S&P you can see that it traded in a channel for much of May and June. The S&P, then, briefly broke above its resistance at 1540. This resistance point soon failed and now we see that the S&P has broken down below its support level of 1490. The S&P has also crossed below its 50 day moving average and sits just above its 200 day moving average. This week we will have to watch closely to see if the S&P can hold its 200 day average or if the sellers will break it down. The institutions view the 200 day average as key support levels and will be keeping a close eye on this area of 1450.
A close up view of the Nasdaq really gives us a clear picture of the selling that took place last week.
Notice on this daily chart how the 50 day moving average was acting as a nice upwards trend line for the Nasdaq. A big sell off volume or distribtion ( indicated by the blue rectangle ) entered into the market last week driving the market below its 50 day average. Once again we will have to watch the market closely to see if it will continue down to its 200 day moving average and hold or break through this line of support at 2500.
Stocks Showing some F.I.T. Formations
The following 3 stock picks held up nicley last week as the market sold off, but the healthy investor will be more cautious jumping into the market as it is correcting. Remember most stocks will follow the trend of the market no matter how F.I.T. they are.
* All charts are 3 year time frames with weekly price patterns *
Stock: Layne Christensen Company
Symbol: LAYN
Sector: Industrial Goods
Industry: Heavy Contruction
Chart Pattern: The U Turn
Pivot or Buy Point: 45.70
Stop Loss: 42.50 or 7%
Profit 1: 50.27 or 10%
Profit 2: 54.84 or 20%
LAYN has shaped out a nice U turn pattern. It has crossed back above its 10 week moving average ( Orange Line) and is heading towards its old high of $45.60. What I like in this chart, is how the 10 week moving average has acted as a nice support area. I, also, like the big green volume bars, represented by the blue rectangles, this is a sign of the big investor's buying into the stock. Now we will wait to pounce when the price shoots above its previous high and signals our buy point of $45.70. As always, confirm the price movement with good volume.
Stock: Varian Semiconductor Equipment Associates
Symbol: VSEA
Sector: Technology
Industry: Semiconductor Equipment & Materials
Chart Pattern: The U Turn
Pivot or Buy Point: $47.02
Stop Loss: $43.72 or 7%
Profit 1: $51.72 or 10%
Profit 2: $56.42 or 20%
VSEA has formed a nice U shape pattern. It has also shown great signs of strength. Last week as the market took a good hit VSEA lost almost $5, but then, fought back to recover most of that and close near its old highs. This is a sign of a F.I.T. stock. Also, notice within the U base pattern some strong buy volume weeks represented by the blue rectangles. Another healthy sign. Now we will wait to see if VSEA can break above its pivot point of $47.02 on healthy volume.
Stock: MEMC Electronics Materials, Inc.
Symbol: WFR
Sector: Technology
Industry: Semiconductor Integrated Circuits
Chart Pattern: Flat Base
Pivot or Buy Point: $64.78
Stop Loss: $60.25 or 7%
Profit 1: $71.28 or 10%
Profit 2: $77.78 or 20%
WFR has formed a nice Flat Base pattern. It traded sideways for 18 weeks now. The 10 week line seems to be offering good support. What I really like, is within the base some really healthy signs of accumulation. Within the 18 week flat base there are 5 weeks of heavy buying. Now we will be patient and wait for the correct buy point of $64.78 with some above average volume.
F.I.T. Stocks still Flexing some Muscle
Stock: CNH Global
Symbol: CNH
CNH is definitely a stock flexing its muscles. CNH is in the leading Farm and Contruction Machinery Industry. Its fundamentals are in the top 10% of all stocks, and as you can see above, CNH has had excellent chart formations. CNH first broke out of a Cup with Handle in January 07 on great volume. After 2 weeks it began to consolidate in a Flat Base for 9 weeks before shooting out like a rocket in May. As you can see a F.I.T. Stock is a Healthy stock.
Please remember to stick with your Invesment business plan, be disciplined, monitor price and volume daily and make money.
Happy and Healthy Investing,
Fitstocks.com