Date: August 17, 2008
Charts provided by Bigcharts.com
Fundamental Data provided by Investors Business Daily
F.I.T. STOCKS
Finding High Quality Growth Stocks to Build Healthy Investment Habits.
Market Update
MARKET HEALTH:
MARKET in RALLY MODE!
Since the market follow through day of July 29 all three major indexes seem to be just treading water to stay afloat. This can be looked at as the glass is half full for the Bulls or the glass is half empty for the Bears, depending on which news stations you watch or whoever you might listen to for market commentary. Whatever the case, there seems to be an unsettledness about which direction the markets truly want to head. This is why it is a necessity to follow the daily price and volume changes of the markets and your leading stocks, so that you may have a pulse on the health of the market. This is what healthy investors do.
A healthy investor also must always remain disciplined and last week was definitely a test of ones investment rules. Many leading stocks have had strong break outs on good volume, only to retreat past stop loss points on bigger volume. This is a sign that for now that the markets are a little unsure of themselves. As we have suggested, when a follow through day does occur, we do not rush right in and buy up every great stock we see. No, we only test the waters by purchasing 1 or 2 high quality F.I.T. Stocks. This way we see how the market is reacting to the follow through rally and we do not take a sizeable hit to our accounts if the rally does not gain momentum. August has been a tricky and volatile month for the markets and F.I.T. Stocks so please use every ounce of discipline as we negotiate this uncertain market.
Now let's get back to the glass half full, glass half empty business. The glass half full contenders will suggest that with the current slow state of our economy the markets have held up rather well. Oil has started to decline and OPEC stated on Friday that it expects worldwide demand for energy will continue to fall. This should help strengthen the market. Also, the dollar has finally started to gain strength once again, which also weakens oil prices. We had some more disturbing news with financial stocks, when JP Morgan had a 1.5 billion write down of sub prime mortgages. This type of news used to sink the markets, yet now they have become somewhat more resilient to this type of news.
The glass half empty followers see the gloom ahead. Yes, Oil has gone down and the demand is slowing, yet even with this news the market has not been able to gain much strength. They also see the economy slowing even more and believe that the mortgage credit worries and the real estate market has much farther to go before it hits rock bottom. All of this will conclude in a market heading further south.
So who do we believe? Either way, we have a chance of being 50% right. No, a healthy investor will not believe either side. We will make our own conclusions by monitoring the daily price and volume movements of the major indexes. Look for signs of strong accumulation on up days and weak volume selling days when the market is healthy. The market will start to show signs of sickness, through several days of distribution. A distribution day is any day sell side volume is stronger than the previous days volume. Since the market confirmed the new rally on July 29 we have had 3 day's of distribution in the DOW and S&P 500. Usually five to six days of heavy distribution within a 2-3 week period can be enough to place the markets back in a correction. For the week the Nasdaq finished up 1.6%, and the S&P 500 finished with a nearly flat .1% gain, however, the S&P's little brother the S&P 600 had an impressive 2.5% moon jump. The DOW lost .6%
NASDAQ:
The Nasdaq, since its first rally day, has been in a nice short term uptrend. So far the Nasdaq has shown the most strength of the 3 major indexes. The Nasdaq blew through its 50 day moving average and last week bumped up through the 200 day moving average, usually a bullish sign for big money investors. Another positive for the Nasdaq is that since the July 29 follow through confirmation it has not shown a distribution day. The test for the Nasdaq will be whether it can hold above the 200 and 50 day moving averages, and eventually for the 50 day to cross through the 200 day moving average creating a bullish cross over pattern. This will probably take a few more weeks to a month if it is to happen, in the mean time we should expect a little pull back and look for it to be on light volume.
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Top 10 Industries:
- Mach. Gen Industry
- Retail-Discount & Variety NEW
- Medical Genetics NEW
- Electrical Military syst. NEW
- Leisure-Tys/Gms/Hbby NEW
- Medical-Biomed/Bth NEW
- Transportation Truck NEW
- Bldg-AC/Heat NEW
- Computer Periphl. Eq. NEW
- Building Maint. NEW
** OIL HAS LEFT THE TOP 10! Notice the take over from NEW leading Industries. We have 9 NEW industries that have made the top 10. When a new rally confirms it is nice to see NEW leadership develop.**
Important Message:
Please remember as you build your portfolio, you are trying to find the best player for each position. Another words find the best stock in a leading industry. DO NOT buy two leading stocks in one industry. We are trying to build the dream team. One stock, one industry, then fill another position depending on your portfolio size and money management guidelines. When we list our F.I.T. Stocks selections, please make sure as you enter in your trades that you have not already filled that position or industry.
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F.I.T. Stock Break Outs
| Symbol |
Newsletter |
Breakout |
Base |
Buy |
Current |
% |
Exit |
Exit |
Profit/ |
| |
Date |
Date |
Pattern |
Point |
Price |
Change |
Date |
Price |
Loss |
| |
|
|
|
|
|
|
|
|
|
| MA |
3/23/2008 |
4/1/2008 |
C/H |
222.43 |
292.46 |
31% |
5/23/2008 |
$273.22 |
70.03 |
| RRC |
3/30/2008 |
4/2/2008 |
FB |
65.73 |
72.3 |
10% |
5/22/2008 |
$72.30 |
6.57 |
| RIG |
3/23/2008 |
4/4/2008 |
C/H |
145.13 |
159.64 |
10% |
5/21/2008 |
$159.64 |
14.51 |
| SID |
4/6/2008 |
4/8/2008 |
FB |
40.23 |
51.9 |
29% |
5/19/2008 |
$51.90 |
11.67 |
| MON |
4/6/2008 |
4/16/2008 |
DB |
123.93 |
114.89 |
-7% |
5/1/2008 |
$114.89 |
-9.04 |
| BCPC |
3/23/2008 |
4/16/2008 |
U |
24.33 |
22.66 |
-7% |
5/1/2008 |
$22.66 |
-1.67 |
| VMI |
4/13/2008 |
4/16/2008 |
U |
99.23 |
117 |
18% |
5/19/2008 |
$117.00 |
17.77 |
| GMXR |
4/6/2008 |
4/17/2008 |
U |
40.23 |
37.42 |
-7% |
4/29/2008 |
$37.42 |
-2.81 |
| DRS |
4/6/2008 |
4/16/2008 |
C/H |
59.43 |
78.56 |
32% |
5/8/2008 |
$73.84 |
19.13 |
| ARD |
4/20/2008 |
4/21/2008 |
U |
44.83 |
53.79 |
20% |
5/21/2008 |
$53.79 |
8.96 |
| FAST |
4/27/2008 |
5/2/2008 |
C/H |
51.43 |
47.83 |
-7% |
5/21/2008 |
$47.83 |
-3.6 |
| CPO |
5/4/2008 |
5/6/2008 |
C/H |
47.33 |
46.07 |
-3% |
5/23/2008 |
$46.07 |
-1.26 |
| SNHY |
5/4/2008 |
5/6/2008 |
C/H |
32.33 |
39.1 |
21% |
5/22/2008 |
$39.10 |
6.77 |
| SBS |
5/4/2008 |
5/5/2008 |
U |
54.63 |
50.81 |
-7% |
6/3/2008 |
$50.81 |
-3.82 |
| WGOV |
5/11/2008 |
5/15/2008 |
C/H |
37.19 |
46.73 |
26% |
|
|
9.54 |
| ABB |
5/4/2008 |
5/14/2008 |
U |
32.43 |
30 |
-7% |
6/11/2008 |
$30.00 |
-2.43 |
| GNA |
4/20/2008 |
5/5/2008 |
C/H |
16.58 |
19.3 |
16% |
6/30/2008 |
$19.30 |
2.72 |
| FLIR |
5/11/2008 |
5/19/2008 |
C/H |
35.73 |
42.9 |
20% |
7/1/2008 |
$42.90 |
7.17 |
| MUR |
5/18/2008 |
5/19/2008 |
U |
93.64 |
87.09 |
-7% |
7/9/2008 |
$87.09 |
-6.55 |
| TITN |
5/18/2008 |
5/19/2008 |
U |
24.65 |
32.29 |
31% |
6/25/2007 |
$32 |
7.64 |
| MPWR |
6/1/2008 |
6/5/2008 |
C/H |
26.03 |
24.21 |
-7% |
6/23/2008 |
$24.21 |
-1.82 |
| SDS ETF |
6/8/2008 |
6/9/2008 |
U |
60.1 |
67 |
11% |
6/27/2008 |
$67.00 |
6.9 |
| QID ETF |
6/22/2008 |
6/25/2008 |
U |
42.33 |
46.56 |
10% |
7/15/2008 |
$46.56 |
4.23 |
| SKF ETF |
6/8/2008 |
6/9/2008 |
U |
121.23 |
160.4 |
32% |
7/3/2008 |
$160.40 |
39.17 |
| KSU |
7/27/2008 |
7/29/2008 |
U |
50.83 |
50.48 |
-1% |
|
|
-0.35 |
| CVA |
7/27/2008 |
7/30/2008 |
C/H |
29.53 |
27.47 |
-7% |
7/31/2008 |
$27.47 |
-2.06 |
| APEI |
7/27/2008 |
8/1/2008 |
U |
47.13 |
43.84 |
-7% |
8/4/2008 |
$43.84 |
-3.29 |
| WBSN |
8/3/2008 |
8/4/2008 |
U |
21.33 |
22.68 |
6% |
|
|
1.35 |
| SXE |
8/3/2008 |
8/4/2008 |
C/H |
35.63 |
35.53 |
0% |
|
|
-0.1 |
| PWR |
7/27/2008 |
8/8/2008 |
C/H |
34.73 |
33.33 |
-4% |
|
|
-1.4 |
| APEI |
7/27/2008 |
8/15/2008 |
U |
47.13 |
49.09 |
4% |
|
|
1.96 |
| MPWR |
8/10/2008 |
8/11/2008 |
U |
27.63 |
25.7 |
-7% |
8/13/2007 |
$25.70 |
-1.93 |
| |
|
|
|
|
|
|
|
|
|
| TOTAL x 100 Shares: |
|
|
|
|
|
|
|
19396 |
|
|
|
|
|
|
|
|
|
|
**
** MONITOR THE FOLLOWING F.I.T. STOCKS HIGHLIGHTED IN YELLOW CLOSELY FOR PRICE AND VOLUME MOVEMENT! Look for light volume on down days and heavy volume on up days.
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The F.I.T. STOCK PLAN
This week we have 1 NEW F.I.T stock meeting our F.I.T. Stock Plan criteria. To make our list of High Quality Growth Stocks a company must show
F- Fundamentals that are Superior
I - Industry Leader or Strong Institutional Buying
T - Technical Charts exhibiting Strong Base Patterns
F.I.T. Stocks Ready to RUN!
* All Charts are One year time frames with weekly price bars *
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**This is a 3 YEAR CHART with WEEKLY TIME FRAME!**
Stock: Industrial Services of America
Symbol: IDSA
Fundamentals: 9.9 out of 10
Industry: Pollution Control Services Industry Strength: 11
Technical Pattern: U Turn Avg. Volume: 51,400 WARNING VERY THIN STOCK, BUY NO MORE THAN 100 SHARES!
Pivot or Buy Point: $18.23
Stop Loss: $16.96 or 7%
Profit 1: $20.05 or 10%
Profit 2: $21.87 or 20%
This is a 3 year chart with a weekly time frame of Industrial Services of America. IDSA provides waste and recycling services to commercial, industrial and logistics customers nationwide. Its earnings growth has stepped up in recent quarters from 5%, to 36%, to now triple digit growth of 109%. This is just what we like to see. IDSA is a very thin stock, but there have been very distinct signs of accumulation in the base over the past 3 years. IDSA is just starting to break above some strong resistance over $18. If IDSA can maintain this momentum on strong volume, let's jump in with a buy of $18.23. Please remember this stock only trades an average volume of 51,400, so only purchase 100 shares.
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Watch List of stocks from previous F.I.T. Stocks Newsletters still holding up strong.
Stock: Ansys Inc.
Symbol: ANSS
Fundamentals: 9.8 out of 10
Industry: Computer Software Design Industry Strength: 38
Technical Pattern: U TURN Avg. Volume: 1,318,300
Pivot or Buy Point: $50.03
Stop Loss: $46.53 or 7%
Profit 1: $55.03 or 10%
Profit 2: $60.03 or 20%
Ansys develops engineering simulation software applications for design analysis. Its recent quarterly earnings were up 40%. Investors Business Daily reports that ANSS has signed on 12 seven figure orders for its software that won't even show up in the books until later on in the year. ANSS has built a wonderful U shaped pattern, and we really like the accumulation that has showed up in the past 2 weeks. When ANSS breaks above its old high of $49.86, let's jump in with a buy point of $50.03 on strong volume.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Stock: Accenture Ltd.
Symbol: ACN
Fundamentals: 9.8 out of 10
Industry: Computer Tech Services Industry Strength: 13
Technical Pattern: Cup with Handle Avg. Volume: 3,446,500
Pivot or Buy Point: $42.23
Stop Loss: $39.28 or 7%
Profit 1: $46.45 or 10%
Profit 2: $50.67 or 20%
Accenture provides management consulting technology and outsourcing services to businesses and government agencies. ACN's Return on Equity is a remarkable 62%. Return on Equity basically measures how effectively a company is run or how efficient a company is with its money. ACN has set up in a beautiful Cup with Handle Pattern. We will look to get involved at $42.23, which is just past the high of the handle, on strong volume.
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Stock: Enpro Industries Inc.
Symbol: NPO
Fundamentals: 9.9 out of 10
Industry: Mach-Gen Indust. Industry Strength: 1
Technical Pattern: U Turn Avg. Volume: 309,700
Pivot or Buy Point: $40.93
Stop Loss: $38.07 or 7%
Profit 1: $45.02 or 10%
Profit 2: $49.11 or 20%
EnPro manufactures sealing, engineering and engine products for petrochemical, paper, and automotive markets. NPO sits in the current number 1 industry spot of Machinery General Industrial. It had formed a very long Cup with Handle Pattern, but once a handle falls more than 10-15% the pattern is broken and the stock begins to build a new base which is what you see happening with NPO. NPO is now 9 weeks into a new U Turn pattern and the stock showed nice signs of support in the bottom of the base at $35. Last week NPO shot past its 10 week moving average on heavy volume. When NPO breaks above its previous high let's jump in at $40.93 on heavy volume.
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** We have a NEW buy point for IBM and a updated Chart. If you have entered a buy stop order make sure you cancel and enter in the new buy point.**
Stock: International Business Machines
Symbol: IBM
Fundamentals: 9.6 out of 10
Industry: Computer Tech. Services Industry Strength: 13
Technical Pattern: Cup with Handle Avg. Volume: 7,837,700
Pivot or Buy Point: $131.13
Stop Loss: $121.96 or 7%
Profit 1: $144.23 or 10%
Profit 2: $157.33 or 20%
IBM has been sitting patiently on our watch list for several weeks now. We initially listed IBM as a U Turn pattern and prices briefly broke above our original buy point although volume did not confirm the move. IBM's industry group has now moved from 30 to 13 since the initial listing. A cup with Handle has now formed and our new buy point is $131.13.
Please remember to stick with your Investment business plan, be disciplined, monitor price and volume daily and make money.
Happy and Healthy Investing,
Steve Martin
Founder
www.fitstocks.com