Date: Sept. 2, 2007
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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: The Rally Confirmed!
Wednesday, August 29, was our confirmation rally day in the Nasdaq. It appeared as though we were heading for trouble on Tuesday when all of the markets were heading south. Wednesday, however, was a different story, as all 3 major indexes recaptured a majority of their losses on higher volume. Please remain a little cautious with this rally. Only because the Nasdaq is the only index to reclaim its 50 day moving average. It would be nice next week to see if the Nasdaq can hold its 50 day line and the S&P and DOW break back above their 50 day moving average.
Fit stocks showed some signs of strength as 3 of the 4 fit stocks in last weeks newsletter hit their buy points and had solid gains.
Let us now take a look at the market confirmation of last week in the Nasdaq with a 6 month daily chart.
The red rectangle represents the Nasdaq's first day of the rally attempt. We quickly shot back above the 200 day moving average ( blue line ) and held their nicely. As stated in previous newsletters, we should wait patiently for one of the indexes to confirm itself with a 1.75% increase in volume from the previous days action. Tuesday, it looked like this rally attempt was doomed to fail as the nasdaq closed back below its 200 day moving average. Wednesday, the markets roared back with impressive gains. The red oval shows our confirmation day with the nasdaq opening up with a gap from the previous days close, and finishing strong for the day on solid volume. By Friday, the nasdaq had finished just above its 50 day moving average. Confirming the nasdaq is ready to start flexing some muscle again.
The 6 month chart of the S&P looks very similar to the Nasdaq. However, we will be more impressed when the S&P can reclaim its 50 day moving average ( orange line ).
Stocks Showing F.I.T. Formations
This week we have 4 stocks showing some F.I.T formations that look ready for some strong breakouts. A healthy market will have corrections. As stated in previous newsletters, corrections are not the time to run and hide and avoid the market. Corrections are the time to study what is going on in the market, practice patience, and be ready to act when the rally is confirmed. The rally has confirmed, so lets see if we can follow the markets trend up, and look for some nice breakouts with these 4 F.I.T. stocks.
* All charts are 1 year time frames with weekly price patterns *
Stock: Baidu.Com Inc Ads
Symbol: BIDU
F undamentals: 9.7 out of 10
I ndustry: Internet Information Providers Group Rank: 50
T echnical Pattern: U Turn
Pivot or Buy Point: $219.35
Stop Loss: $204.00 or 7%
Profit 1: $241.29 or 10%
Profit 2: $263.23 or 20%
BIDU has developed a nice U shape pattern. BIDU held up nicely during the market correction and regained its 10 week line 2 weeks ago on good volume. Last week also saw some nice upside volume. If the market continues to rally, look to buy on the break above $219.35 on good volume.
Stock: Lifeway Foods Inc.
Symbol: LWAY
Fundamentals: 9.8 out of 10
Industry: Dairy Products Group Rank: 1
T echnical Pattern: U Turn
Pivot or Buy Point: $15.01
Stop Loss: $13.96 or 7%
Profit 1: $16.51 or 10%
Profit 2: $18.02 or 20%
LWAY appears to be a great stock ready to flex its muscles. Currently, LWAY stands in the #1 ranked dairy group. Its U shape pattern has spent 7 weeks forming its base. The last 3 weeks show tremendous upside volume with each week higher than the previous week. When the price breaks above $15.01 look to get in on this stock. Then follow up by going to your nearest grocery store and purchasing one of their healthy yogurt drinks.
Stock: Mechel Open Joint Stock Company
Symbol: MTL
Fundamentals: 9.7 out of 10
Industry: Steel and Iron Group Rank: 25
T echnical Pattern: U Turn
Pivot or Buy Point: $48.03
Stop Loss: $44.67 or 7%
Profit 1: $52.83 or 10%
Profit 2: $57.63 or 20%
Steel and Iron has been on fire this year. MTL has been shaping a nice 8 week U shape base. Last week it reclaimed its 10 week line. MTL has been in a nice uptrend for the year. But what really makes this stock look fit is the swell in volume for the past 2 weeks. MTL could end up being our Superman stock made of steel once it leaps above the $48.03 buy point on good volume.
Stock: WebMD Health Corp.
Symbol: WBMD
Fundamentals: 9.6 out of 10
Industry: Business Software & Services Rank: 50
T echnical Pattern: Cup with Handle
Pivot or Buy Point: $55.78
Stop Loss: $51.88 or 7%
Profit 1: $61.35 or 10%
Profit 2: $66.92 or 20%
How does a stock get much healthier than WBMD. WBMD has built a nice 19 week cup shaped base and appears to now be building its handle. What is beautiful about this chart is the enormous volume on the right side of the cup. That is a healthy sign. When WBMD breaks above the high of the handle at $55.78 on healthy volume its time to jump in.
Special note: Please still keep an eye on TRAK from last week. It has not broke out yet, but still remains a F.I.T. looking stock. Buy point $40.84.
F.I.T. Stocks still Flexing some Muscle
3 out of 4 F.I.T. Stocks broke out nicely last week. Take a look at the charts of these technical patterns showing F.I.T. formations.
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