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Date: Feb. 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 IS in CORRECTION! But Trying to Strengthen! The major markets are trying to dump these Flu like symptoms and get back to work. All of the major indexes had a positive week, showing some signs of strength. The DOW and S&P 500 were up 1.4%, the NYSE rose 1.7%, and the Nasdaq finished the week with a .7% gain. The problem with this attempt at a new rally is there aren't to many high quality growth stocks forming solid base patterns. In addition, there still seems to be a lot of jitters out there about the state of our economy. Mr. Bernanke, the Federal Reserve Chairman, is still warning of economic weakness, with trouble still in the housing and job markets, and worry over how the bond insurer’s weakness will effect the big financial institutions. Headlines seem to be the main catalyst driving the major indexes. On the up days we will have headlines that Warren Buffet is going to help bail out the bond insurers or the President is going to pass a stimulus package, on the down days we are driven by poor economic news and downgrades by Moody's on some of the bond insurers. What ever the case it is still best to stay on the sidelines until this market proves itself to the upside or the downside with some conviction. Right now it appears as though the bulls and bears are having a great fight, and we must be spectators until one of them throws the knockout PUNCH. Let's take a look at the 6 month chart of Nasdaq, using the 50,200 day moving averages, and daily price bars. Above we stated that soon a KNOCKOUT punch will be delivered by the Bears or the Bulls. For F.I.T. Stock Investors we hope the Bulls win this battle. If you look at the Nasdaq chart above, there is a TRIANGLE formation pattern developing. This pattern occurs when prices begin to consolidate into a very tight range, until the energy of the prices get squeezed so much that prices explode in one direction or the other. In this case the Triangle is being formed at the bottom of a down trend. Prices over the past three weeks are making higher lows and lower highs, and you can see by the triangle pattern drawn in white that prices are converging upon each other. This type of convergence can only last so long before the market can no longer take it and a decision is made as prices explode in one direction or the other. We need to watch this action very closely next week. If the BULLS deliver the Knockout punch we could see the Nasdaq move quickly past the 2400 level and onto the 2525 level where it may meet resistance at the 50 day moving average and its last horizontal level of resistance. If the BEARS win this fight we could see the Nasdaq retest its previous low of 2200, and if we break below this low we could see a very quick drop down to the 2000 level. NOT GOOD. What to Do? Watch the markets carefully next week as all three of the major indexes are forming this similar Triangle Pattern. Just in case the BULLS deliver this KNOCKOUT punch, we as F.I.T. Investors want to be prepared to start entering into one or two F.I.T. Stocks that have really held up nicely during this correction. So let's take a look at the top 10 Sectors and a couple of F.I.T. Stocks that have held up nicely. IMPORTANT NOTE: This is merely a watch list, not a recommendation to buy anything yet as many leading growth stocks have maintained the F. and the I. of our F.I.T. Stock System, but have NOT yet developed a sound T. or technical chart formation. Top 10 Sectors: F.I.T. Stocks within the Sector: 1. Energy ATW, PDE2. Medical ISRG, LIFC, MR3. Telecom TNE4. Agriculture CF, AGU, POT5. Finance MA, NDAQ6. Business Services SAY7. Transport CHRW8. Machinery BUCY, MTW9. Metals/Steel SID, GNA, GGB, MTL10. Chemicals SDTH, NEU Also of special note is the Top 10 Fidelity Industry Funds since Jan. 1, 2008 as reported in Investors Business Daily: 1. Gold2. Transportation3. Medical Equipment & Systems4. Chemicals5. Natural Gas6. Construction & Housing7. Consumer Discount8. Multimedia9. Biotechnology10. Home FinanceThese areas will be the areas to search for when looking for F.I.T. Stocks. As sound Technical Base Patterns begin to develop in fundamentally sound stocks, and as Institutions begin to start accumulating stocks, we will once again begin posting F.I.T. Stock formulating F.I.T. Formations to the Newsletter. Until then let's keep an especially close eye on this fight between the BULLS and BEARS this week, and hope the BULLS will be the ones to deliver the KNOCKOUT PUNCH!
In your journey to develop healthy investment habits, please remember to monitor the markets direction on the day of your entry points, confirm with a solid volume surge to the upside, and follow your buy and sell rules strictly. 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
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