Date: August 26, 2007
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.
F.I.T. Stock of the Week
How about KOP. It shot out of its 9 week U shaped base on Monday, August 20. It hit our buy point of $34.90 on twice its normal volume. KOP hit our first target price of $38.40 or 10%. As of Friday, August 24, it was up 11.37% or $3.97. Monitor KOP closely for its price and volume, and do not let these profits slip away.
Market Update
MARKET HEALTH: Market is Correcting.
The markets are attempting to stage a brave comeback, but as of yet have been unable to confirm their rally. Until then we must remain cautious, and remember we are still in a correction. On August 16, the S&P staged the first day of its rally with a huge reversal day. The DOW and Nasdaq followed the very next day. Last week the markets all ended up for the week, but we have yet to see a convincing follow through day to confirm this rally. Monday, will be day 8 of the rally attempt, but, remember, between days 4-12 ( according to William O'Neil, Author of How to Make Money in Stocks ), we would like to see one of the major indices surge in buy side volume by 1.75% higher than its previous days volume to confirm the rally. Please monitor the markets closely next week, for if it does confirm we want to be ready. Remember to follow the markets momentum as it always knows best. Be patient and disciplined with your investing. Please remember that market corrections are a healthy sign for the market and stocks. A market correction allows for our F.I.T. stocks to build healthy bases so that we are ready to pounce when the market confirms its new rally. This is not the time to avoid your stocks because you have seen some profits eaten away or even taken some losses.
At this point you should be mostly in cash, and keeping only your best performing stocks and monitoring them closely. In a tricky market like this DO NOT be afraid to take your profits early, and DO NOT let a profit turn into a loss. Healthy Investing means you keep your profits and cut your losses short.
Lets review the chart of the last weeks market action and the rally attempt in the S&P.
On this 6 month chart of the S&P you can see the rally attempt that began Thursday Aug. 16. ( Green circle ). Monday, Aug. 27 will be the 8th day of the rally attempt. The S&P was able to clear its 200 day moving average ( blue line ) and is progressing to its 50 day moving average ( orange line ). As you can see by the solid green line, the 1490 level in the S&P has become a major point of resistance. This line also coincides with the 50 day moving average. The last rally attempt began to fail at this point. So let us watch carefully this week to see if we can burst above this level of 1490 or whether the bears will take over once again and ruin this rally attempt. Be patient, disciplined, and follow the rules. The markets always know best.
Stocks Showing F.I.T. Formations
This week we have 5 stocks showing some F.I.T formations. However, as stated above, we are still in a correction until this rally proves itself. So if one of these stocks hits its buy point stay closely tuned to its price and volume until the market reveals what it wants to do. 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: American Science & Eng.
Symbol: ASEI
F undamentals: 8.9 out of 10
I ndustry: Commercials services-security/safety Rank: 7.6 out of 10
T echnical Pattern: Cup with Handle
Pivot or Buy Point: $69.35
Stop Loss: $64.50 or 7%
Profit 1: $76.29 or 10%
Profit 2: $83.23 or 20%
ASEI Profit: -$2.40 or -7%
ASEI has developed a nice cup with handle pattern. It has built a nice 36 week cup base with a 34% correction from its old high. As the stock corrected it showed below average volume. In mid may ASEI began to build the right side of its base with a nice big green volume bar. Someone became interested in this stock. There was another big volume spike at the beginning of August which started the high of its 3 week handle. The volume has been light in the handle which is a nice sign. If ASEI can break above the handles high of 69.25, look to buy at $69.35 on good volume. We would also like the tide of the Market flowing in an upwards direction as well.
Stock: Crocs Inc.
Symbol: CROX
Fundamentals: 9.7 out of 10
Industry: Apparel-Shoes & Rel Mfg. Rank: 9.4 out of 10
T echnical Pattern: U Turn
Pivot or Buy Point: $61.44
Stop Loss: $57.14 or 7%
Profit 1: $67.58 or 10%
Profit 2: $73.72 or 20%
CROX Profit: $9.12 or 15%
CROX! Hopefully you have all heard about these shoes. They are'nt the prettiest shoes, but they sure are comfortable. CROX is in a nice U shape pattern. It has bounced off of its 10 week moving average nicely and heading towards its old high of $61.34. What is really nice about CROX is the swell of its buy side volume. Lots of investors seem to really like this stock. Be ready to buy if CROX breaks above its pivot of $61.44 on good volume.
Stock: Deere & Co.
Symbol: DE
Fundamentals: 8.3 out of 10
Industry: Machinery- Farm Rank: 9.2 out of 10
T echnical Pattern: U Turn
Pivot or Buy Point: $134.06
Stop Loss: $124.68 or 7%
Profit 1: $147.46 or 10%
Profit 2: $160.86 or 20%
DE Profit: $41.71 or 31%
Deere broke out of a nice Cup with Handle pattern in Novemeber of last year on huge volume. It since has been in a nice uptrend. DE has hit its 10 week average 3 times and bounced off nicely each time. What stands out now is that as DE has set up in this U pattern it has shown some great volume as it heads towards its old high of 133.96. Look for the break above $134.06 on good volume.
Stock: Dryships Inc.
Symbol: DRYS
Fundamentals: 9.1 out of 10
Industry: Transportation-Ship Rank: 8.7 out of 10
T echnical Pattern: U Turn
Pivot or Buy Point: $65.48
Stop Loss: $60.90 or 7%
Profit 1: $71.98 or 10%
Profit 2: $78.48 or 20%
DRYS Profit: $48.51 or 74%
Pay close attention to DRYS. It had great volume last week as buyers really stepped in. It broke out of a Flat base in mid June and went straight up for 4 weeks. It seems to have consolidated in this U pattern and may be ready to burst again. Watch for the $65.48 buy point and an increase in volume. 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
Sorry I missed this one. But you can't win them all. A healthy investor however, will learn from those stocks showing that they are F.I.T. Blue Coat Systems Inc. shows all of the signs of a F.I.T. stock. Its fundamentals are spectacular, its in a leading industry, and its technical patterns were exceptional. Let us take a look. BCSI first set up in a Cup with Handle pattern that developed from Nov 2005 to May of 2007. In may it broke out of the pattern and quickly shot up almost 20 points. BCSI then built a nice flat base in July that lasted 6 weeks. Last week it vaulted out of its Flat Base on HUGE volume. BCSI is definetly a stock that flexed its muscles.
Please remember to stick with your Invesment business plan, be disciplined, monitor price and volume daily and make money.
Happy and Healthy Investing,
Steve Martin
Founder
Fitstocks.com