Date: Dec. 7, 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 HEALTH: New Market Rally Confirms!
The major indexes staged a new market rally confirmation on Tuesday Dec. 2. This now means we want to look for opportunity in F.I.T. Stocks. As a new market rally confirms we want to see leading stocks break out of sound base patterns. Then as healthy investors we want to ease into the market by testing the waters. If a F.I.T. Stock breaks out of a healthy pattern start by investing only half of what you would normally purchase. This way we can see how the markets and F.I.T. Stocks will react to the new rally confirmation. More importantly, make sure you have a sound exit strategy on when you will sell if the market and your stock take a turn for the worse. In a volatile market like this your exit strategy is your survival kit. Also remember, that this is a bull market rally within a bear market, so there is much work to be done before the major indexes can be considered in a up trend and the bulls have regained control.
One interesting point in this new market rally is how well the major indexes have handled the BAD NEWS that has riddled the headlines. Monday was a terrible day for the markets and it looked like history would repeat itself as we stated in last weeks index chart section. With Monday's huge losses it appeared the new market rally attempt was heading for a FAILURE. Tuesday, however, the market gapped up from the opening bell and rose above the 1.75% mandate for a new market rally confirmation on stronger volume than the previous day's volume. This move all came despite a terrible report from the November Auto sales.
Wednesday we opened lower then the previous days close on news of a worse than expected November payroll report and gloom looked evident, but the indexes shook the news off and continued to rise on strong volume.
Thursday we saw a dip in the markets because of a terrible November retail sales report, but take a look at the volume and it was mild compared to the strong volume associated with the up days.
On Friday, the November employment report came out and was worse than expected, but the major indexes showed some resilience by moving up in volume.
This new market rally is just getting started and as we have learned from the last few market rally attempts things can change in a hurry. The encouraging part to this new market rally is that so far it has shrugged off bad news and has risen in price on stronger volume suggesting the Big Institutions are investing in equities.
Keep a pulse every day on the market to check the major indexes health and stick with your sell rules with no questions asked, this is what healthy investors do.
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STOCK MARKET NEWS:
Nasdaq drops 1.7%, S&P 500 slides 2.3%, and DOW falls 2.2%.
The National Bureau of Economic Research certifies the recession started in Dec. 2007, one year after the down turn in the market began. Proof it pays to watch the technical charts of the major indexes every day as we spotted the down turn last December when it began and saved much heartache by turning to CASH.
Chrysler, GM, and Ford plead for a Bailout of $35 billion, but still the Government is reluctant.
Unemployment reaches its worst decline in 28 years posting a 533,000 job loss in the month of November.
Retail sales drop 1.8% lower versus a year ago.
Mortgage delinquencies hit record 6.99%, but new foreclosures are drying up as lenders try to help out.
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Index Charts
S&P 500: 6 Month Chart with Daily Price Bars.
The S&P confirms a new rally on Dec. 2. Point 1 was the first day the S&P rallied and closed up from the previous day. The rules state that following the first rally day we then wait 4-12 days for a follow through confirmation. The confirmation occurs when one of the major indexes increases in price by 1.75% or higher on strong volume. The S&P confirmed its new rally on Dec. 2, which is point 2 in the chart above. Now we would like to see some healthy technical signs in the S&P. First, it would be nice for the S&P to post a new high by closing above the 900 mark. Second, if the S&P could pierce through its 50 day moving average at just over 940 and hold above this point. Third, if the S&P can break above the high it created at the beginning of November, just above 1000, and remain above there.
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NASDAQ: 6 Month chart, daily price bars.
The NASDAQ also confirmed a follow through to a new market rally on Dec. 2 which is the second green arrow. This chart shows the volume associated with the new rally confirmation that took place on Dec. 2. Notice on Monday we had a big down day, but volume was rather tame. The very next day the new rally confirmed and volume increased on both Tuesday and Wednesday. For the Nasdaq to remain healthy we would want to see it hold above the support level of 1400. Next the Nasdaq needs to break above its most recent high of around 1540. If it can hold this level, a break above the 50 day moving average should be the next stop, which rest currently at 1650. Following this, the next step is the high created back at the beginning of November, which the Nasdaq must break through at 1800.
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Top 10 Industries:
- Transportation Airlines
- Commercial Services Schools
- Insurance Brokers
- Medical-Outpatient Homecare
- Soap and Cleaning Preparation
- Medical Generic Drugs
- Banks-Northeast
- Commercial Services Security
- Commercial Services-Consulting
- Banks-West/Southwest
Important Message:
Please remember as you build your portfolio, you are trying to find the best player for each position, 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 you list your 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 |
44.61 |
20% |
9/2/2008 |
$44.61 |
7.42 |
| 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 |
51.13 |
1% |
9/2/2008 |
$51.13 |
0.3 |
| 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 |
23.85 |
12% |
9/4/2008 |
$21.79 |
2.52 |
| SXE |
8/3/2008 |
8/4/2008 |
C/H |
35.63 |
33.14 |
-7% |
8/22/2008 |
$33.14 |
-2.49 |
| PWR |
7/27/2008 |
8/8/2008 |
C/H |
34.73 |
32.3 |
-7% |
8/25/2008 |
$32.30 |
-2.43 |
| APEI |
7/27/2008 |
8/15/2008 |
U |
47.13 |
43.84 |
-7% |
10/6/2008 |
$43.84 |
-3.29 |
| MPWR |
8/10/2008 |
8/11/2008 |
U |
27.63 |
25.7 |
-7% |
8/13/2007 |
$25.70 |
-1.93 |
| NPO |
8/10/2008 |
8/22/2008 |
C/H |
40.93 |
38.07 |
-7% |
9/18/2008 |
$38.07 |
-2.86 |
| LPHI |
10/19/2008 |
10/20/2008 |
C/H |
37.63 |
35 |
-7% |
|
|
-2.63 |
| LPHI |
10/19/2008 |
10/27/2008 |
C/H |
37.63 |
35 |
-7% |
|
|
-2.63 |
| |
|
|
|
|
|
|
|
|
|
| TOTAL x 100 Shares: |
|
|
|
|
|
|
|
17687 |
|
|
|
|
|
|
|
|
|
|
** 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 2 NEW F.I.T stocks 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!
**IMPORTANT NOTICE** This week we are listing 2 F.I.T. Stocks as buy candidates. Please remember to go lightly at first. At this time we only want to buy one or two F.I.T. Stocks at half of our normal position size. If normally you buy 200 shares, only purchase 100 shares. Most importantly be very disciplined in your sell rules. If a F.I.T. Stocks hits the 7% sell rule get out with no questions asked.
* All Charts are One year time frames with weekly price bars *
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Stock: Comtech Telecom
Symbol: CMTL
Fundamentals: 9.8 out of 10
Industry: Telecom-Wireless Equipment Industry Strength: 45
Technical Pattern: U Turn Avg. Volume: 405,700
Pivot or Buy Point: $50.63
Stop Loss: $47.09 or 7%
Profit 1: $55.69 or 10%
Profit 2: $60.75 or 20%
Comtech manufactures satellite based telecom transmission and mobile tracking systems for defense and commercial markets. Last quarter earnings were up 81% and sales grew 67%. CMTL has formed to U Turn patterns within each other, but we have grouped it into one big U Turn pattern. Last week CMTL showed a great increase in volume suggesting Big Money Investors stepped in. CMTL has strong resistance at the $50.50 level having hit there twice before declining. If or when CMTL can break above this resistance level we will want to jump in with a buy point of $50.63 on strong volume.
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Stock: Thoratec
Symbol: THOR
Fundamentals: 9.8 out of 10
Industry: Medical Products Industry Strength: 30
Technical Pattern: U Turn Avg. Volume: 1,272,200
Pivot or Buy Point: $29.93
Stop Loss: $27.84 or 7%
Profit 1: $32.92 or 10%
Profit 2: $35.91 or 20%
Thoratec develops ventricular assist devices, point of care blood test kits and vascular grafts. They currently have a new pump called the HeartMate II in clinical trials that will replace the older model. Earnings grew a remarkable 325% last quarter. Volume really pumped up last week as some Big Money started accumulating the stock. When THOR jumps above the high of the U turn pattern, lets pump up some profits with a $29.93 buy point and confirm it with a strong volume surge.
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Stock: South Jersey Industries
Symbol: SJI
Fundamentals: 9.9 out of 10
Industry: Utility Gas Distribution Industry Strength: 16
Technical Pattern: Cup with Handle Avg. Volume: 254,800
Pivot or Buy Point: $39.13
Stop Loss: $36.40 or 7%
Profit 1: $43.04%
Profit 2: $46.95%
BEFORE: U-Turn Pattern
NOW: Cup with Handle Pattern: 6 Month Chart with daily price bars.
Many times a U Turn Pattern, if it does not break above it's pattern, it will consolidate one last time shaking out weak investors, thus creating a handle in a Cup with Handle Pattern. Notice below how the pattern has changed, however in this case the buy point remains the same at $39.13.
South Jersey Industries is a holding company engaged in the distribution of natural gas to customers in southern New Jersey. Earnings increased 180% last quarter and sales jumped 35%. SJI is also going to meet heavy resistance at the $39.00 level, but if the stock can break through this level it would be a very positive sign. In addition, since the beginning of October, SJI has had 4 weeks of heavy accumulation suggesting heavy buying by big money investors. If the market rallies and SJI breaks above its resistance point of $39, let's jump in with a $39.13 buy point.
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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