Date: Feb. 15, 2009
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:
Rally Confirmed Jan. 28, 2009! Rally trying to hold on!
The stock market is still being driven up by the headlines of HOPE and then selling off hard when HOPE is taken away. Last week was no different, but let us go back to the prior week when HOPE was high. The headlines were focused on the HOPE that a new stimulus package would come through in the amount of 1.5 trillion dollars and that Treasury Secretary Tim Geithner was going to unveil a "bad bank" rule that would help stimulate lending. Fast forward one week later and we have a stimulus package that has been cut to 789.5 billion dollars and leaving many investors feeling edgy on exactly how it will all work. Then Tim Geithner unveils his "bad bank" plan last Tuesday and the stock market tanks because there was very little detail on how this plan will all work.
Last Thursday was another great example of this tricky and news driven market. Thursday the stock market started to sell off early on news of the economic stimulus package, as democrats and republicans drew the battle lines over to much spending versus not enough tax breaks. Then suddenly, out of the middle of nowhere the stock market began to rebound when Reuters reported that the White House was working on a plan that would subsidize mortgage payments for troubled homeowners.
As stated for several weeks now, these are very tricky times for stock market. When current conditions are so news driven, it makes for a very volatile stock market. These market conditions are ideal for the trader but not the investor. This does not mean that we should not be paying close attention to the daily activity of the stock market and its price and volume swings. These are the times we need to be more disciplined in our approach to investing in the stock market. Compare these times to a great athlete whose gift in sports has always come easy to them. Suddenly they fall to injury. Some athletes will never be the same after this injury. For the first time they have come to a test of their character and how they will handle the situation, but mentally it becomes to hard for them and they are not willing to put in the work. Other athletes, those with the heart of a champion, will put their blinders on and work harder than ever to not only come back from the injury, but be better than they were after the injury. They will work harder, be more disciplined, take responsibility for the challenge, meet it head on, and never ever quit. These are the athletes that will come out even better then ever. These are the athletes we want to be like in our investing. This stock market and many of the companies within it are injured. We are the athlete that must overcome these injuries. We must have the heart of a champion and work harder at our investing, be more disciplined at our investing, and take responsibility for our investing. This is the time to be patient, never quit, and continue to get even better with your investing. If you stick with it during these tough times you will come out the better for it and you will be a champion investor.
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STOCK MARKET NEWS:
NASDAQ heads down for the week by -3.6%. The S&P falls -4.8% and the DOW loses -5.2%.
House passes $787 billion Stimulus Package.
Bank of America, Citi, JP Morgan, and Morgan Stanley stop home foreclosures for a couple of weeks. Wait to see government fix.
Treasury Secretary Timothy Geithner introduces Bad Bank Plan, but with little detail.
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Index Charts
SPY - SPDR ETF: 6 Month Chart with Daily Price Bars.
Look out for the $80 level in the SPY or the $800 level in the S&P 500, if prices crash below these levels this rally is dead once again and we will have turned back into a correction. Once again we have been unable to hang onto the 50 day moving average line. We have some minor resistance just under $88 where the SPY has jumped up twice to hit but has been unable to continue further. However, as stated above right now are main concern is the $80 level of support. If we break below this level the new rally has been faltered and the correction will continue. If this occurs then we need to be very concerned with the $75 area of support or $7500 level in the S&P 500 because if price break below this level we will have crashed through a major support level that dates back 10 years. Watch closely this week.
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NASDAQ: 6 Month chart, daily price bars.
The NASDAQ remains in a triangle pattern and is looking to burst out of this pattern in one direction or the other. The key area of support for the NASDAQ is the 1430 level. If prices break below this level we will have hit the low of the first day's rally attempt and this will negate the new rally as a failure and place us back into a correction. If we break these levels we must watch closely the 1300 level of support in the NASDAQ as this is another major support level. To the upside we must try to get pass the 1600 level and then try to create a new high for the year past 1670. As always watch this daily interaction between the bulls and the bears carefully, staying on top of the markets direction goes a long way to building healthy investment habits.
Please remember at this point you should be watching your stocks very closely for price and volume movement. DO NOT let a stock get 7% below your cost of entering the trade. Follow your sell rules specifically.
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Top 10 Industries:
- Metal Ores-Gold/Silver
- Commercial Services Schools - This group showing resilience in tough market, watch CPLA.
- Medical Biomed
- Food-Flour and Grain
- Medical Genetics
- Computer Software Medical
- Financepbl Inv Fdbnd
- Oil & Gas-Transp. and Pipelines
- Oil and Gas- Refin/marketing
- Medical-Ethical Drugs
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 2009
Please review the entry prices and set your stop loss limits.
| Symbol |
Newsletter |
Breakout |
Base |
Buy |
Current |
% |
Exit |
Exit |
Profit/ |
| |
Date |
Date |
Pattern |
Point |
Price |
Change |
Date |
Price |
Loss |
| |
|
|
|
|
|
|
|
|
|
| THOR |
12/7/2008 |
12/16/2008 |
C/H |
29.93 |
27.84 |
-7% |
2/3/2009 |
$27.84 |
-2.09 |
| HMSY |
11/23/2008 |
12/15/2008 |
U |
27.53 |
34.29 |
25% |
2/6/2009 |
$34.29 |
6.76 |
| TWGP |
12/21/2008 |
12/31/2008 |
U |
27.73 |
25.79 |
-7% |
1/12/2009 |
$25.79 |
-1.94 |
| GMCR |
12/21/2008 |
12/29/2008 |
C/H |
38.63 |
41.4 |
7% |
|
|
2.77 |
| SJI |
12/7/2008 |
12/30/2008 |
C/H |
39.13 |
36.4 |
-7% |
1/15/2009 |
$36.40 |
-2.73 |
| QSII |
12/21/2008 |
12/24/2008 |
D/B |
43.63 |
40.58 |
-7% |
1/5/2009 |
$40.58 |
-3.05 |
| DV |
1/18/2009 |
1/21/2009 |
FB |
60.63 |
56.39 |
-7% |
1/28/2009 |
$56.39 |
-4.24 |
| GILD |
2/1/2009 |
2/3/2009 |
C/H |
52.53 |
50.25 |
-4% |
|
|
-2.28 |
| |
|
|
|
|
|
|
|
|
|
| TOTAL x 100 Shares: |
|
|
|
|
|
|
|
-680 |
** 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.
FOLLOW YOUR SELL RULES. As you can see we went from lots of green last week to lots of red this week suggesting the BEARS are trying to take over again.
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The F.I.T. STOCK PLAN
This week we have NO 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: Schering Plough
Symbol: SGP
Fundamentals: 9.9 out of 10
Industry: Medical Ethical Drugs Industry Strength: 7
Technical Pattern: Cup with Handle Avg. Volume: 13,513,200
Pivot or Buy Point: $20.23
Stop Loss: $18.82 or 7%
Profit 1: $22.25 or 10%
Profit 2: $24.27 or 20%
Schering Plough develops prescription drugs for the treatment of high cholesterol, arthritis, and allergies. It is expected to have annual earnings increase of 63% and last quarters earnings were up 44%. This is a one year chart of SGP with daily price bars to give you a better idea of how nice of a handle it has shaped. Notice how the handle had wedged down and now prices are peaking up to the high of the handle. This is where we need to be on alert and wait for SGP to break above the high on the handle. If it does, let us jump in at $20.23 on heavy volume.
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Stock: Gilead Sciences
Symbol: GILD
Fundamentals: 9.9 out of 10
Industry: Medical Biomed Industry Strength: 13
Technical Pattern: Cup with Handle Avg. Volume: 8,534,500
Pivot or Buy Point: $52.53
Stop Loss: $48.86 or 7%
Profit 1: $57.78 or 10%
Profit 2: $63.03 or 20%
We have had GILD on our F.I.T. Stock list for awhile now and it looks to have finally shaped the perfect Cup with Handle pattern. GILD develops therapeutics for the treatment of viral, fungal, respiratory and cardiovascular diseases. Last quarters earnings were up 34% and sales increased 30%. Returnn on Equity is a rock solid 66%. Last Wednesday, Thursday, and Friday while the market started to sell off, GILD began its climb to the high of its handle. If the market holds up and GILD breaks above the high of the handle jump in with a $52.53 buy point. Confirm the move with strong volume.
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Keep a Close Eye on CPLA as Education stocks have been holding STRONG!
Stock: Capella Education
Symbol: CPLA
Fundamentals: 9.9 out of 10
Industry: Commercial Services Schools Industry Strength: 1
Technical Pattern: Cup with Handle Avg. Volume: 306,600
Pivot or Buy Point: $61.33
Stop Loss: $57.04 or 7%
Profit 1: $67.46 or 10%
Profit 2: $73.59 or 20%
Capella Education provides online post-secondary education to people by offering 950 courses and 19 academic programs. Online education has been one of our top 10 industries for several weeks now as people go back to school to re-invent themselves. CPLA is building a nice Cup with Handle pattern and currently sits in the sixth week of the handle. In the handle, prices have wedged down and volume has dried which are classic signs of a healthy handle pattern. When CPLA breaks above the high of the handle enter a buy point of $61.33 and confirm the move with strong volume.
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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