Date: Mar. 29, 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.
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MARKET HEALTH:
MARKET IN RALLY!
The New rally so far has remained intact. The key is to keep measuring the health of the daily stock market activity and the stocks you are involved with through their price and volume movements. Monday, March 23, was a great example of this as prices soared on all three of the major indexes, but if you were to look at the volume at the end of these price moves it was unimpressive for such a large move up. This is not to mean the markets won't gather up more steam and move higher, it merely means that on this day prices moved up a large amount but there was not much conviction behind the move as volume was very light. When prices move up strong, but volume is weak, it should send out a warning that this price movement up was not very convincing and deserves a close look over the next few day's.
The stock market is always right in its decision making process, as healthy investors we must always follow the stock markets lead. We are like those little fish that follow behind the big sharks tracking their every move, if the shark turns left we turn left, if the shark turns right we turn right. The same is true of the stock market, if the stock market goes up we follow it and become buyers, if the stock market goes down, we follow it and become sellers. It really is that simple, we follow the stock markets lead.
Unfortunately, most investors get stung because they try and outsmart the market. They try and take the lead and let the market follow them. These types of investors lose a lot of money trying to outsmart the market. The market is never wrong no matter how smart we think we are. A healthy investor will always start with a written investment plan as their number one priority, and number 2, is they will always follow the flow or trend of the stock market. If you can establish these first two priorities you are well on your way to becoming a successful investor. I only speak so strongly of these matters because I have had many a hard lesson of not following my plan and not following the trend of the stock market and learning the hard way. Many of you will take the path I did and learn the hard way, but hopefully more of you will listen to the healthy investment habits I have set forth for you, learn from my mistakes, and start right now building on the healthy investment habits that make for a successful investor.
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STOCK MARKET NEWS:
NASDAQ leaps up for the week by 1.8%. The S&P bounces 1.6% and the DOW hurdles .8%.
Treasury Secretary wants lawmakers to create a single regulator for financial system.
Forth Quarter GDP fall revised to 6.3%.
Best Buy exceeds earnings expectations.
Jobless Claims inline with forecast.
Government auction of 7 year notes meets expectations.
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Index Charts
DOW JONES: 6 Month Chart with Daily Price Bars.
The March 12 new rally confirmation remains intact. The DOW so far has had 2 distribution day's since the new rally began (red arrows), so we must keep watch over this. On Monday of this past week the DOW rose almost 500 points and cleared above the 50 day moving average (yellow arrows). The volume was above average, but not nearly as strong as the previous days distribution day. This type of activity, when prices move up big on weaker volume, should send a warning signal that this move requires close monitoring. The DOW, to this point, has done a nice job of remaining above the 50 day moving average (white arrow), and it will be key for this 7500 level to hold as support for the DOW to keep a healthy rally moving forward. To reverse this Bear market and turn to a Bull market we will have to see the Bulls run prices up above the 9500 level where the 200 day moving average stands (blue line). Obviously, there is a way to go before we reach these levels, so maintain your discipline in studying the markets daily price and volume action. This is always the best way to stay in tune with the current market conditions.
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NASDAQ: 6 Month chart, daily price bars.
The NASDAQ has maintained the leadership role of the three major indexes. To this day it has held up the strongest and only shows one distribution day since the March 12 confirmation signal. The NASDAQ has taken 2 other major trips above the 50 day moving average and has been unable to hold this level as support. Will the third time be the charm for the NASDAQ? One thing is for sure, for the NASDAQ to remain healthy it must finally hold the 50 day moving average as support. Currently that level rest just under 1500. The NASDAQ could also show some bullish strength by moving up above the 200 day moving average (blue line) at 1850. We still have a ways to go for this level to be hit. On Thursday, Mar. 26 we witnessed the NASDAQ actually head into positive territory for the first time in 2009. Although the trip was brief (today we are back into negative territory for 2009), it still was a positive sign after all of the turmoil we have been through over the last year and a half.
Watch closely the 50 day moving averages in all of the major indexes and let us hope they can hold these levels this time. More importantly study the daily price and volume movements of the stock market and your individual stocks, this is like being disciplined enough to do your 30 minutes of exercise each day, the more you do it the healthier you become.
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Top 10 Industries:
- Metal Ores-Gold/Silver
- Food Flour and Grain
- Retail Wholesale Autoparts
- Computer Software Medical
- Retail Dsicount Variety
- Computer Software Security
- Commercial Services Schools
- Financepbl Inv. Fdbnd
- Retail Restaurants
- Chemicals Fertilizers
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/ |
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Date |
Date |
Pattern |
Point |
Price |
Change |
Date |
Price |
Loss |
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| 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 |
47.3 |
22% |
3/29/2009 |
$47.30 |
8.67 |
| 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 |
48.86 |
-7% |
2/17/2009 |
$48.86 |
-3.67 |
| SGP |
3/8/2009 |
3/9/2009 |
C/H |
20.23 |
24.21 |
20% |
3/13/2009 |
$24.27 |
3.98 |
| GMCR |
3/15/2009 |
3/16/2009 |
C/H |
43.03 |
47.3 |
10% |
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4.27 |
| AIPC |
3/22/2009 |
3/25/2009 |
F/B |
33.63 |
35.14 |
4% |
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1.51 |
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| TOTAL x 100 Shares: |
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747 |
READ ME:
Portfolio management and disciplined rules: If you notice are profit and loss statement above you can clearly see the benefit to sticking with sound investment rules and portfolio management. For the first time this year we have turned into positive territory for the F.I.T. Stocks Portfolio and this has been during a time where most people have lost half of their portfolio under management by someone else. The rules have been simple: Find high quality growth stocks with strong Fundamentals, in leading Industries, forming superior Technical Chart patterns. We enter into these F.I.T. Stocks during a rally, set our 10-20% profit target and take no more than a 7% loss. If you look at the spreadsheet above, you quickly notice that by following sound and healthy investment habits, we tested the market, we were only right less than 50% of the time, yet we have turned a profit. The key is we got out when the market and our stocks told us to get out, we followed our investment plan, we built healthy investment habits and we have come out ahead of most investment professionals. You can be successful in the stock market it just requires a strong investment plan and the courage and discipline to follow it.
** 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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F.I.T. STOCKS Showing some Muscle
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| Below are some F.I.T. Stocks that are showing signs of institutional buying as they build the right side of their chart patterns |
| These stocks have passed the F-Fundamentals and I -Industry test, but we must wait for the T -Technical Chart pattern to form |
| and the market direction to begin to rally once again. |
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| Please review the charts and save this as a watch list. |
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| F.I.T. STOCKS Showing Accumulation |
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| STAR |
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| SVR |
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| SNDA |
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| BWLD |
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| SXL |
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| INT |
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| SPH |
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| BMC |
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| CPSI |
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| EPIQ |
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| PZZA |
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| AAP |
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| AIPC |
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| WW |
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| ACM |
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| GVA |
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| IBM |
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| CHKP |
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| AMZN |
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| DEP |
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| PCG |
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**IMPORTANT**- AIPC looks ready to burst. Check out a 1 year chart on this stock and you will see some nice accumulation that has taken place. AIPC also rest in the number 2 industry of food Flour and Grain - they basically provide 2oo varieties of pasta. It has been consolidating for the past 3 weeks, but if it can break above a buy point of $33.63 it looks like a nice opportunity. Set your stop loss at -7%.
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The F.I.T. STOCK PLAN
This week we have 1 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: Open Text
Symbol: OTEX
Fundamentals: 9.9 out of 10
Industry: Computer Software-ENT Industry Strength: 31
Technical Pattern: U Turn Avg. Volume: 546,800
Pivot or Buy Point: $36.63
Stop Loss: $34.07 or 7%
Profit 1: $40.29 or 10%
Profit 2: $43.95 or 20%
Open Text had a 28% increase in earnings last quarter, but it is expected to grow 42% annually. OTEX develops content management software that captures, manages, stores and delivers organizational content through networks. Many of you probably use OTEX at your offices. OTEX has built a beautiful Cup with Handle pattern and the Handle in the pattern can now also qualify as its own U Turn base pattern. Either way we have the same buy point at $36.63, if OTEX can break out on 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