Date: April 5, 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 rally that began March 12 continues on. The good news is that volume is looking stronger to the upside this week as the indexes gained in price. This is a positive event, but remember to remain focused and on your toes at all times.
The government appears to be doing whatever it thinks is best to help this economy recover. Thursday was a great example of this as politicians put the pressure on the Financial Accounting Standards Board (FASB) to pass new rules that would expand the Banking industries discretion on how they value assets. Basically the rule will let Banking firms use "significant" judgment on how they value mortgage securities. This move in the rule making process, some believe, will increase earnings in commercial banks by 20%. The markets applauded the move as the major indexes shot up in price on strong volume, as big money investors jumped into financial stocks.
On a global scale we had the G-20 meeting where world leaders pledged $1 trillion towards the International Monetary Fund and promised to keep a more watchful eye on the global financial system.
Another bit of encouraging news is that although jobless claims continue to rise, the market this time has seemed to overlook the situation. Factory orders, on the other hand, rose by 1.5%.
On a technical chart point of view the NASDAQ was able to climb and remain above 1600, and the DOW breached through the 8000 mark and is trying to remain above this level.
Since the new market rally began on March 12, 2009, the rise in the major indexes has the feel that maybe big institutional investors are sensing a bottom for the recession and a turn around in the economy. Remember that the major indexes always think 6-12 months out into the future, so maybe they are seeing some positive effects from all of the planning that has gone to help stimulate this economy and drag us out of a recession. That being said, do not fall asleep at the wheel, the market can change its direction at anytime and we must always be prepared. Stay focused on the daily movements of the stock market prices and volume changes. Be disciplined in your approach to investing and you will be rewarded with healthy investment habits.
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STOCK MARKET NEWS:
NASDAQ leaps up for the week by 5%. The S&P bounces 3.3% and the DOW hurdles 3.1%.
Financial Accounting Standards Board relaxes fair value accounting methods.
Factory Sales up 1.5% in February.
G-20 meeting pledges $1 trillion dollars to International Monetary Fund.
Jobless Claims rise 12,000.
Research in Motion beats quarterly earnings by 6 cents.
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Index Charts
S&P 500: 6 Month Chart with Daily Price Bars.
The S&P 500 held the support of its 50 day moving average line last week, which has been something it has been unable to do for several months. For now it appears that the 50 day moving average is now acting as support. We have drawn in a white horizontal line at roughly 880, this will be the next area of resistance for the S&P. Our best scenario for the S&P is for prices to break above the 880 level, head up to the 200 day moving average at the 1000 level and break through the resistance, and on its way up to hold support at the 50 day moving average. If the S&P loses its support of the 50 day moving average we need to put our guard up and be ready to react to a possible downturn and correction. Just a few things to watch for in the coming weeks.
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NASDAQ: 6 Month chart, daily price bars.
The NASDAQ has maintained the leadership role of the three major indexes. There are three positive aspects to the current conditions of the NASDAQ: First, the NASDAQ has held its 50 day moving average. Second, we made a new 2009 price high above 1600, putting the NASDAQ in positive territory for the year. Third, we have a big volume surge that occurred on Thursday, suggesting big investors are starting to put money back into the markets. Now we must expect some type of pull back as we have had 4 straight up weeks in the NASDAQ. If a pull back does occur we want the 50 day moving average to hold as a support line. Our next area above is the 200 day moving average that will act as resistance at 1800. Now that we are in a rally we just want to monitor the success of the rally. Again watch for prices to move up in higher volume and pull back in lower volume.
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Top 10 Industries:
- Metal Ores-Gold/Silver
- Chemicals Fertilizers
- Food Flour and Grain
- Retails Consumer electronics
- Retail Wholesale Autoparts
- Retail Restaurants
- Computer Software Medical
- Computer Software Security
- Building Heavy Construction
- Computer Software Financial
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 |
Pattern |
Point |
Price |
Change |
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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 |
49.38 |
15% |
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6.35 |
| AIPC |
3/22/2009 |
3/25/2009 |
F/B |
33.63 |
32.2 |
-4% |
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-1.43 |
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| TOTAL x 100 Shares: |
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661 |
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: Aaron Rents Inc.
Symbol: RNT
Fundamentals: 9.8 out of 10
Industry: Retail Home Furnishings Industry Strength: 18
Technical Pattern: U Turn Avg. Volume: 1,056,100
Pivot or Buy Point: $29.03
Stop Loss: $27 or 7%
Profit 1: $31.93 or 10%
Profit 2: $34.83 or 20%
Aaron Rents operates 1,014 and franchises 484 electronics, appliance and furniture stores in the US and Canada. Last quarters earnings were up 50%. In the U turn base we have 6 up weeks on strong volume compared to 3 down weeks. As credit gets worse for people they may be turning to places like Aaron Rents who allow you to lease or rent with the option to buy. If RNT can break above the high of its U Turn base look for a buy point of $29.03 on strong volume.
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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
