Date: April 19, 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!
Hello F.I.T. Investors:
MAKE IT 6 STRAIGHT WEEKS UP! Yes, that is how many weeks in a row we have had the major indexes finish higher. At this point the market rally that confirmed March 12, 2009 is holding on strong.
Last week we had one distribution day (prices fell on volume higher than the previous day's volume) that came on Tuesday, but the indexes showed some resilience by fighting back in the last hour on Wednesday, and cruising forward on strong volume on Thursday. Overall this was a great comeback for the stock market.
Some other positive signs have been the breakouts that have occurred in our F.I.T. Stocks. If you remember back to the previous bear market rally back in Nov. 2008, many of the F.I.T. stock selections would breakout past their buy points only to fail a few days later hitting our 7% stop loss rule. This time the feeling is different as our F.I.T. Stock selections have held up much better. GMCR, our top gainer for the year so far, has risen 22% from its buy point. Make sure you lock in your 20% profit target for this stock. OTEX and RNT have both broken past their buy points on strong volume and are up 2% and 3% respectively. INT broke past its buy point on Friday, but volume was rather weak and unconvincing. Monitor any F.I.T. Stocks you may have entered into for their price and volume movements.
I know many of you get tired of hearing this information, but please continue to make it a daily habit to monitor the price and volume movements of the 3 major indexes and any stocks you may be invested in. Price and volume movement are true indicators of the health of the stock market and your stocks. Again, we like to see prices move up in strong volume, this suggest conviction behind the price movement and is a sign of accumulation by institutional investors. When prices retreat or pull back we like to see lighter volume suggesting that sellers were unable to create supply for the stock and buyers were able to hold up current price levels and maintain demand.
Next, because we are still in a Bear market rally, always have your exit strategy in place before entering into any trade. We have set a 7% stop loss order; your sell rules may be different depending on your risk tolerance. The important habit to maintain is that you have a exit strategy and that you are disciplined enough to stick with it with no questions asked. Building and perfecting these two habits of monitoring price and volume movement on a daily basis and having a strict set of sell rules will put you well on your way to building healthy investment habits.
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STOCK MARKET NEWS:
NASDAQ leaps up for the week by 1.2%. The S&P bounces 1.5% and the DOW hurdles .6%.
JP Morgan tops Quarter 1 Views.
March Housing Starts fall 10.8%.
Single Family Starts hold steady for 3 Months, suggesting bottom maybe here.
Philly Fed manufacturing index show factory activity is improving.
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Index Charts
S&P 500: 6 Month Chart with Daily Price Bars.
The S&P 500's rally has lasted 6 weeks now. The last time the market rallied, back in November of 2008, it also lasted 6 weeks. So in the coming days and weeks I will be looking to see if the S&P will be able to hold the support line of its 50 day moving average as indicated by the white arrow. As you can see back in Nov. 2008 it was unable to. This level will be a key test for this new market rally.
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NASDAQ: 6 Month chart, daily price bars.
The NASDAQ has maintained the leadership role of the three major indexes, but as you can see it falls under the same scenario as the S&P. We are now six weeks into a new rally, just as in Nov. 2008. The big difference in this chart is to notice how weak the volume was during the Nov. 2008 rally versus the strong green volume bars we see since the March 2009 rally began. Also, the NASDAQ has risen much stronger above the 50 day moving average line. Again we are probably due for a pull back in the major indexes and the key factor will be for the 50 day moving average to hold the support line. The next couple of weeks should tell the tale.
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Top 10 Industries:
- Retail Consumer Electronics
- Retail Wholesale Autoparts
- Retail Restaurants
- Oil Gas International Exploration
- Internet E-Commerce
- Retail Leisure Products
- Chemicals Fertilizers
- Metal Ores Gold and Silver
- Retail Clothing Shoes
- Retail Department Stores
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 |
52.67 |
22% |
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9.64 |
| AIPC |
3/22/2009 |
3/25/2009 |
F/B |
33.63 |
31.8 |
-5% |
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-1.83 |
| RNT |
4/5/2009 |
4/9/2009 |
U |
29.03 |
30.02 |
3% |
|
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0.99 |
| OTEX |
4/12/2009 |
4/14/2009 |
C/H |
35.33 |
35.95 |
2% |
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0.62 |
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| TOTAL x 100 Shares: |
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1111 |
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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| 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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| SJI |
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**IMPORTANT**-
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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: MedAssets Inc.
Symbol: MDAS
Fundamentals: 9.9 out of 10
Industry: Computer Software Medical Industry Strength: 19
Technical Pattern: Cup with Handle Avg. Volume: 352,600
Pivot or Buy Point: $15.83
Stop Loss: $14.73 or 7%
Profit 1: $17.41 or 10%
Profit 2: $18.99 or 20%
Medassets provides revenue cycle and spend management software for hospitals and other healthcare providers. Last quarters earnings were phenomenal with a 2000% increase. Sales were up 55% and Oppenheimer raised their guidance from perform to outperform. MDAS is in the 10th week of a cup with handle base with the past week beginning the start of the handle. Volume has picked up nicely on the right side of the base for the past five weeks. When MDAS breaks above the high point of the handle set a buy point of $15.83 and confirm this move with a strong volume surge.
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Stock: BMC Software
Symbol: BMC
Fundamentals: 9.7 out of 10
Industry: Computer Software ENT Industry Strength: 26
Technical Pattern: Cup with Handle Avg. Volume: 3,740,600
Pivot or Buy Point: $35.03
Stop Loss: $32.58 or 7%
Profit 1: $38.53 or 10%
Profit 2: $42.03 or 20%
BMC Software provides mainframe distributed systems service and identity management software applications for enterprises. They are expected to grow 37% this year. BMC has created a beautiful Cup with Handle base pattern. Prices started to trade tight at the bottom of the cup at $24. Then BMC started to form the right side of its base as it did so look at the great volume that appeared as it rose past its 10 and 40 week moving averages. Definitely a sign of accumulation. Now BMC is resting in its first week of the Handle, when BMC breaks above the high of the handle look to jump in at $35.03 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
