Date: May 4, 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 Update
MARKET HEALTH: Market in Confirmed Rally,
The rally light has turned GREEN! Last week the major indexes were able to break through their downward sloping trend lines. Now the question is will old resistance become new support. This week we would like to see if the major indexes can now hold this new support line. Many times after a break though of major resistance, prices like to come back down to test the resistance they just broke through, which has now become support. If the prices can hold this support level it is a very positive sign for the markets.
As stated in last week's newsletter, we believed the FED Announcement would most likely be the catalyst to drive the markets one way or the other. When the FED decided on a quarter point deduction on Wednesday, the markets rallied positively for a brief moment before losing ground for the rest of the day. This marked another distribution day for the markets. However, Thursday the markets came roaring back with some great conviction, causing all three of the major indexes to break through their downward sloping trend lines, on big volume. Once again buy side volume surged higher than on the distribution day. The Bulls tend to be winning this rematch with the Bears since the March 20 rally confirmed.
As the credit concerns fade, the dollar is seemingly making a comeback. When the dollar rises against foreign currencies, it makes importing such commodities as OIL cheaper. Unfortunately, this rattled some of the F.I.T. Stocks that were related to the Oil industries. The key here is to follow your rules of selling and you will be safe.
What to watch for next week: All in all the NASDAQ jumped up 2.2%, the DOW 1.3%, and the S&P 1.2% for the week. The indexes appear to be gathering strength. Next week, or in the coming weeks we would expect a bit of a pull back in the markets, again to test this new support line left behind from the break through of the downwards trend line, and then hopefully a continuation of the new rally. Keep looking for signs of strength, up days on strong volume, pull backs on weak volume, and leading stocks breaking out of excellent bases on strong volume. These are signs that a market is healthy. Let the market always lead the way, we may have opinions on the economy, a recession or no recession, or which way the markets are heading, but a HEALTHY INVESTOR always will let the MARKETS show us where they want to go and we will follow.
We have left up last weeks newsletter charts so you can compare them to this week. Notice the breaks of the downwards trend lines.
NASDAQ
LAST WEEKS!
THIS WEEK
S&P 500
Last Weeks
This Week
The NASDAQ and S&P 500 charts look identical. You can clearly see the break outs that occurred on both charts from the downwards sloping trend line. We have now broken beyond these levels and now would expect the 200 day moving average to show us some resistance. As stated above, it is also possible in the next week or two to have these indexes come back down to retest these old resistance levels that have now become support. Support needs to hold up for these markets to remain strong. Watch carefully and let the markets show us what they want to do.
Top 10 Industries:
- Oil and Gas - US Exploration
- Steel Producers
- Energy - Other
- Chemicals - Fertilizers
- Bldg-Residential/Commercial
- Machinery Farm
- Oil Gas and Drilling
- Machinery-General Industrial
- Bldg. AC/Heating
- Transportation Rail
Important Message:
Please remember as you build your portfolio, you are trying to find the best player for each position. Another words 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 we list our F.I.T. Stocks selections, please make sure as you enter in your trades that you have not already filled that position or industry.
F.I.T. Stock Break Outs
| Symbol |
Newsletter |
Breakout |
Base |
Buy |
Closing |
% |
Exit |
Exit |
Profit/ |
Notes |
| |
Date |
Date |
Pattern |
Point |
Price |
Change |
Date |
Price |
Loss |
|
| MA |
3/23/2008 |
4/1/2008 |
C/H |
222.43 |
285.04 |
28% |
|
|
62.61 |
| RRC |
3/30/2008 |
4/2/2008 |
FB |
65.73 |
67.59 |
3% |
|
|
1.86 |
| RIG |
3/23/2008 |
4/4/2008 |
C/H |
145.13 |
151.92 |
5% |
|
|
6.79 |
| SID |
4/6/2008 |
4/8/2008 |
FB |
40.23 |
43.31 |
8% |
|
|
3.08 |
| 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 |
102.57 |
3% |
|
|
3.34 |
| 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 |
64.72 |
9% |
|
|
5.29 |
| ARD |
4/20/2008 |
4/21/2008 |
U |
44.83 |
44.45 |
-1% |
5/1/2008 |
$41.70 |
-0.38 |
| FAST |
4/27/2008 |
5/2/2008 |
C/H |
51.43 |
51.76 |
1% |
|
|
0.33 |
IMPORTANT MESSAGE:
Please remember to follow the investment plan rules. This week we were stopped out of 3 of the F.I.T. Stock Selections. However we had a great gain in MA. 7 out of the 11 F.I.T. Stock selections have made a profit. If you were able to create the full portfolio you would be up $69.40 or $6,940 per 100 shares invested. What is not included here, is many of the F.I.T. Stock selections have retreated a bit since their break outs, however if you took your profits at the 10% profit target you would have locked in solid gains on RIG, RRC, VMI, and SID.
The F.I.T. STOCK PLAN
F.I.T. Stocks to still Watch: DRQ, WGOV and GNA.
This week we have 4 NEW F.I.T stocks meeting are F.I.T. Stock Plan criteria. To make our list of High Quality Growth Stocks a company must show
superior F- Fundamentals, be in a leading I - Industry, and have a strong T - Technical Chart Pattern.
F.I.T. Stocks Ready to RUN!
* All Charts are One year time frames with weekly price bars *
Stock: ABB
Symbol: ABB
Fundamentals: 9.5 out of 10
Industry: Electrical Equipment Industry Strength: 77
Technical Pattern: U TURN Avg. Volume: 4,951,900
Pivot or Buy Point: $32.23
Stop Loss: $29.98 or 7%
Profit 1: $35.45 or 10%
Profit 2: $38.67 or 20%
ABB just came out with a great earnings increase of 87%. It's industry rank has increased from 117 to 77. ABB is a Swiss manufacturer of power management and power automation equipment for Industrial and Utility markets. ABB has set up nicely in a U Turn base pattern and now rest just off its previous high established in late October. When ABB breaks above this previous high, we have a buy point of $32.23 look for a surge in buy side volume to confirm.
Stock: Corn Products Intl. Inc.
Symbol: CPO
Fundamentals: 9.7 out of 10
Industry: Food Flour and Grain Industry Strength: 44
Technical Pattern: Cup with Handle Avg. Volume: 862,500
Pivot or Buy Point: $47.33
Stop Loss: $44.02 or 7%
Profit 1: $52.06 or 10%
Profit 2: $56.79 or 20%
Corn Products has positioned itself in a 6 month base and is one week into building a handle. The past 2 weeks, the right side of the base has shown good accumulation. CPO manufactures food ingredients including starches and liquid sweeteners derived mainly from the processing of corn. If CPO can break above the high of its handle, look for a buy point of $47.33 on a swell of volume.
Stock: Sun Hydraulics
Symbol: SNHY
Fundamentals: 9.9 out of 10
Industry: Machinery General Industrial Industry Strength: 8
Technical Pattern: Cup with Handle Avg. Volume: 120,400
Pivot or Buy Point: $32.33
Stop Loss: $32.07 or 7%
Profit 1: $35.56 or 10%
Profit 2: $38.79 or 20%
Sun Hydraulics sits in the same industry as Woodward Governor from last weeks F.I.T. Stock selections. So keep an eye on both. The Machinery General Industry moved up in the rankings from last week from #13 to #8, a positive sign. SNHY manufactures screw in hydraulic cartridge valves and manifolds for fluid power systems in construction equipment. Its earnings have improved 15% or better for 17 quarters, and it is set up in a perfect Cup with Handle pattern. One area of warning is that SNHY is a thin traded stock, so do not buy more than 300 shares. When SNHY breaks above the high of its handle, jump in at $32.33 on confirmed buy side volume.
Stock: Companhia de Saneamento Basico
Symbol: SBS
Fundamentals: 9.3 out of 10
Industry: Foreign Utilities Industry Strength: 25
Technical Pattern: U TURN Avg. Volume: 335,867
Pivot or Buy Point: $54.63
Stop Loss: $50.81 or 7%
Profit 1: $60.09 or 10%
Profit 2: $65.55 or 20%
SBA provides water and sewage services to residential, commercial, industrial, and governmental customers in municipalities in Sao Paulo. The stocks has formed a perfect U turn Pattern with 3 strong weeks of accumulation on the right side of the pattern. The 10 week moving average is just starting to pierce the 40 week moving average and on top of this great pattern the S&P just improved Brazil's credit rating. The economy is growing there and we want to be part of it. When SBS breaks above its previous high we should look to buy at $54.63 on strong volume.
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