F.I.T. Stocks Newsletter
Finding High Quality Stocks to Build Healthy Investment Habits.
Date: Oct. 11, 2009
Charts Provided by Bigcharts.com
Fundamental Research provided by Investors Business Daily
Market Health
Uptrend Holds, and the 50 Day Line HOLDS as Support.
Hello F.I.T. Investors:
The Stock Market continued its predictable and organized pattern. The up trend continued on, bouncing from its 50 day moving average line and heading up higher. The next question we will need to ask ourselves is whether prices will continue up to the top level of the upwards trending channel line and create a higher high in price or whether the upwards price movement will stall and then decline, creating a lower high.
Up trends are created as prices move to higher highs and lower lows, and for the past 7 months we have been in a picture perfect up trending pattern. In the coming weeks it will be important for the major indexes to continue this up trending price movement and move past the highs that were created in the third week of September. This price action would convince us that we are still in a healthy stock market environment.
If on the other hand, prices cannot create a new high and reach the upwards resistance level of the price channel, we will need to once again monitor the support level of the 50 day moving average line. If this level is violated then we must keep an eye on the most recent low at 2150. If this 2150 level is breached, than a lower low in price will have been established and we will need to monitor the price and volume movements to establish if a new downwards trend is developing.
We have just entered in to a new earnings season, with Intel getting ready to report next week. Earnings are the most efficient way to drive the market up or down, so if the stock market likes what it is hearing from this earnings season, and if forward looking views seem positive we would expect the major indexes up trend to continue. The reverse effect can happen, and we very well may see the market start a new down trend if this earnings season falters with bad reports. Intel will be big for next week as it is a huge player in the stock market and traders will be hinging on Intel's every word for what they perceive to be positive or negative news and the major indexes will respond accordingly. As always the message is: keep a daily pulse on the health of the stock market, this is what building healthy investment habits is all about.
It was a positive week for the F.I.T. Stocks newsletter as many of our F.I.T. Stocks followed the lead of the stock market and increased in price. Another example of how 3 out of 4 stocks will follow the lead of the stock market. ARO, BCSI, and CTRP all have bi-passed our first profit target of 10% and MFE and VPRT are creeping up closely to their 10% profit target.
TSAR broke out of its Cup with Handle pattern on Oct. 7 with strong volume and is now up 6%, so keep a watchful eye on this stock.
Our purely technical trade on the QQQQ's, which tracks the NASDAQ index, triggered on Monday Oct. 5 when the Willams %R line pierced up through its oversold area and through the -80 level. A reasonable buy point would have been $41.09 and the QQQQ's current price level is $42.48. At this point we have captured a short term profit of $1.39 or 3.5%. This type of technical trade is considered a short term or swing trade and you should look to get out as the blue line in the Williams %R breaks down through the -20 level.
If you are going to be a successful investor, it is paramount that you build consistent and healthy investment habits. Study the daily routines of the stock market, and your stocks, understand the movement of price and volume, and have a strong set of investment rules that you can follow with no emotions attached. Building healthy investment habits is just a matter of being consistent, disciplined, and having a written investment plan to follow and understand. Make these your trademarks, persevere and you will be a successful investor.
Happy and Healthy Investing,
Steve Martin
Founder
www.fitstocks.com
STOCK MARKET NEWS
The Major Indexes bounce from their 50 day lines: NASDAQ and S&P jump 4.5% and the DOW climbs 4%.
Gold prices continue to climb as the Dollar falls.
Quarter 3 Earnings start with a BANG!
Retailers see sales rise in Sept.
President re-thinks Afghan strategy.
Jobless Claims fall to Jan. lows.
STOCK MARKET INDEX CHARTS
S&P 500: 6 Month Chart with Daily Price Bars
The S&P bounced nicely from its oversold conditions and the support line of its 50 day moving average. So far we remain within this nice organized and defined trading pattern. We would now like to see the S&P continue its journey upwards until prices hit a higher high or the top of the trading channel. An uptrend is defined by a series of higher highs and higher lows. This has remained the defined pattern for the past 7 months. Key areas to watch for the S&P will be the support area of the 50 day moving average line at 1050 and the upper level of the channel at 1100. A healthy sign will also be for the S&P to rise above the price highs that were created back in the third week of September.
NASDAQ: 6 Month Chart with Daily Price Bars.
It is always nice to see the unison between the major indexes, all of them moving with the same similarity. The NASDAQ took the same bounce in price from the 50 day moving average line and continued in price upwards. If the NASDAQ can continue its upwards way and break through the high it created in mid September, it would be a sign of continued health and strength. If prices do not continue upwards we will need to watch the 50 day line for support at roughly 2100, and then keep an eye on the low the NASDAQ made at the end of September. As healthy investors we would hope that the NASDAQ will continue its orderly and defined upwards trending channel.
TOP TEN INDUSTRIES
- Paper and Paper Products
- Mining-Gems
- Media Newspapers
- Retail-Mail Order Delivery
- Textile-Mill/Household
- Media Radio TV
- Leisure Services
- Household/Housewares
- Auto/Truck-Original Equipment
- Auto/Truck-Tires
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.
F.I.T. Stocks Break Out Portfolio 2009
Please review you entry prices and stop loss limits.
| Symbol |
Newsletter |
Breakout |
Base |
Buy |
Current |
% |
Exit |
Exit |
Profit/ |
Notes |
| |
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 |
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 |
80.5 |
87% |
5/12/2009 |
$80.50 |
37.47 |
|
| AIPC |
3/22/2009 |
3/25/2009 |
F/B |
33.63 |
31.28 |
-7% |
4/22/2009 |
$31.28 |
-2.35 |
|
| AAN |
4/5/2009 |
4/9/2009 |
U |
29.03 |
34.86 |
20% |
5/6/2209 |
$34.86 |
5.83 |
|
| OTEX |
4/12/2009 |
4/14/2009 |
C/H |
35.33 |
32.86 |
-7% |
4/28/2009 |
$32.86 |
-2.47 |
|
| INT |
4/12/2009 |
4/24/2009 |
D/B |
36.03 |
43.93 |
22% |
5/20/2009 |
$43.93 |
7.9 |
|
| MDAS |
4/19/2009 |
4/20/2009 |
C/H |
15.83 |
19.37 |
22% |
7/27/2009 |
$19.37 |
3.54 |
|
| PEET |
5/31/2009 |
6/2/2009 |
C/H |
28.33 |
26.35 |
-7% |
6/15/2009 |
$26.35 |
-1.98 |
|
| MFE |
6/21/2009 |
6/29/2009 |
C/H |
41.13 |
44.99 |
9% |
|
|
3.86 |
|
| ARO |
6/21/2009 |
7/20/2009 |
C/H |
38.13 |
42.43 |
11% |
|
|
4.3 |
|
| CMG |
6/21/2009 |
7/20/2009 |
C/H |
89.73 |
91.78 |
2% |
|
|
2.05 |
|
| JST |
719/2009 |
7/24/2009 |
C/H |
33.13 |
36.44 |
10% |
8/11/2009 |
$36.44 |
3.31 |
|
| ABVT |
7/19/2009 |
8/3/2009 |
U |
83.43 |
98.98 |
19% |
9/30/2009 |
$98.98 |
15.55 |
|
| LFT |
7/19/2009 |
8/10/2009 |
C/H |
29.43 |
27.37 |
-7% |
|
|
-2.06 |
|
| BWLD |
8/16/2009 |
8/26/2009 |
C/H |
41.13 |
40.68 |
-1% |
|
|
-0.45 |
|
| BMC |
8/16/2009 |
9/8/2009 |
C/H |
35.73 |
37.85 |
6% |
|
|
2.12 |
|
| VPRT |
7/24/2009 |
9/17/2009 |
F/B |
45.93 |
49.49 |
8% |
|
|
3.56 |
|
| BCSI |
9/13/2009 |
9/23/2009 |
U |
21.23 |
24.03 |
13% |
|
|
2.8 |
|
| CTRP |
9/20/2009 |
9/23/2009 |
C/H |
56.03 |
62.29 |
11% |
|
|
6.26 |
|
| GMCR |
9/27/2009 |
9/28/2009 |
C/H |
71.53 |
73.43 |
3% |
|
|
1.9 |
|
| TSRA |
9/27/2009 |
10/7/2009 |
C/H |
29.43 |
31.19 |
6% |
|
|
1.76 |
|
| |
|
|
|
|
|
|
|
|
|
|
| TOTAL x 100 Shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9459 |
|
PORTFOLIO MANAGEMENT
Disciplined Rules: If you notice are profit and loss statement above you can clearly see the benefit to sticking with a set of sound investment rules. The rules are simple: Find high quality growth stocks with strong fundamentals, in a leading industry, forming superior technical chart patterns. We enter into these F.I.T. Stocks during a market rally, set our 10-20% profit target and take no more than a 7% loss. If you look at the spreadsheet above, you will quickly notice that by developing a set of healthy investment habits to follow, we were able to test the market, we were only right 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.
Please remember to stick with your investment plan, be disciplined, monitor the price and volume daily and make money.
The F.I.T. STOCK PLAN
For a stock or company to make the F.I.T. Stock dream team it must meet 3 stringent criteria:
- F - Fundamentals must be Superior - Its all in the numbers, earnings, sales, profit margins, and return on equity must be increasing on a quarterly and annually basis.
- I - Industry, Innovation or Institutions - The company must be in a leading industry, have an innovative product or have institutional buying.
- T - Technical Charts - The stock charts must show strong base patterns such as: Cup with Handle, Flat Base, Double Bottom or the U Turn patterns.
THE F.I.T. STOCK WATCH LIST
Please Review last weeks F.I.T. Stocks Newsletter for the buy points of RGR, TSRA, and NFLX as they have not hit their buy points yet. With the uncertainty of the stock market and the amount of F.I.T. Stocks in the portfolio at this time we will not be listing any new F.I.T. Stocks this week as nothing new stands out at this time.
Stock: International Assets Holding
Symbol: IAAC
- F - Fundamentals - 9.5 out of 10 Earnings: +121%
- I - Industry - Investment Brokers Avg. Volume: 24,100 VERY LIGHTLY TRADED
- T - Technical Charts - Flat Base
Pivot or Buy Point: $19.13
Stop Loss: $17.8
Profit 1: $21.04
Profit 2: $22.95
International Assets provides trade execution focused on international equities and debt, forex, commodities and asset management. Last quarter earnings surges 121% and estimates are for a 36% annual increase. Currently IAAC rest in a 10 week Flat Base pattern and the last two weeks of the base have produced massive volume suggesting some big money has moved into the stock. IAAC is very lightly traded at only 24,000 shares so go lightly as this stock could be easily manipulated. However, when IAAC breaks above the resistance level of 19, let's jump in with a $19.13 buy point on strong volume.
Stock: JDA Software
Symbol: JDAS
- F - Fundamentals - 9.7 out of 10 Last Quarter Earnings: +62%
- I - Industry - Computer Software Entertainment Avg. Volume: 342,600
- T - Technical Charts - Flat Base
Pivot or Buy Point: $24.03
Stop Loss: $22.35
Profit 1: $26.43
Profit 2: $28.83
JDA Software provides demand and supply chain and business process management software for the retail industry and suppliers. It has an estimated annual earnings rate of 50%. JDAS has set itself up in a Flat Base Pattern that is in its fifth week. If JDAS can break above the resistance level of 24 on solid volume we will jump in at $24.03.
Next week, as the market decides which direction it will take from this major support level, we will offer more F.I.T. Stocks to the watch list if the major areas of support hold and the uptrend continues. If the stock market decides to crash through its level of support pull out those investment rules and follow them with no emotions attached.
Happy and Healthy Investing,
Steve Martin
www.fitstocks.com