F.I.T. Stocks Newsletter
Finding High Quality Stocks to Build Healthy Investment Habits.
Date: Oct. 25, 2009
Charts Provided by Bigcharts.com
Fundamental Research provided by Investors Business Daily
Market Health
Uptrend Remains, but Selling Pressure Adds Strain to Major Indexes.
Hello F.I.T. Investors:
The Stock
Market continued its up trending channel and remains, for now, in a
tight and organized channel. The major indexes hit the top of their
resistance lines last week and then promptly began to sell off. Each
of the major indexes added 2 distribution days, meaning volume came in
higher on the sell off than the previous days volume. The more
distribution days that add up in the indexes the more strain it places
on the major indexes. Enough of these distribution days within a short
time period can be enough to awaken the big bad BEAR and begin a
correction. The heavy volume sell offs can be the first sign of a
market beginning to show signs of weakness and ill health. Other
symptoms that may give clues that this up trend is over with, are a
breach of the 50 day moving average and a lower low in the price
chart. If our 50 day line level of support is broken, most likely this
will lead to a new lower low in price, thus breaking the rules of a
nicely organized upwards trending channel.
In the next
week or two, we should expect prices to continue to drop in the major
indexes until they arrive at their magical 50 day moving average
lines. At this point we will need to see how the markets react to
these major areas of support. If Wall Street remains positive about
the earnings that have come out, and the expectations or estimates that
companies have of their earnings and sales going forward, we would
expect these major areas of support to hold and the major indexes to
continue their beautifully built upwards trending channel. If
projections for the future appear more glim, and earnings weren't quite
as good as Wall Street had hoped, we may be heading for trouble as this
latest move up in the market has definitely been guided by earnings.
If the stock market perceives less growth in the future, we may be in
for a correction.
One other
aspect of this stock market to consider is that we have been in a
significant uptrend for the past eight months. Many of our leading
stocks broke out of nice base patterns months ago and have had very
nice profitable runs. There seem to be less base patterns forming and
less leading stocks making any head way once they do break out of
strong chart patterns. This is not to say we may go into an immediate
correction, but because of the longevity of this latest uptrend, and
leading stocks beginning to stall out in price, my intuition says to
tread very lightly and monitor every situation very closely. Prepare
your defense now for great teams our built around a strong defense.
In the stock
market we only have three ways to move: up, down, or sideways. We may
all have our guesses, our intuitions, our special and top secret
indicators of what the market will do next, but the fact is, is that
the stock market itself is the only true leading indicator, the rest of
us just make educated guesses. This is why, as healthy investors, and
to build healthy investment habits, we monitor the pulse of the stock
market everyday so we at least stay in harmony with her movements.
Well even
with this small bit of down turn in the stock market the F.I.T. Stocks
portfolio has held up well. BCSI locked in to its second profit target
of 20% and NFLX and VPRT both had a very strong showing on Friday even
though the markets were heading south. NFLX was up over $5 on the day
and VPRT is up 14%. To the downside was BMC, TSRA, and IAAC which all
have declined 2%. The key for all of these stocks is to monitor their
price and volume movements for signs of weakness or strength.
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 all begin a slight slide: NASDAQ loses -0.1%, S&P declines -0.7% and the DOW falls -0.2%.
Obama orders slash of Exec. pay.
YHOO, AMZN, EBAY, and NFLX all report solid earnings.
PC world heats up with MSFT and AAPL beating views.
Home resale at 2 year high.
STOCK MARKET INDEX CHARTS
S&P 500: 6 Month Chart with Daily Price Bars
The S&P
continues between its two channel lines. The patterns has remained
tight and organized and until one of these trend lines is penetrated
the up trend continues. In the Williams % R indicator we can see the
blue line is heading into oversold territory, this occurs when the blue
line passes through the -80 level. At this time we will see if the
blue line will reverse and head higher, and if the support line of the
bottom trend channel will remain as support at the 50 day moving
average line. The 50 day moving average line will be the key level for
the major indexes to hold if this market is to remain healthy.
NASDAQ: 6 Month Chart with Daily Price Bars.
The NASDAQ
stills remains within a nice tight and organized upwards trending
channel. The one difference between the NASDAQ and the S&P is that
it appears the NASDAQ still has a bit of room to go before it hits the
upwards trending channel line. This may or may not occur, it just
appears as though their is a little more space above. Notice the white
arrows in the volume bars pointing to distribution days in the NASDAQ.
In the coming weeks we need to see if the 50 day moving average line or
the bottom trend line to the channel will hold support. If it does
not, then the trend is broken and the bears win. If it does, then the
bulls go about business as usual.
TOP TEN INDUSTRIES
-
- Media NewspapersPaper and Paper Products
- Mining and Gems
- Textile Mill/Household
- Retail-Mail Order and Delivery
- Paper and Paper products
- Machinery-Construction
- Leisure Services
- Banks-Foreign
- Household-Housewares
- Retail-Wholesale Jewlery
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 |
43.73 |
6% |
|
|
2.6 |
|
| 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 |
83.45 |
-7% |
10/23/2009 |
$83.45 |
-6.28 |
|
| 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 |
40.51 |
-2% |
|
|
-0.62 |
|
| BMC |
8/16/2009 |
9/8/2009 |
C/H |
35.73 |
37.16 |
4% |
|
|
1.43 |
|
| VPRT |
7/24/2009 |
9/17/2009 |
F/B |
45.93 |
52.17 |
14% |
|
|
6.24 |
|
| BCSI |
9/13/2009 |
9/23/2009 |
U |
21.23 |
25.47 |
20% |
10/21/2009 |
$24.47 |
4.24 |
|
| CTRP |
9/20/2009 |
9/23/2009 |
C/H |
56.03 |
60.99 |
9% |
|
|
4.96 |
|
| GMCR |
9/27/2009 |
9/28/2009 |
C/H |
71.53 |
74.64 |
4% |
|
|
3.11 |
|
| TSRA |
9/27/2009 |
10/7/2009 |
C/H |
29.43 |
28.82 |
-2% |
|
|
-0.61 |
|
| IAAC |
10/11/2009 |
10/12/2009 |
U |
19.03 |
18.66 |
-2% |
|
|
-0.37 |
|
| JDAS |
10/11/2009 |
10/14/2009 |
U |
24.03 |
22.35 |
-7% |
10/20/2009 |
$22.35 |
-1.68 |
|
| NFLX |
9/13/2009 |
10/15/2009 |
C/H |
47.83 |
54.89 |
15% |
|
|
7.06 |
|
| ALXN |
10/18/2009 |
10/22/2009 |
U |
47.13 |
47.97 |
2% |
|
|
0.84 |
|
| |
|
|
|
|
|
|
|
|
|
|
| TOTAL x 100 Shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9165 |
|
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: Aeropostale POSSIBLE SECOND BUY POINT FORMING
Symbol: ARO
- F - Fundamentals - 9.9 out of 10 Earnings: +84%
- I - Industry - Retail Clothing and Shoes Avg. Volume: 2,614,200
- T - Technical Charts - Flat Base
Pivot or Buy Point: $45.03
Stop Loss: $41.88
Profit 1: $49.53
Profit 2: $54.03
ARO appears
to be creating a Flat Base pattern. This is a fairly common pattern to
form after a stock has broken out of a Cup wtih Handle pattern such as
ARO did when we listed it in out June 21, 2009 newsletter. Now ARO may
offer us a second buy point, or a first buy point if you missed out on
the original Cup with Handle pattern. ARO now rest in the sixth week
of its new Flat Base and volume had been light even when the market has
registered distribution days. If the market dips and then takes
another bounce ARO may offer us the perfect buy point at $45.03.
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