Date: June 15, 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 CORRECTION!
Right now you should be converting to CASH as the best way to protect yourself if we head further south. If you are not in CASH, monitor your stocks closely for price and volume movement.
The MAJOR INDEXES START ANOTHER ATTEMPT AT A NEW RALLY ON THURSDAY JUNE 12.
Thursday June 12, marked the first day of another new rally attempt. Two weeks ago the major indexes tried to stage a new rally attempt, but the rally FAILED on all three of the major indexes when prices broke below the low of the first rally day. As of Thursday, we are in a new rally watch mode. Now we must wait to see if one of the major indexes will push up on 1.75% higher volume than the previous day's volume, as confirmation that this new rally has strength. This will suggest that major money institutions are getting back involved on the buy side of the market. This volume surge should occur 4-11 days after the first rally day, according to William O'Neil of Investors Business Daily fame. Also remember that if prices break below the first rally day attempt, the rally has failed.
Last week the Major Markets finished with the NASDAQ down -.8%, the S&P lost -.1%, but the DOW gained +.8%. News seemed to be the major catalyst once again to drive the markets up or down. The major correlations are, a rise in Crude Oil makes the markets sell off. When the dollar rises, Crude Oil lowers and the markets tend to move up. This week the dollar had its best showing in three years. When news on the economy front is bullish, the markets rise. This week the FED stated that the risk of a major U.S. slump had eased and the FED will resist taming rising inflation expectations. This news has traders anticipating rate hikes later on this year. Also following the economic news was both retail and pending home sales came in better than expected for the month of MAY. Finally the Consumer Price Index rose .6% for May, which topped analyst's views. However, much of this rise was due to the rising commodity prices of food and energy.
All of this DATA or information could drive one crazy and it is a tough environment to invest in when the market heads up one day on good news and down the next day on bad news. This is why learning to read technical charts becomes so important, as the picture it creates clearly can show us the true price and volume movements of the market or our individual stocks.
This week we must watch for the confirmation day. Tuesday will be the fourth day of the new rally attempt and when we must begin to watch for some type of volume surge in one of the major indexes of 1.75% or higher. If this occurs we can begin to enter into a stock to test out this new market rally. If prices dip below last Thursdays low in any of the major indexes then that rally has failed and we remain in a correction. Let us watch carefully next week the market action.
Let's take a look at the Charts from last week.
NASDAQ
6 Month Chart with Daily Price Bars.
Last Weeks Newsletter Chart
This Weeks:
Last Monday the NASDAQ broke through the support level of its 3 month uptrend and pierced through the low of the NASDAQ's first rally attempt day which was 10 days prior. So this rally attempt is considered a FAILURE. Thursday, June 12, marked the first day of a new rally attempt (white circle) as prices closed above the previous days close. Friday, June 13 marks the second day of the new rally attempt and prices on this day gained heavily, however, volume remained rather light for such a big point move. There would have been much more conviction behind this move if volume would have surged beyond the previous days volume.
This week there are a couple of situations we need to watch closely. First, we need to see whether this new rally will confirm its upward momentum. Day 4 will start on Tuesday of this week and sometime during the week or for the beginning of next week we will want to see prices rally on 1.75% higher volume than the previous day's volume. A second situation we should keep an eye on is whether prices can break through the 200 day moving average which happens to correspond with the previous support line of the upwards trend line. Whenever prices break through a support line, that support line now becomes a new resistance line. Many times prices like to bounce back and test this new line. This new resistance line and the 200 day moving average all converge at roughly the 2500 price level, so this is a major area on concern for this week.
Top 10 Industries:
- Oil and Gas US Explor. and Prod.
- Energy - Other
- Steel Producers
- Chemicals Fertilizers
- Oil and Gas Canadian Explor. and Prod.
- Oil and Gas Drilling
- Metal Prdcts. Distribution
- Machinery General Industrial
- Oil and Gas - Field Services
- Oil and Gas Machinery Equip.
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 |
292.46 |
31% |
5/23/2008 |
$273.22 |
70.03 |
| RRC |
3/30/2008 |
4/2/2008 |
FB |
65.73 |
72.3 |
10% |
5/22/2008 |
$72.30 |
6.57 |
| RIG |
3/23/2008 |
4/4/2008 |
C/H |
145.13 |
159.64 |
10% |
5/21/2008 |
$159.64 |
14.51 |
| SID |
4/6/2008 |
4/8/2008 |
FB |
40.23 |
51.9 |
29% |
5/19/2008 |
$51.90 |
11.67 |
| 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 |
117 |
18% |
5/19/2008 |
$117.00 |
17.77 |
| 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 |
78.56 |
32% |
5/8/2008 |
$73.84 |
19.13 |
| ARD |
4/20/2008 |
4/21/2008 |
U |
44.83 |
53.79 |
20% |
5/21/2008 |
$53.79 |
8.96 |
| FAST |
4/27/2008 |
5/2/2008 |
C/H |
51.43 |
47.83 |
-7% |
5/21/2008 |
$47.83 |
-3.6 |
| CPO |
5/4/2008 |
5/6/2008 |
C/H |
47.33 |
46.07 |
-3% |
5/23/2008 |
$46.07 |
-1.26 |
| SNHY |
5/4/2008 |
5/6/2008 |
C/H |
32.33 |
39.1 |
21% |
5/22/2008 |
$39.10 |
6.77 |
| SBS |
5/4/2008 |
5/5/2008 |
U |
54.63 |
52.53 |
-4% |
|
|
-2.1 |
| WGOV |
5/11/2008 |
5/15/2008 |
C/H |
37.19 |
39.78 |
7% |
|
|
2.59 |
| ABB |
5/4/2008 |
5/14/2008 |
U |
32.43 |
30 |
-7% |
6/11/2008 |
$30.00 |
-2.43 |
| GNA |
4/20/2008 |
5/5/2008 |
C/H |
16.58 |
18.18 |
10% |
|
|
1.6 |
| FLIR |
5/11/2008 |
5/19/2008 |
C/H |
35.73 |
38.52 |
8% |
|
|
2.79 |
| MUR |
5/18/2008 |
5/19/2008 |
U |
93.64 |
90.55 |
-3% |
|
|
-3.09 |
| TITN |
5/18/2008 |
5/19/2008 |
U |
24.65 |
27.9 |
13% |
|
|
3.25 |
| MPWR |
6/1/2008 |
6/5/2008 |
C/H |
26.03 |
24.34 |
-6% |
|
|
-1.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| TOTAL x 100 Shares: |
|
|
|
|
|
|
|
13795 |
** 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. Remember if we head into another big correction, it is best to start turning to cash now. You should be out of all other F.I.T. Stocks at this time as we have either hit our profit targets or the stop loss.
The F.I.T. STOCK PLAN
This week we have 1 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
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!
* All Charts are One year time frames with weekly price bars *
Stock: Morningstar Inc.
Symbol: MORN
Fundamentals: 9.3 out of 10
Industry: Asset Management Sector Strength: 3
Technical Pattern: Cup with Handle Avg. Volume: 204,125
Pivot or Buy Point: $77.13
Stop Loss: $71.74 or 7%
Profit 1: $84.84 or 10%
Profit 2: $92.55 or 20%
Morningstar Inc. provides independent investment research to investors worldwide in areas such as stocks, mutual funds, and personal finance. Besides MORN's strong fundamentals, we really like the Cup with Handle Pattern it has developed. MORN has been forming the Cup part of its base since Dec. 2007. As it started to form the right side of its base signs of major institutional buying started to develop in late April. This is a very positive sign. MORN is now into the 6th week of its Handle period and volume has dried up perfectly suggesting support by institutions unwilling to sell this stock. One other positive aspect is that the 10 week moving average appears to be starting to penetrate through the 40 week moving average. This often represents a change of trend. When MORN breaks above the high of its Handle, let's look to get involved at $77.13, confirm this move with a surge in buy side volume.
** Remember one important aspect with this F.I.T. Stock is that we are in a correction. In addition to the above, we would be stacking the odds in our favor if the Major Indexes were to confirm this new rally. If MORN breaks out before this new rally confirmation be extra careful and monitor the stock very closely. **
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