New TC2000 Scan finds GLB and possible cup with handle break-out $PJC; next post Tuesday night

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I created a scan in TC2000 that  looks for  strong stocks hitting a 100 day high that did not hit a 100 day high the prior day (I want a stock to be just breaking out), that is up significantly from a year ago and that traded an above average number of shares that day. This scan identified 19 stocks, of which PJC is one.

I like the the technicals and fundamentals of PJC. It also has a Composite Rating in IBD=95.  You can access this scan in my TC2000 Club at www.wishingwealthblog.com/club. The scan is also described in my blog’s glossary above. I use the results of my scans as a starting point to identify strong stocks that I must then research for other technical and fundamental attributes. I like to run this scan during the last hour of the trading day (I do not want a stock that breaks out early only to reverse by the end of the day) to find stocks breaking out on above average volume. If I find one I like, I might buy an initial position and place a sell stop below the day’s low. Here are some charts on PJC. This weekly chart indicates a GLB (Green Line Break-out to an all-time high, see Glossary for definition).

The daily chart shows the increased volume on Friday. This might be also be considered a cup with handle break-out.

The weekly chart shows an established RWB rocket pattern and a break-out from a base.

 

The GMI remains at 6 (of 6).

 

GLB: $WLDN

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WLDN continued through its green line top to an all-time high with above average volume on Tuesday. I took an initial position. WLDN has a 99 composite rating from IBD. Note the triple digit earnings increases and that it has already doubled.

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Back from Mark Minervini’s Wonderful Master Trader Program

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I just spent 3 days in Myrtle Beach, South Carolina, at an intensive 3 day workshop for committed stock traders. It was a privilege to spend time with two of the greatest stock traders, Mark Minervini (above) and David Ryan. They taught the attendees what they had learned as they amassed their fortunes in the market. I had read Mark’s book, listed to the right, and was impressed with his trading strategy that draws upon stage analysis and his own brand of stock trading. I had also admired the writings of David Ryan, William O’Neil’s protege, and require all of my students to read his wonderful chapter in Market Wizards.

While I was expecting to learn a lot from these masters, I was not prepared for the compassionate and decent human beings that these two men are. They greeted me and immediately offered to present a lecture (by Skype) to my students. They both are dedicated to educating young people in financial literacy and in how to manage risk in the stock market. And if that wasn’t enough, I was amazed to see how many of the traders came up to me and thanked me for teaching technical analysis to students at a university. The personal qualities of the attendees was far beyond anything I had expected and created a warm and receptive environment for the workshop. As I left the workshop, Mark reiterated that he wanted to begin teaching my students as soon as possible–wow!

The first two days (Saturday and Sunday) we spent almost 12 hours each day listening to Mark and David. We could have been just as easily in a desert rather than a beautiful and fully supportive resort hotel. All were totally focused on the information being presented. They showed over 600 slides that taught everything from how to select stocks, the price patterns that are most profitable, the way to set stops, pyramid up, and close out positions. They gave the best information on the value of cutting losses that I have ever seen. I also got a real feel for the benefits of using IBD’s MarketSmith service. (And no, Mark did not even once try to take advantage of the opportunity to sell any of his other trading books or services–what integrity!) Mark would not leave the training room until people had an opportunity to ask every question they had. I have never witnessed in a prestigious speaker such devotion to educating and serving every attendee.

The third day (Monday) was a newly added feature. We watched Mark and David prepare for the market open, and then observed them and Mark’s associate, Bob Weissman, actually place trades. This experience gave me a unique insight into what it really takes to trade stocks profitably as a business. Monday evening ended the long day with Tony Robbin’s son, Jairek Robbins, conducting a 3-hour session on how to enhance one’s psychology and well being to enable one to handle the stresses and requirements of trading. This was also an invaluable experience. That session ended around 10:00 PM!

I found that Mark has put together a program to enable people to ready themselves for trading successfully. He has put into a 3 day session much of what it took me over 50 years to learn. I may even attend again next year, as many of the other attendees were doing. I am now eager to infuse my curriculum with the new insights I gained and look forward to the day when Mark and David will present a lecture directly to my students. Thank you to Mark, Bob and David and to the attendees, my new stock buddies.

GLB: $BZUN and $CATM; TC2000 work-shop and their new Version 16

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This weekly chart shows that BZUN had a high volume GLB break-out on Friday to an all-time high. BZUN has a 99 RS rating on IBD.  BZUN has more than tripled over the past 250 days.

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CATM also broke out last week. CATM has an IBD Composite rating of 93.

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I attended the free TC2000 work-shop in Virginia on Saturday. The new Version 16 of TC2000 allows trading from charts and includes options. It also allows one to paper trade right off the charts so as to test out various signals and strategies. I was amazed by what is now possible with this powerful software. Check it out!

The GMI is now 3, but it is still on a Green signal.

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Split market with techs showing strength; FFIV Stage 4 decline?

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The market is showing a strange split similar to the one that occurred in early 2008 when the SPY showed a lot more weakness than the QQQ.   This is because the financial stocks in the SPY were cratering while the Nasdaq 100 index, which has no financial stocks, held up better.   We are faced with a similar market. The DIA and SPY are below their 10 week averages but the QQQ remains above its 10 week average.   This divergence will end with the SPY and DIA joining the QQQ in a renewed up-trend, or in the QQQ joining their down-trend.   By my count, the QQQ reached the 22nd day of the current short term up-trend on Friday.   Another show of strength is that some important market leaders,   GOOG, AAPL,   CMG, BIDU, and PCLN, remain in up-trends.   When good earnings can propel a growth stock like GMCR up 16% on Thursday, it does not look like the market is entering a period of bearishness.   I may be completely wrong, but this market looks to me like it has a lot of underlying strength, at least for growth stocks.

So, even though the GMI is now at 2 (reflecting only the strength in the QQQ) and IBD considers the market to be in a correction, I am staying with some long positions in the leading growth stocks and in QLD.   However, a few more days of weakness could cause me to sell out, if a new QQQ short term down-trend   begins. The gridlock in raising the debt limit   is scary stuff, but I rely mainly on the market’s behavior, rather than politics to guide my trading decisions.   While the SPY and DIA are now below their 30 week averages, these averages are still rising and not even close to a Weinstein Stage 4 decline.

Speaking of Stage 4 declines,   I have been watching FFIV for months   trying to find a good place to short it.   The developing Stage 4 pattern is just too perfect for me to ignore.   (I do own a put on FFIV now.)   After breaking out in April 2009 around $25, FFIV steadily climbed until it topped around $145 in January, 2011.   In late January it had a huge volume down week, with far greater weekly volume than any since the up-trend began.   It had another large volume decline in March and then began a rebound that ended in early July.   Note that the 30 week average (red line) is now curving down, and the 10 week average (blue dotted line) is below the 30 week average. This stock looks very sick to me and I bought a longer term put option that will give FFIV time to decline.   If the market continues to weaken, I think this stock will decline a lot. Remember, the bad news tends to come out after a stock’s turn, so I do not look to company news in order to decide whether to short a stock. (Click on this weekly chart to enlarge.) It should not take an experienced technician to see that FFIV’s up-trend has ended and a classic Stage 4 decline has likely begun. I believe FFIV is also showing the ideal shorting pattern that William O’Neil describes in his excellent book on shorting stocks ( book is listed at lower right of this post). On a daily chart, FFIV is very oversold and may be due for a counter-trend bounce within the longer term down-trend.

NOG: RWB rocket stock with possible cup-with-handle break-out

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As my regular readers know, each Monday morning I post a table containing the components of my General Market Indicator (GMI) and my revised GMI-R.   These indicators track short and long trends in the market and keep me on the right side of the trend.   All of the major   traders I respect (Darvas, Livermore, O’Neil) talk about the importance of the trend in the general market indexes in determining their success.   Most stocks rise or fall consistent with the market trend.   So half the battle for profits can be achieved if we track the market averages.   This table shows that the GMI and GMI-R remain at their maximum levels.   The QQQQ and SPY have closed above their critical 10 week averages for 23 straight weeks. This has been a huge up-trend.   When will it end?   No one knows for sure.   It could end when we get to May (“sell in May and go away“) or it might be some major event like the inability of the president and congress to agree on a new federal budget, with a resulting shut down of the federal government.

I am a chicken when it comes to investing and often exit too early from the market. I did so a few weeks ago when I read all of the news about an impending municipal bond default.   This debacle might occur, but probably when we least expect it.   The GMI only tells me the current trend.   It will signal a down-trend only after it has begun.   So, the proper course for me is to remain on the long side, with one eye always on the exits.

The T2108 remains in neutral territory, at 69%.   57% of the Nasdaq 100 stocks closed with their MACD above its signal line, a sign of short term strength.   There were 542 new 52 week highs in my universe of 4,000 stocks on Friday, the most since   685 on January 3rd. The short term up-trend in the QQQQ has now lasted for 58 consecutive days. During that time, the QQQQ has gone up +11.4%, the DIA   +9.5%, and the SPY +11.2%.

If I had simply bought an ultra long index ETF I would have had spectacular returns without the need to buy individual stocks:   QLD +23.9%, TYH +39.9% and TQQQ +37.2%. Only 20% of the Nasdaq 100 stocks rose 20% or more during this period and only 7% rose 30% or more.   So why spend time trying to find the few stocks that can beat these ultra index ETF’s? I have come to this conclusion repeatedly over the past few years. The best strategy may be to slowly buy into one of these ultra long index ETFs when the short term trend turns up and to slowly wade into the inverse ultra ETF’s (QID, TYP, SQQQ) when the trend turns down…..

But I can’t resist looking for promising stocks!   I did a scan of Monday’s IBD 50 list and found 5 stocks that were bouncing off of support: NOG, MELI, COH, EZPW and LYB.   One of them, NOG, may have broken out of a cup-with-handle base on Friday. It closed above its pivot point in the handle (horizontal red line) on above average volume.   According to William O’Neil, if one buys a successful stock emerging from a good base at the perfect time, it rarely declines 8%.   Therefore, if one purchased this stock at the correct pivot point at about $28.15) one would place a protective sell stop (GTC, good-til-canceled) around $25.89. David Ryan, O’Neil’s successful protege, wrote that he would often set a   sell stop even closer to his purchase price.   NOG closed at $28.63 on Friday. If I bought it on Monday, I would probably place a stop at $27.49, just below Friday’s low price.

As the weekly GMMA chart below shows, NOG is also am RWB rocket stock at its all-time high, with all of its short term averages (red) well above their rising long term averages (blue lines).