Thursday, April 30, 2009

Do multiple ETFs over their 200-DMA signify something more than a bear market rally?

Question of the day: Is it really just a bear market rally when we are starting to see so many ETFs moving above their 200-day moving average?

Many analysts consider a stock moving above its 200-DMA to be a buy signal. Furthermore, it is also said that a bull market can be defined as one where major market averages are trending up above their 200-DMA.

Through most of this bear market, we haven't seen many stocks or ETFs anywhere close to their 200-DMA. Now, that seems to be changing.

In my highly unscientific sample, I'm seeing a number of sector ETFs as well as the NASDAQ 100 have moved above their 200-DMA recently. Included among the ETFs I am tracking are the following:

  • Technology iShares (IYW)
  • Network iShares (IGN)
  • Semiconductor iShares (IGW)
  • Consumer Discretionary iShares (IYC)
Comparable ETFs from the SPDR family of funds are essentially doing equally well.

In addition, the NASDAQ Composite is a hair away from crossing over its 200-DMA and the Telecom iShares (IYZ), though it didn't quite hold on after crossing above its 200-DMA today, seems ready to make the move soon. Materials (IYM) and Industrials ETFs (IYJ) are also only a few points away their 200-DMA.

Looking farther afield, the iShares FTSE/Xinhua China ETF (FXI) crossed above and now seems to be consolidating at a level above its 200-DMA.

Other major market averages such as the Russell 2000 are only a few points away from their 200-DMA. Will they be rejected or will they power through and confirm something stronger than a bear market rally is underway?

I'm not much at making those kinds of predictions but I am becoming more encouraged with the fact that we now have some leadership that might be able to pull this market upward.

Disclosure: small position in IGN



Thursday Trend Leaders, Swing Signals and Trend Busters for April 30, 2009

This is a quick post to announce that Thursday's Trend Leaders, Swing Signals and Trend Busters are now available at Alert HQ. All are based on daily data.

Today we have the following:





Wednesday, April 29, 2009

Tech - looking for a bottom in the GDP data

The Bureau of Economic Analysis today released the advanced report on GDP for the first quarter on 2009. The headline number came in at -6.1%, significantly worse than expected. The stock market, however, rallied on the news.

Two factors were looked at as positives. Consumer spending was up a surprising 2.2% where another drop had been expected and inventories saw a large decline. With spending up and inventories down, investors are hoping that manufacturing can finally begin to ramp up again.

What about the tech sector?

The GDP data is presented in a set of tables and a few of them break out the numbers by sector. The chart below is taken from one of these tables. Note that the Information processing equipment and software category is the summary line for the whole table.

Extract from Table 2.--Contributions to Percent Change in Real Gross Domestic Product
[Quarters seasonally adjusted at annual rates]


2008:Q12008:Q22008:Q32008:Q42009:Q1
Information processing equipment and software0.270.30-0.16-0.92-0.69
Computers and peripheral equipment
0.100.08-0.16-0.28-0.10
Software0.160.04-0.08-0.23-0.28
Other0.000.180.08-0.42-0.31

Based on the data in this table it does appear that tech just might be out of the woods. Here's why:
  • 2008:Q3 was bad and 2008:Q4 was much worse. Q4 was so bad, in fact, that at this point it does look like the bottom.
  • At the summary level, the 2009:Q1 data does show an improvement.
  • At the sub-sector level, two out three are showing marked improvement, especially Computers and peripheral equipment; ie, hardware looks to be on the mend.
  • The Software sub-sector shows another decline but it's a small decline, much less than that seen in the prior quarter.
It is often said that one data point doesn't make a trend. Today's data, however, is at least a step in the right direction and it certainly fits in with the "less bad" theme that has been driving stocks ever upward over the last couple of months.

Let's hope this positive momentum can continue and that these numbers aren't revised back down when the updated GDP report is released.



Tuesday, April 28, 2009

AlphaDEX ETFs - performing as promised?

I mentioned last week that I was seeing a group of AlphaDEX ETFs on the TradeRadar Trend Leaders list. I was not at all familiar with the name but since they were performing so well I felt they deserved a look. It turns out they are managed by First Trust and they are intended to provide superior performance by taking fundamentals into account when selecting the stocks that make up each style or sector portfolio.

Index Universe first wrote about these ETFs way back in 2007 (here's the link from Seeking Alpha).

Here's how Index Universe described the mechanics:

The methodology for enhancing those indexes is transparent, but complicated. The stocks in each index are divided into growth, core and value buckets. The growth stocks are evaluated by five metrics and given a score:
  • three-, six- and 12-month price appreciation (i.e., momentum)
  • one-year sales growth
  • sales-to-price ratio.
The value stocks are evaluated by three metrics and given a score:
  • book value-to-price
  • cash flow-to-price
  • return-on-assets.
The core stocks are evaluated on both metrics and the higher of the two scores is taken.

So the questions is, has First Trust succeeded in doing better than a standard cap-weighted index fund?

I took a selection of AlphaDEX funds (the ones that appeared on the Trend Leaders list this past weekend) and compared them with the corresponding SPDR ETFs managed by State Street Global Advisors.

Among the ones we looked at, it does appear that many of the AlphaDEX ETFs do indeed provide superior performance. The following charts show the gains since the March low for each of the ETFs with the AlphaDEX ETFs in blue and the SPDR ETFs in red. Click on any chart to view a larger image.

FIRST TRUST LARGE CAP VALUE OPPORTUNITIES ALPHADEX FUND (FTA)
compared to SPDR Dow Jones Large Cap Value ETF (ELV)


FIRST TRUST SMALL CAP CORE ALPHADEX FUND (FYX)
compared to SPDR Dow Jones Small Cap ETF (DSC)


FIRST TRUST MATERIALS ALPHADEX FUND (FXZ)
compared to Materials Select Sector SPDR (XLB)


FIRST TRUST CONSUMER STAPLES ALPHADEX FUND (FXG)
compared to Consumer Staples Select Sector SPDR (XLP)


FIRST TRUST CONSUMER DISCRETIONARY ALPHADEX FUND (FXD)
compared to Consumer Discretionary Select Sector SPDR (XLY)


FIRST TRUST INDUSTRIALS/PRODUCER DURABLES ALPHADEX FUND (FXR)
compared to Industrial Select Sector SPDR (XLI)


FIRST TRUST ENERGY ALPHADEX FUND (FXN)
compared to Energy Select Sector SPDR (XLE)


FIRST TRUST FINANCIALS ALPHADEX FUND (FXO)
compared to Financial Select Sector SPDR (XLF)


Conclusion --

Some of these ETFs do provide quite a margin of superior performance compared to the Select Sector SPDR ETFs and then some of them are pretty much just equivalent to the SPDRs. Judging by this sample then, it would appear that you can't really go wrong with the AlphaDEX family of ETFs in terms of returns though expenses tend to be higher than the SPDRs and volume is quite a bit lower.

The methodology does seem to add value when the stocks in the particular sector are showing the characteristics that their algorithm emphasizes. At the moment that seems to be consumer discretionary, consumer staples, materials and large-cap value. The benefit is less clear in the small cap, industrials, energy and financial sectors.

Overall, however, the AlphaDEX ETFs are worth consideration.

For more info on these ETFs: visit the First Trust site



Tuesday Trend Leaders, Swing Signals and Trend Busters for April 28, 2009

This is a quick post to announce that Tuesday's Trend Leaders, Swing Signals and Trend Busters are now available at Alert HQ. All are based on daily data.

Today we have the following:

We have now implemented a sorting feature on these web pages so it is easier to slice and dice these large lists of stocks and ETFs. Just click on a column heading to sort. Check it out!

Explanations of how these lists are derived are provided on their respective pages.



Monday, April 27, 2009

Trading leveraged ETFs? Stops are essential. Here's how to do it right.

Trading leveraged ETFs, ProShares or Direxion ETFs, for example, comes with a significant amount of risk, especially if the market begins moving against you.

This is why advisers recommend using a stop loss order. Often referred to simply as a stop, it directs your brokerage to automatically sell a stock or ETF if it falls to a pre-determined level. This is intended to limit an investor's loss on an investment.

There are essentially two kinds of stops:

  1. A hard stop that causes the stock to be sold if it hits a particular price.
  2. A trailing stop that causes a stock to be sold if it falls a particular percentage from the most recent high
With leveraged ETFs it can sometimes be tricky setting stops. An investor must evaluate the underlying index and translate that evaluation into an appropriate stop for the leveraged ETF. This is necessary because the price action of the ETF is totally dependent on the performance of the underlying index.

Some ETFs are leveraged 2X, such as the ProShares ETFs. Others are leveraged 3X like the Direxion ETFs. Moves in the underlying index will tend to be exaggerated in the leveraged ETF so it is very important to understand how the leveraged ETFs will react.

Further complicating matters, leveraged ETFs generally track their benchmarks, or underlying indexes, accurately on a daily basis. The companies that offer these ETFs make no claims that they would do so over time periods greater than one day. Nevertheless, many investors do hold leveraged ETFs over longer periods of time and the results can sometimes be unexpectedly extreme.

An example --

An investor may be comfortable taking a 5% loss in an underlying index ETF that tracks the Russell 2000 like IWM, for example. The 5% decline may take the ETF below a support level or trend line and the investor feels that would be a signal to exit the position.

In the unlikely event that the 5% decline happened in one day, what would happen to the corresponding leveraged ETFs? If the investor was holding the ProShares Ultra Russell 2000 (UWM), that 5% loss would become a 10% loss. If the investor instead held the Direxion Small Cap Bull 3x Shares (TNA), the loss would have been further magnified into a 15% loss. Ouch!

Due to the way leveraged ETFs work, a 5% decline over several days would have left the investor worse off than if the decline had happened all in one day.

This implies that investors holding leveraged ETFs may want to evaluate their stops on a daily basis. For those who are day trading the Direxion 3X ETFs, this should be a natural process.

To make it easy to run some "what if" scenarios on leveraged ETFs I have created a simple stop calculator. You can enter the current price of an underlying index or ETF and the current price of 2X or 3X leveraged ETFs. Play around with changes in the price of the underlying index or ETF and see what happens to the leveraged ETFs. Trust me, it can be eye-opening.

Conclusion --

Leveraged ETFs are great for hedging or for attempting to juice up a portfolio; however, they should come with a "Handle with Care" sticker. The most important way to be careful with these ETFs is to limit the damage they can do if the trade goes against you. Carefully consider your use of stops and employ the TradeRadar Stop Calculator to help you determine the best way to protect your portfolio.

Disclosure: none



Sunday, April 26, 2009

Weekly Review - tech leads the way to new highs, will others follow?

Stocks weakened a bit this week but for the most part held their gains. There were fractional losses on all the major indexes except for the NASDAQ which managed to advance 1.3% and has now achieved seven straight weeks of gains.

Earnings season, of course, is in full swing and things are as confusing as I've ever seen them. One news report will describe how a company saw a huge decline in earnings and revenue and another news report will focus on how the same company beat expectations. Overall, investors are still in the "glass is half full", "things could be worse" mode and are grateful that the majority of earnings surprises have been positive.

This has especially been true among tech stocks; hence, the strength in the NASDAQ. Among the notable companies with well-received earnings this week we had Apple, Microsoft, eBay and Amazon.

On the other hand, financial stocks, while turning in earnings that are better than most expected, are still facing headwinds from ever-expanding loan loss reserves and the soon to be revealed bank stress tests. In the meantime, concerns about commercial real estate keep rising and increasing the worries about the effects that will have regional banks. (Hard to understand why many REITs keeping rising but that's another story)

In terms of economic reports, investors have become blasé about weekly initial jobless claims staying stubbornly above 600,000. The fact that the numbers are steady rather than rapidly increasing is providing hope for the labor market. Existing home sales were down again but new sales beat expectations. Durable goods orders fell again but only by 0.8% whereas economists were expecting a 1.5% decline. Overall, there was nothing horrible enough to cause investors to abandon stocks and snuff out the current rally.

As always, I want to present our usual two charts to demonstrate the state of the overall stock market.

TradeRadar Alert HQ Stock Market Statistics --

Each week our Alert HQ process scans almost 7300 stocks and ETFs and records their technical characteristics. The following charts are based on daily data and presents the state of some of our technical indicators.

This first chart presents the moving average analysis for the entire market and contrasts it with the performance of the S&P 500 SPDR (SPY). When the number of stocks trading above their 50-day moving average (the yellow line) crosses the line that tracks the number of stocks whose 20-day moving average is above their 50-day moving average (the magenta line) there is an expectation that you will get a change in the trend of the S&P 500.

SPY versus the market, Moving Average Analysis, 04-24-2009
This chart shows that the strength in market is moderating only slightly. We've had a few stocks fall below their 50-day moving average but for the most part, stocks are still moving up, just more slowly.

This next chart is based on Aroon Analysis and compares our trending statistics to the performance of SPY. We use Aroon to measure whether stocks are in strong up-trends or down-trends. The number of stocks in down-trends is indicated by the red line and the number of stocks in up-trends is indicated by the yellow line.

SPY versus the market, Trend Analysis, 04-24-2009
Here we see a very slow continuation of last week's moves: a few more stocks in down-trends and a few less stocks in up-trends. Strength is moderating on this chart, too, but the move is nowhere near alarming yet.

Conclusion --

For those who feel the bottom is in and we are in a new bull market, there is so far nothing in the charts to dispute that. On the other hand, for those who think this is just a bear market rally, there is nothing in the charts to dispute that either.

When looking at major market indexes, none of them have gotten close to crossing above their 200-day moving averages. Bears point to this as evidence we are still in a bear market.

I take some comfort, however, in the fact that I am starting to see a number of individual stocks who are close to or are already above their 200-day moving average. A couple of months ago, that would have been a true rarity so it must be interpreted as a positive to see some leadership emerge (some of these are listed on our Trend Leaders page).

The big story this coming week is still earnings but there is also a decent selection of economic reports coming up including: Consumer Confidence, CaseShiller Home Price Index, Advance GDP for the first quarter, the note of the last FOMC meeting, crude inventories, initial jobless claims, personal income, personal spending, Chicago PMI, factory orders, ISM Index and auto and truck sales. Some of these are important but I have a hard time thinking any of them could cause a real market rout.

Last week I wondered whether we would see the return of fundamentals as a driving force in the market. It does seem as if that is happening as earnings are indeed turning out to be decent enough to keep the market pretty close to its recent highs. As long as the financials don't throw us a curve, it seems the possibility of a retest of the March lows may be receding. Let's keep our fingers crossed and our stops tight.



Saturday, April 25, 2009

Swing Signals and Trend Busters for April 24, 2009

This post is to announce that our weekend batch of new swing trading signals is available at the TradeRadar Alert HQ Swing Signals page.

Our system looks for those stocks and ETFs that have exceeded their upper or lower Bollinger Bands and then have moved back inside the Bollinger Band envelope by a certain amount. Our interpretation is that there is a reversal underway and a short-term trading opportunity has presented itself.

Today we have a total of 68 swing trading signals or which 43 are BUYs and 25 are SELLs.

Trend Busters, too --

We have also posted our weekend list of Trend Busters. These are stocks or ETFs who are breaking out above downward sloping trend lines or are breaking down below upward sloping trend lines.

We have 371 Trend Buster signals based on daily data of which 31 are BUY signals and the great majority are SELL signals.

We also have 940 Trend Buster signals based on weekly data. In this case, things are reversed: 894 of them are BUY signals.

To see today's lists you can check out the TradeRadar Swing Signals page. All 68 stocks are listed, plus we provide a free download in the form of a CSV text file which can be easily opened in Excel or any text editor. In addition to the signal and the stock symbol, we also provide some basic fundamental data to help you select the stocks that are of most interest to you.

On the Trend Busters page we list all the signals based on daily data. You can also download all the signals based on either daily or weekly data.

For a more detailed explanation of how the system works, click on this link and this link.



Free stock alerts, Trend Leaders, Bollinger Band Breakouts and Cash Flow Kings for April 24, 2009

This post is to announce that the latest list of free stock alerts is up and available at Alert HQ. Each week we scan about 7300 stocks and ETFs looking for fresh BUY and SELL signals. We apply a combination of proprietary and standard technical analysis techniques to identify those stocks that are beginning to move. Our goal is to identify stocks or ETFs that are undergoing reversals, either to the upside or to the downside.

In addition to alerts, we also have our lists of Trend Leaders, a collection of stocks in strong up-trends, Cash Flow Kings whose free cash flow yield is 25% or greater and Bollinger Band Breakouts, stocks or ETFs that have moved at least 3% above their upper Bollinger Band or at least 3% below their lower Bollinger Band. These lists are all available at Alert HQ.

Here is what we have this week --

Well, the market wasn't able to make it seven straight weekly gains in row. As a result, the signals based on daily data are weakening while the signals based on weekly data are still in mode where they are catching up in terms of bullishness.

Here is the detailed breakdown for Alert HQ for this week:

  • based on daily data, we have 11 Alert HQ BUY signals and 35 SELL signals.
  • based on weekly data, we have 237 Alert HQ BUY signals and 3 SELL signals.
  • based on daily data, we have 874 Trend Leaders, a decline from last week.
  • based on daily data, we have 274 Bollinger Band Breakouts but we also have 408 Breakouts based on weekly data. Bullish breakouts dominate.
  • finally, we have 1088 Cash Flow Kings, exactly the same number as last week.
Visit Alert HQ and download your free lists of stock alerts. The alerts based on weekly data show those stocks that have exhibited some good follow-through after a recent trend reversal. If you want to be early in identifying the newest trend reversals, the lists based on daily data are for you. No matter which preference you have, there are bound to be a few stocks you will want to add to your watch list.

Don't forget to view the free lists of Trend Leaders, Bollinger Band Breakouts and Cash Flow Kings, also at Alert HQ. If you're a momentum trader, the TrendLeaders list is a good place to go shopping. If you have no faith in technical analysis, the Cash Flow Kings may be just what you are looking for.



Thursday, April 23, 2009

Introducing TrendBusters - who's breaking their trend line now?

I've been working on a new feature at Alert HQ. It's called TrendBusters. Here how it works.

Building on the functionality we use to produce all the other signals we offer at Alert HQ we are able to scan over 7200 stocks and ETFs and, in this case, build classic trendlines.

When testing a stock for a BUY signal, we connect the daily highs to generate a trendline and test to see whether the latest price is 5% higher than the trend line. When testing a stock for a SELL signal, we connect the daily lows to generate a trendline and test to see whether the latest price is 5% lower than the trend line.

Crossing the trendlines implies a reversal; hence, the trend has been broken; hence, TrendBusters.

The table below presents the results of our first shot at generating a list of TrendBusters. Almost all of them are SELL signals. This is looking like an effect of almost every stock in the market rallying from the March 9 low. Many of the stocks rocketed higher and established fairly steep trendlines. Now, with the market's rally slowing down, some of these stocks are beginning to fall below their trendlines.

SymbolNameSignalPriceMarketCap
ABCOThe Advisory Board CompanySELL16.48286,900,000
ACIWACI Worldwide, Inc.SELL17.56682,900,000
ATCCYCLE COUNTRY ACCESSORIES CORP.SELL0.251,700,000
BELFBBel Fuse Inc.SELL14183,300,000
BHLBBerkshire Hills Bancorp, Inc.SELL22.52322,200,000
BRSBRISTOW GROUP, INC.SELL22.16684,800,000
BWINBBaldwin & Lyons, Inc.SELL18.54311,300,000
CBCHUBB CORPORATIONSELL40.461,486,500,0000
CBUCOMMUNITY BANK SYSTEMSELL17.43638,400,000
CFBKCentral Federal CorporationSELL2.7113,300,000
CMCSAComcast CorporationSELL13.614,171,200,0000
CNMDCONMED CorporationSELL12.99477,300,000
CPOCORN PRODUCTS INTL., INC.SELL20.92174,800,0000
CRFNCrescent Financial CorporationSELL3.48536,100,000
CSFLCenterstate Banks of Florida, Inc.SELL11.02157,900,000
CXWCORRECTIONS CORP. OF AMERSELL13.1183,300,0000
CZNCCitizens & Northern CorpSELL18.45190,700,000
DCGNdeCODE genetics, Inc.BUY0.439,300,000
DGIIDigi International Inc.SELL7.26197,400,000
DSWDSW, INC CLASS ASELL9.73488,200,000
DTEDTE ENERGY COMPANYSELL27.93474,100,0000
ENHENDURANCE SPECIALTY HOLDINGS LTD.SELL25156,700,0000
ENWVEndwave CorporationSELL1.871517,900,000
ENZENZO BIOCHEM, INC.SELL3.99167,900,000
FBNCFirst BancorpSELL11.37199,400,000
FBSSFauquier Bankshares, Inc.SELL10.840,200,000
FCFFIRST COMMONWEALTH FNCL.SELL9.14894,800,000
FRMEFirst Merchants CorporationSELL11.96270,200,000
FTGXFibernet Telecom Group, Inc.SELL10.039984,200,000
FULTFulton Financial CorporationSELL6.67133,900,0000
FXCBFox Chase Bancorp, Inc.SELL9.18137,700,000
GLGGLG PARTNERS, INCSELL2.38638,900,000
GVPGSE SYSTEMS, INC.SELL5.392,400,000
HRAYHurray! Holding Co., Ltd.SELL1.3730,700,000
HSJHEALTH CARE SELECT SECTOR INDEX ARN DUE JUNE 02, 2009SELL7.22N/A
ISMSLM CORPORATIONSELL8.19N/A
ISTSPDR S&P INTERNATIONAL TELECOMMUNICATIONS SECTORSELL18.1604N/A
JCDAJacada Ltd.SELL2.5847,200,000
MBFIMB Financial Inc.SELL14.52590,400,000
MBHMBF HEALTHCARE ACQUISITION CORP.SELL0217,500,000
MCBCMacatawa Bank CorporationSELL3.0666,600,000
MDTMEDTRONIC, INC.SELL29.723,615,300,0000
MNRTAMonmouth Real Estate Investment CorporationSELL6.09156,300,000
MOSYMoSys, Inc.SELL1.7457,400,000
MSSSELECT 10 INDEX SRN DUE MARCH 08, 2012SELL3.91N/A
MTDMETTLER-TOLEDO INTLSELL54.47198,200,0000
MTRMESA ROYALTY TRUSTSELL2751,400,000
NEWPNewport CorporationSELL4.73180,800,000
NOVNNoven Pharmaceuticals, Inc.SELL9.66249,600,000
NPBCNational Penn Bancshares, Inc.SELL8.56809,700,000
NTENAM TAI ELECTRONICS, INCSELL3.93N/A
NWLINational Western Life Insurance CompanySELL116.8548,100,0000
OCFCOceanFirst Financial Corp.SELL10.72154,600,000
OLNOLIN CORP.SELL13.56123,600,0000
PCOS&P 100 INDEX PPN DUE APRIL 29, 2010SELL9.28N/A
PEGPUBLIC SERVICE ENTERPRISE GROUP INCORPORATEDSELL28.331,494,700,0000
PFSPROVIDENT FINANCIAL SERVICES, INC.SELL10701,600,000
PKIPERKINELMER, INC.SELL13.06163,100,0000
PONEProtection One, Inc.SELL3.22106,600,000
PRAPROASSURANCE CORPORATION (HOLDING COMPANY) 4SELL45.93162,400,0000
PRFHPowerShares FTSE RAFI Health Care Sector PortfolioSELL35.85N/A
PROJDeltek, Inc.SELL4.05192,300,000
PTHPOWERSHARES DYNAMIC HEALTHCARE SECTOR PORTFOLIOSELL17.31N/A
RMCFRocky Mountain Chocolate Factory, Inc.SELL5.835,900,000
RNTAARON RENTS, INC.SELL0161,100,0000
ROCMRochester Medical CorporationSELL10.83142,900,000
RTSSELECT 10 INDEX SRN DUE NOVEMBER 08, 2011SELL4.15N/A
SALSALISBURY BANCORP, INC.SELL22.438,600,000
SJWSJW CORPORATIONSELL24.42472,900,000
SLESARA LEE CORPORATIONSELL8.25599,600,0000
SNVSYNOVUS FINANCIAL CORP.SELL3.26170,500,0000
STESTERIS CORPORATIONSELL22.95150,900,0000
TECHTechne CorporationSELL51.7120,700,00000
TMKTORCHMARK CORPORATIONSELL26.28272,600,0000
TRIBTrinity Biotech plcSELL1.5939,300,000
TRSTTrustCo Bank Corp NYSELL6.14534,900,000
TWBTWEEN BRANDS, INC.SELL2.36,700,0000
UAHCUnited American Healthcare CorporationBUY1.641,300,0000
UILUIL HOLDINGS CORPORATIONSELL22.26592,100,000
UVVUNIVERSAL CORPORATIONSELL30.27799,800,000
VIAPVIA Pharmaceuticals, Inc.SELL0.173,400,000
VIRLVirage Logic CorporationSELL2.8768,500,000
VSCIVision-Sciences, Inc.SELL1.2347,800,000
WCNWASTE CONNECTIONS, INC.SELL25.59215,100,0000
WFDWestfield Financial, Inc.SELL8.8302,200,000
WRWESTERN ENERGY INC.SELL17.19193,500,0000
WSBCWesBanco, Inc.SELL19.88632,100,000
WTBAWest BancorporationSELL7.5513,900,0000
WTNYWhitney Holding CorporationSELL12.21100,900,0000

Since this is the first TrendBusters list, we pulled in all the reversals that occurred within the last couple of weeks or so. In future lists we'll tighten up the time frame so we won't see so many repeats on the list.

Disclosure: none



Thursday TrendLeaders and Swing Signals, April 23, 2009

This is a quick post to announce that Thursday's Swing Signals and TrendLeaders are now available at Alert HQ.

Today we have 64 Swing Trading Signals. There are 20 BUY signals and 44 SELL signals.

We also have a new list of TrendLeaders, 738 in total. No surprise that Apple is on top of this list.

Looking at our Swing Signals, the SELL signals are outnumbering the BUY signals. And the TrendLeaders list seems to be shrinking little by little each time we run it. Stocks seem to be entering a bit of a weakening phase. Is it time to get worried?

Please check out our latest stock market data at the TrendLeaders page and the Swing Signals page. You will also be able to download the data in a CSV format file that can be opened in Excel. Of course, it's all still free.



Wednesday, April 22, 2009

More cash, less debt = stock market gains?

Today there were a couple of posts about how tech stocks are currently especially attractive because they hold plenty of cash and tend to have little debt. Paul Kedrosky initially caught my eye with his post "Tech Cash is King" which in turn pointed me to a story on Bloomberg by Eric Martin.

I ran a screen tonight that looked at both cash and debt. Specifically, I screened for a Price-to-Cash ratio under three, a Debt-to-Equity ratio under three and a Market Cap greater than $2.5 million. Based on these criteria, I obtained a list of 136 stocks.

Judging from our list, it is absolutely true that many tech stocks do seem to have lots of cash and little debt. What also became apparent as I went through the list is that there are also a lot of pharmaceutical companies that meet these criteria. Below is a shortened list that should give you a general flavor of this screen's result:

SymbolNamePricePEPrice To SalesPrice To BookDebt To EquityCash
ADPTAdaptec, Inc.$2.9050.892.330.81No Debt$371,210,000
AIRVAirvana,Inc.$5.8119.112.632.24No Debt$228,370,000
BBNDBigBand Networks, Inc.$5.9941.382.12.8No Debt$174,630,000
BMRNBioMarin Pharmaceutical Inc.$12.4042.984.274.581.7976$559,970,000
CBSTCubist Pharmaceuticals, Inc.$16.396.842.323.220.9616$409,020,000
CCMPCabot Microelectronics Corporation$27.1524.381.871.450.005$223,100,000
CNCCENTENE CORPORATION$19.3610.480.261.690.5279$480,390,000
COHRCoherent, Inc.$18.35120.330.770.77No Debt$199,880,000
CRDNCeradyne, Inc.$19.634.880.740.80.1927$221,420,000
CRSCARPENTER TECHNOLOGY CORP$18.023.650.420.990.3583$296,700,000
CYMICymer, Inc.$28.1521.511.691.5No Debt$283,290,000
DELLDell Inc.$10.638.720.354.860.4444$9,092,000,000
DRIVDigital River, Inc.$33.4422.453.272.030.0146$500,330,000
EHTHeHealth, Inc.$16.8929.783.622.63No Debt$150,630,000
EIXEDISON INTERNATIONAL$27.737.660.650.971.1249$4,250,000,000
ELNKEarthLink, Inc.$7.234.250.831.760.5769$486,560,000
ENDPEndo Pharmaceuticals Holdings Inc.$17.898.61.691.880.3296$782,190,000
ENEREnergy Conversion Devices, Inc.$16.3915.372.051.070.5017$433,770,000
ESGREnstar Group Limited$71.4011.0718.581.510.6364$3,144,600,000
FAROFARO Technologies, Inc.$15.6518.731.251.230.0013$105,460,000
FORRForrester Research, Inc.$20.9116.141.911.52No Debt$213,430,000
HLITHarmonic Inc.$6.819.911.741.53No Debt$327,160,000
HLTHHLTH Corporation$11.544.423.062.561.417$630,220,000
HSHEALTHSPRING, INC.$9.574.510.250.70.314$285,500,000
HUGHHughes Communications Inc$17.2137.250.331.041.7102$203,820,000
INFAInformatica Corporation$13.9024.372.723.460.6209$460,930,000
IPXLImpax Laboratories, Inc.$5.5417.51.552.010.0376$119,980,000
ITGINVESTMENT TECHNOLOGY GRP$21.418.351.251.20.12$352,960,000
LDKLDK SOLAR CO., LTD$7.555.920.581.10.6884$338,910,000
LXKLEXMARK INTERNATIONAL INC$17.956.80.311.750.7988$973,300,000
MIRMIRANT CORPORATION$13.362.230.640.550.6991$2,035,000,000
MKSIMKS Instruments, Inc.$17.0727.21.230.860.0005$278,870,000
MLNXMellanox Technologies, Ltd.$10.2313.412.71.360.0041$181,010,000
MOHMOLINA HEALTHCARE, INC.$20.539.320.181.10.3917$577,030,000
MRXMEDICIS PHARMACEUTICAL$13.2173.971.451.240.2805$343,880,000
NCRNCR CORPORATION$9.817.530.33.680.0159$711,000,000
NIHDNII Holdings, Inc.$14.337.340.611.461.2274$1,325,250,000
NTAPNetApp, Inc.$18.8460.11.653.890.8282$2,460,870,000
NTGRNETGEAR, Inc.$12.5723.290.551.04No Debt$203,010,000
NVRNVR, INC.$504.0028.340.741.950.1531$1,147,640,000
OMCLOmnicell, Inc.$8.7623.491.121.21No Debt$120,440,000
ORBORBITAL SCIENCES CORPORATION$15.1113.630.681.750.3152$328,310,000
SAYSATYAM COMPUTER SERVICES ADR$1.891.610.320.380.0102$1,147,400,000
SEPRSepracor Inc.$13.503.221.222.220.2093$691,630,000
SIGMSigma Designs, Inc.$12.2712.481.511.04No Debt$119,710,000
SNWLSonicWALL, Inc.$5.6263.931.321.08No Debt$105,450,000
SONOSonoSite, Inc.$19.0716.241.341.420.6295$279,140,000
SPSSSPSS Inc.$30.6716.51.862.670.7109$305,920,000
TECDTech Data Corporation$26.2810.820.050.760.2098$528,020,000
TEXTEREX CORPORATION$11.6717.420.120.690.8111$484,400,000
TSLTRINA SOLAR LIMITED$12.875.830.40.770.3415$132,220,000
TSRATessera Technologies, Inc.$13.79145.732.741.52No Debt$276,500,000
UTEKUltratech, Inc.$13.6126.912.41.630.002$158,500,000
VPHMViroPharma Incorporated$4.995.981.650.580.3782$275,840,000
XIDEExide Technologies$4.716.410.10.791.4021$148,410,000

The articles today discussed how tech has outpaced all other sectors in stock price gains thus far this year in part due to the attractiveness of their strong balance sheets. Given what we see in the table above, I was curious how the pharmaceutical sector has fared in comparison to tech.


The chart above compares a tech ETF (XLK), a pharma ETF (XPH) and a biotech ETF (XBI). You can see that tech has indeed rallied more strongly in 2009 but it is also apparent that the pharmaceutical sector in general held up much better than tech during the severe stock market decline in 2008.

Pharmaceuticals benefit not only from their cash holdings and lack of debt. It is also true that they are generally considered a defensive sector due to the tendency for demand for their products to remain steady even during economic downturns. These strong balance sheets, however, must also play a part in why they are viewed as attractive stocks during tough times.

Disclosure: none



Wednesday TrendLeaders and Swing Signals, April 22, 2009


I wanted to generate a new list of TrendLeaders today and while I was at it I also produced a new batch of Swing Trading Signals. They are all available now and can be found at the TrendLeaders page and the Swing Signals page, respectively.

The market has been pretty erratic so far this week but there are still 824 stocks and ETFs that qualify as TrendLeaders. As of the close of trading today they are all above their 50-day moving average and registering strong trends according to Aroon, MACD and DMI analysis.

I notice there are quite a few PowerShares ETFs on the list today as well as some ETFs I have never heard of: the First Trust Alphadex funds. Something to look into...

We also have a new batch of Swing Trading Signals. Just like yesterday, we have 38 signals in total. Today they are split down the middle: 19 are BUYS and 19 are SELLS.

Please check out our latest stock market data at the TrendLeaders page and the Swing Signals page. You will also be able to download the data in a CSV format file that can be opened in Excel. Of course, it's all still free.



Tuesday, April 21, 2009

Tuesday Swing Signals for April 21, 2009

This post is to announce that the Tuesday batch of new swing trading signals is available at the TradeRadar Alert HQ Swing Signals page.

Today we have a total of 38 swing trading signals of which 24 are BUYs and 14 are SELLs.

To see today's list you can check out the TradeRadar Swing Signals page. All 38 stocks are listed, plus we provide a free download in the form of a CSV text file which can be easily opened in Excel or any text editor.

For more detailed explanations of how the system works, click on this link and this link.



Monday, April 20, 2009

Is this the long awaited pullback? ...charting the S&P 500

It's been a while since I did a post devoted solely to technical analysis of a stock or index but now seems like a good time.

Market technicians have been watching in awe as the market put together six straight weeks of gains. Every pullback turned out to be a "buy the dip" opportunity for the bulls.

Today, we finally had the kind of down day technicians were predicting given how far and how fast the market had climbed.

With IBM and Texas Instruments beating earnings expectations after the close today, perhaps the market will rebound as it has done so often over the last six weeks.

If it doesn't rebound, though, where might we be headed?

The move from the March 9 low to the April 17 high is so clear that it seems to cry out for Fibonacci retracement analysis.

Rather than draw a bunch of lines on the chart below we have added two bubbles. The light green bubble is in the vicinity of the 38% retracement which would be at roughly the 796 level. Note that this is also an area intersected by the 50-day moving average. To further add congestion in this area, this is also a level that previously offered resistance and support as denoted by the horizontal yellow line.

The convergence of all these technical factors in one area suggests that this vicinity will provide strong support to the S&P 500. If it falls below this area, though, the next stop can be expected to be at the next Fibonacci retracement level, 50% down from Friday's peak. This area, centered around the 773 level, is denoted by the light blue bubble.

Chart of S&P 500, 04-20-2009, annotated
I have drawn an upward sloping trend line from the March 9 low (gray line). You can see how steep this line is, indicating how abrupt and robust this rally has been. Today the index easily broke below this line. Note that volume picked up today, too, suggesting that today wasn't just the absence of buyers.

MACD hasn't rolled over yet but it's getting close. It takes more than one day, though, to affect the moving averages that make up MACD and get them to head in a new direction. A bit more weakness and it will happen.

Williams %R has dropped out of the overbought area and indicates a transition is underway.

Conclusion --

Today's 4.28% decline put a real dent in this rally but the index still managed to stay just above its 20-day moving average. Another day like today, though, would take the index down through the 20-day MA and the next stop would be that congestion area at 796 that we described above.

After this long discourse on the technical aspects, my strong suspicion is that we are, in fact, dependent on the earnings reports we see coming out over the next few weeks. Today, investor sentiment seemed to take the "glass is half empty" attitude despite the fact that recent earnings reports for a selection of bellwethers were reasonably decent.

Where bad news was shrugged off as stocks rose, it could be that decent news will be shrugged off as stocks fall. If stocks do fall, you can expect to see the levels described above as targets to hit on the way down.

Disclosure: none



Sunday, April 19, 2009

Weekly Review - the return of fundamentals?

The first week of earnings season didn't spook the market too badly and major averages managed modest gains. This makes it six straight weeks without a loss. We survived reports from Goldman Sachs, JP Morgan Chase, GE, Citigroup, Intel and Google. If you dig into the numbers of each of these bellwethers there were certainly a few questionable items; nevertheless, the fact that they were all "less bad" than expected gave investors the go ahead to push this rally for another week.

Economic reports had little effect this week. CPI and PPI came in below expectations and some bloggers resumed discussion of deflation. The markets, however, shrugged off the news. The worst report was from the housing market where starts dropped to a 510,000 annual rate, well below the expected 540,000 and a clear signal that the real estate market has not yet turned the corner.
As usual, I want to present our usual two charts to demonstrate the state of the overall stock market.

TradeRadar Alert HQ Stock Market Statistics --

Each week our Alert HQ process scans almost 7300 stocks and ETFs and records their technical characteristics. The following charts are based on daily data and presents the state of some of our technical indicators.

This first chart presents the moving average analysis for the entire market and contrasts it with the performance of the S&P 500 SPDR (SPY). When the number of stocks trading above their 50-day moving average (the yellow line) crosses the line that tracks the number of stocks whose 20-day moving average is above their 50-day moving average (the magenta line) there is an expectation that you will get a change in the trend of the S&P 500.

SPY versus the market - Moving Average Analysis, 04-17-2009
The chart shows continued advancement toward the extremes. The number of stocks trading over their 50-day MA is still increasing (though a bit more slowly) but the number of stocks whose 20-day MA has done a bullish cross over above their 50-day MA has continued to climb rapidly and has hit he highest level since we started tracking these indicators.

This next chart is based on Aroon Analysis and compares our trending statistics to the performance of SPY. We use Aroon to measure whether stocks are in strong up-trends or down-trends. The number of stocks in down-trends is indicated by the red line and the number of stocks in up-trends is indicated by the yellow line.

SPY versus the market - Trend Analysis, 04-17-2009
Here we see the faint stirrings of a moderation in the strength of this rally. The number of stocks in up-trends declined slightly and the number of stocks in down-trends increase ever so slightly.

Conclusion --

After six straight weeks of gains, it should come as no surprise that our indicators are beginning to show the rally slowing down, even if the slowing trend is very modest. If, as some analysts have suggested, the early March lows reflected an over-done bout of selling, it is possible that the current rally is correcting the imbalances of March. As stocks find their equilibrium point, it is possible that we will see our indicators weaken even while major averages retain much of their recent gains.

Earnings season will reveal which stocks are weathering the economic storm. It seems recent buying has been driven by knee jerk momentum investing and investors have been indifferent to the fundamentals.

With the market up 25% from its lows and optimism rampant, it could be that it's time for fundamentals to make a comeback. That will be good for some stocks and bad for others. In other words, perhaps the markets will have less of the flavor of a casino and will return to providing a discounting and price discovery mechanism.

We can only hope.



Saturday, April 18, 2009

Weekend Swing Signals for April 17, 2009

This post is to announce that our weekend batch of new swing trading signals is available at the TradeRadar Alert HQ Swing Signals page.

Our system looks for those stocks and ETFs that have exceeded their upper or lower Bollinger Bands and then have moved back inside the Bollinger Band envelope by a certain amount. Our interpretation is that there is a reversal underway and a short-term trading opportunity has presented itself.

Today we have a total of 31 swing trading signals or which 13 are BUYs and 18 are SELLs. For some reason this week, we seem to have a number of Chinese companies in the list and they are mostly SELL signals. A sign the rally in the Hang Seng starting to take a breather? Stay tuned...

To see today's list you can check out the TradeRadar Swing Signals page. All 58 stocks are listed, plus we provide a free download in the form of a CSV text file which can be easily opened in Excel or any text editor. In addition to the signal and the stock symbol, we also provide some basic fundamental data to help you select the stocks that are of most interest to you.

For a more detailed explanation of how the system works, click on this link and this link.



Free stock alerts, Trend Leaders, Bollinger Band Breakouts and Cash Flow Kings for April 17, 2009

This post is to announce that the latest list of free stock alerts is up and available at Alert HQ. Each week we scan about 7300 stocks and ETFs looking for fresh BUY and SELL signals. We apply a combination of proprietary and standard technical analysis techniques to identify those stocks that are beginning to move. Our goal is to identify stocks or ETFs that are undergoing reversals, either to the upside or to the downside.

In addition to alerts, we also have our lists of Trend Leaders, a collection of stocks in strong up-trends, Cash Flow Kings whose free cash flow yield is 25% or greater and Bollinger Band Breakouts, stocks or ETFs that have moved at least 3% above their upper Bollinger Band or at least 3% below their lower Bollinger Band. These lists are all available at Alert HQ.

Here is what we have this week --

Yup, the market registered a sixth straight gain this week. As a result, we are finding plenty of bullish signals. Again the BUY signals outnumber the SELL signals, the list of Trend Leaders has grown and there are a ton of Bollinger Band Breakouts to the upside.

Here is the detailed breakdown for Alert HQ for this week:

  • based on daily data, we have 29 Alert HQ BUY signals and only 10 SELL signals.
  • based on weekly data, we have 338 Alert HQ BUY signals, a nice increase from last week, and no SELL signals.
  • based on daily data, we have 1272 Trend Leaders, a big jump up from last week.
  • based on daily data, we have 319 Bollinger Band Breakouts which is a decrease from last week but we also have 431 Breakouts based on weekly data which is a nice increase.
  • finally, we have 1088 Cash Flow Kings.
Visit Alert HQ and download your free lists of stock alerts. The alerts based on weekly data show those stocks that have exhibited some good follow-through after a recent trend reversal. If you want to be early in identifying the newest trend reversals, the lists based on daily data are for you. No matter which preference you have, there are bound to be a few stocks you will want to add to your watch list.

Don't forget to view the free lists of Trend Leaders, Bollinger Band Breakouts and Cash Flow Kings, also at Alert HQ. If you're a momentum trader, the TrendLeaders list is a good place to go shopping. If you have no faith in technical analysis, the Cash Flow Kings may be just what you are looking for.



Friday, April 17, 2009

PC Rankings - one company firmly in the top spot

More rankings, this time for the major PC vendors.

The numbers in the following chart are from Gartner and cover U.S. shipments in the first quarter of 2009. Hewlett-Packard for the first time since 2001 has taken the lead, slipping ahead of Dell. Apple, despite its market share slipping from over 9% down to 7.4%, is solidly in fourth place. Apple stock has been doing quite well and is one of the few that is trading above its 200-day moving average so investors are apparently not too concerned about market share numbers. Gartner has this to say:

Analysts think that Apple’s relatively higher ASP created challenges for it in the tough economy, but that its deft control of inventories limited its shipment decline.


Company

1Q09 Shipments

1Q09 Market Share (%)

1Q08 Shipments

1Q08 Market Share (%)

1Q09-1Q08 Growth (%)

Hewlett-Packard

4,228

27.7

3,804

24.8

11.1

Dell Inc.

3,996

26.2

4,775

31.2

-16.3

Acer

2,076

13.6

1,389

9.1

49.4

Apple Computer

1,135

7.4

1,148

7.5

-1.1

Toshiba

1,005

6.6

840

5.5

19.6

Others

2,837

18.6

3,371

22.0

-15.8

Total

15,276

100.0

15,327

100.0

-0.3



Overall, Gartner estimates that PC shipments worldwide fell 6.5% year-over-year while IDC puts the decline at 7.1%. Here is the chart showing Gartner's estimates for world-wide numbers:


Company

1Q09 Shipments

1Q09 Market Share (%)

1Q08 Shipments

1Q08 Market Share (%)

1Q09-1Q08 Growth (%)

Hewlett-Packard

13,305

19.8

12,974

18.1

2.6

Dell Inc.

8,789

13.1

10,579

14.7

-16.9

Acer

8,758

13.0

6,911

9.6

26.7

Lenovo

4,430

6.6

4,798

6.7

-7.7

Toshiba

3,688

5.5

3,115

4.3

18.4

Others

28,239

42.0

33,467

46.6

-15.6

Total

67,209

100.0

71,846

100.0

-6.5


In a tough environment, Gartner points to H-P's success at the lower end with net-books and note-books as well as strong sales and distribution into the professional/enterprise market. Dell, on the other hand, has struggled, especially in the enterprise market.

One takeaway from Gartner's commentary is that a large percentage of PC shipments were at the low end: mobile consumer PCs, netbooks and mini-notebooks. Given the lower selling prices and thinner margins in these products, there is concern that revenues and profits will show greater declines than these shipment statistics might at first suggest.

Another takeaway here is that H-P is consolidating its position as a dominant player. Between their success in surging to the top spot in the PC market, their steady performance in servers, network gear, software and printers and their growth in the services business via the EDS buyout, the company is clearly poised to come out of this economic downturn stronger than ever. These rankings help explain why H-P is on so many BUY lists.

Disclosure: none



Semiconductor Rankings - looking up from the bottom

With tech, including the semiconductors, rallying furiously the last month or so, it is worth keeping in mind how deep the downturn has been in the sector.

I found the following chart at the EETimes.com web site (hat tip to Semiconductors editor Mark Lapedus).

Semiconductor Revenues
As can be seen, a consistent theme is weak Q4 revenues followed by Q1 guidance that ranges from bad to worse.

As we move through the currently unfolding earnings season, we'll have to keep an eye on management projections for Q2. Hopefully there will be some further confirmation that we have seen the trough for semiconductor revenues.

Disclosure: none



Thursday, April 16, 2009

Thursday Swing Trading Signals now available

Thursday's Swing Trading Signals are now available on the TradeRadar Alert HQ Swing Signals page.

Based on today's daily data we have a total of 33 signals: 22 BUY signals and 11 SELL signals.

For those of you who are new to our Swing Signals, we use the basic concept of stocks exceeding their upper or lower Bollinger Band and then reversing back inside the Bollinger Band envelope. To help avoid whipsaw we use Williams %R to confirm the price reversals.

To see this updated list you can check out the TradeRadar Swing Signals page. All 33 stocks are listed, plus we provide a free download in the form of a CSV text file which can be easily opened in Excel or any text editor. In addition to the signal and the stock symbol, we also provide some basic fundamental data to help you select the stocks that are of most interest to you.



Tuesday, April 14, 2009

Tuesday Swing Signals for April 14, 2009

This is to announce a new set of Swing Trading Signals is available on the Swing Signals page at Alert HQ.

Last week ended on an up note and we had lots of BUY signals. So far this week, stocks have not been performing so well; therefore, it seemed like a good idea to run our Alert HQ process again and see what kind of Swing Signals we generate now.

We have a total of 54 signals today, this time 44 SELL signals and only 10 BUY signals.

It's interesting to see two ProShares ETFs on the list. The Short Financials (SEF) is generating a BUY signal and the Ultra Real Estate (URE) is generating a SELL signal. Is this a sign that the market is about to turn around? We shall see...

My intention is to run the Swing Signals screen every Tuesday, Thursday and Saturday. Bear with me if I miss a day here and there. Eventually everything will be automated from start to finish but currently there is still some manual effort required.

In the meantime, check out our newest batch of Swing Trading Signals at Alert HQ and stay tuned for Thursday's list.



So who's got the money? This screen gives a clue

There have been a number of portfolio managers who have been quoted as saying that the safest companies to invest in these days are the ones that don't need to continually go to the credit markets to fund their businesses. These are companies with substantial piles of cash that should allow them to ride out this recession without having to pay exaggerated borrowing costs in today's credit markets.

Though corporate bond issuance is currently robust, spreads are still quite high with the yield on double-A bonds more than 3.5% higher than comparable Treasuries. This is better than last year but significantly worse than the historical average. For bonds that are rated less than double-A, terms get even tougher and demand is correspondingly weaker.

I ran a screen this weekend (all numbers are as of Saturday morning) to identify those companies with big cash stockpiles. Rather than look at the absolute value of cash, I looked for those companies whose price to cash ratios appear to be quite favorable. I divided market cap by cash to obtain the rankings. In order to narrow the list down to a small number, I looked for companies where the stock price to cash ratio was 0.5 or less. With the government backstopping everything in sight, I felt it was reasonable to consider "cash" to be cash on hand combined with short-term investments.

The following twelve companies were picked up in this screen:

SymbolNamePrice to CashLast PriceMarket CapCash HoldingsPEPrice To Book
BHOB&H OCEAN CARRIERS LTD.0.17$1.87$12,800,000$73,210,00018.070.11
ESGREnstar Group Limited0.27$64.40$857,700,000$3,144,600,0009.791.34
FORTYFormula Systems (1985) Ltd.0.39$4.64$61,200,000$156,760,00050.35
GSGOLDMAN SACHS GROUP0.47$124.33$57,414,000,000$122,404,000,00025.651.03
GSIGGSI Group, Inc.0.19$0.83$34,600,000$183,270,0002.110.09
IBKRInteractive Brokers Group, Inc.0.11$15.80$640,500,000$5,935,620,0006.791.2
MSMORGAN STANLEY0.39$25.35$27,239,000,000$70,364,000,00015.660.75
NNINELNET, INC. CLASS A0.42$10.00$493,000,000$1,187,120,00016.950.76
PNSNPenson Worldwide, Inc.0.07$7.90$199,600,000$2,852,300,00018.710.75
PXLWPixelworks, Inc.0.13$0.59$7,800,000$61,210,0001.061.69
TMMGRUPO TMM S.A.0.24$0.73$40,300,000$168,440,0000.520.24
VOCLVocalTec Communications Ltd.0.20$0.40$3,000,000$14,990,0000.820.29


Note that Goldman Sachs (GS) has the largest cash hoard by far on this list. It is ironic that, despite all the cash they have, they are willing to dilute existing shareholders by raising more cash in a $5 billion common equity offering so they can pay back the government's TARP funds. I guess we have yet another tone-deaf bank CEO...

Aside from the issues surrounding Goldman, though, a screen like this is intended to highlight stocks that are selling for less than the cash on their books. In essence, then, this is a value screen that should identify stocks that are cheap. Note that this view of "cheap" doesn't necessarily equate to low Price-Earnings ratios though the Price-to-Book ratios are pretty much all quite reasonable for this batch of stocks.

Interactive Brokers

If I had to pick one stock on this list that looks kind of interesting, I guess I would have to go with Interactive Brokers (IBKR). In terms of its credibility as a value stock, it has a modest PE, very low Price-to-Sales (as is common for financial stocks), low PEG and a modest Price-to-Book ratio. Its Debt-to-Equity ratio is also low while its Cash Flow Yield is quite high. As a financial stock, Interactive Brokers has seen its stock plunge from the $30's to the teens. The company, not being a bank, has no investments in any toxic assets and makes its money on the volume of trades that it handles. As markets perk up, so should revenues at this company. In the meantime, it has a nice pile of cash and should be able to comfortably ride out this market downturn.

Next time...
In retrospect, it seems that using a Price-to-Cash criterion of 0.5 is rather extreme; hence the small list. Next week I will look into expanding this criterion to accommodate a Price-to-Cash ratio of 1.0 but leave out some of the micro-caps. This should leave us with a more manageable list of companies.

Disclosure: none
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Sunday, April 12, 2009

Weeky Review - sure we're over-bought but is that really a negative?

I've been doing a bunch of new development on the Alert HQ software, upgrading to a more robust database, automating more tasks and improving the Swing Signals algorithm. I also took some time off to enjoy the family over the Easter holiday. Bottom line - I'm late in posting the Weekly Review.

Being late, I won't go into too much depth but I do want to present the usual two charts.

TradeRadar Alert HQ Stock Market Statistics --

Each week our Alert HQ process scans almost 7300 stocks and ETFs and records their technical characteristics. The following charts are based on daily data and presents the state of some of our technical indicators.

This first chart presents the moving average analysis for the entire market and contrasts it with the performance of the S&P 500 SPDR (SPY). When the number of stocks trading above their 50-day moving average (the yellow line) crosses the line that tracks the number of stocks whose 20-day moving average is above their 50-day moving average (the magenta line) there is an expectation that you will get a change in the trend of the S&P 500.


Look at the yellow line - the number of stocks over their 50-day moving average is hitting the highest level since we started tracking back in early 2008. Almost 80% of all stocks we evaluated are now over their 50-DMA. To me this screams "over-bought" but sure enough this represents another increase in this measure compared to last week's results.

This next chart is based on Aroon Analysis and compares our trending statistics to the performance of SPY. We use Aroon to measure whether stocks are in strong up-trends or down-trends. The number of stocks in down-trends is indicated by the red line and the number of stocks in up-trends is indicated by the yellow line.


In this chart, it looks like the indicators are finally running out steam. The number of stocks in down-trends can't get much lower without going negative which, of course, is not possible. The number of stocks in up-trends finally stopped increasing this week and actually dipped slightly.

Conclusion --

I've been interpreting the statistics presented above as indications that the market is extremely over-bought and due for a pullback. After reading a post by Dr. Duru this weekend, I realize this can be looked at in a another way. The point of Dr. Duru's post is that at several major market bottoms, when stocks finally began to rally again, the number of stocks trading above various moving averages moved to very high levels, much as we are seeing in the charts above. This does make sense - after stocks were beaten down so low, any reversal, especially the beginning of a bull market, would indeed tend to result in a large number of stocks initially surging above their 20-DMA and, if the move is strong enough, above their 50-DMA also.

This kind of action would result in the charts we see above. Though stocks might truly be over-bought, the strength and the broad-based nature of this rally are very different than what we have seen over the last year. According to our data, way more stocks participated in this rally than in any of the previous rallies we have experienced during this bear market. This would lead one to think that when stocks finally do pull back, they will not be dropping to new lows but will recover and more than likely continue to new highs.

Lest anyone become too complacent, however, there is another opinion that contends that the fact that this rally is so broad-based indicates that buying has been indiscriminate. An article discussing this topic illustrates the point by describing several small caps that are nowhere near profitable or showing any kind of fundamental strength, current or future, yet have surged in price more than other, more deserving larger-cap stocks. This indication of froth, this line of thinking goes, shows that this is a bear market rally that has been grossly overdone.

So which is it? Over-bought and due for a pullback that sets the stage for further gains? Or Over-bought and due for a pullback that will see previous lows retested?

Trade Radar leans toward the former but worries about the latter. How about you?



Updated Swing Trading Signals for week ending April 10, 2009

I've spent some time this weekend experimenting with the Swing Signal screen that we use in the Alert HQ software. I have made two changes that have resulted in a smaller but more robust set of swing trading signals.

We still use the basic concept of stocks exceeding their upper or lower Bollinger Band and then reversing back inside the Bollinger Band envelope. The problem with this approach is that in some cases, the initial trend is still intact despite the fact that the stock is back inside the Bollinger Band envelope. In other words, the expected reversal is probably not occurring.

To improve our results, we have made the following two changes:

  • We have added a calculation of Williams %R to confirm that the price is really turning up in the case of BUY signals (coming out of an over-sold condition) or that the price is really turning down in the case of SELL signals (coming out of an over-bought condition).
  • We now require that the most recent closing price be higher than the previous day's high in the case of BUY signals and that the most recent closing price be lower than the previous day's low in the case of BUY signals.
The result of adopting these changes is that our previous list of 58 swing signals has been reduced to total of 25. There are now 15 BUY signals and 10 SELL signals. We think this list will meet your expectations as the technicals of these stocks now more closely match the classic swing trading approach.

To see this updated list you can check out the TradeRadar Swing Signals page. All 25 stocks are listed, plus we provide a free download in the form of a CSV text file which can be easily opened in Excel or any text editor. In addition to the signal and the stock symbol, we also provide some basic fundamental data to help you select the stocks that are of most interest to you.

For a more detailed explanation of how other aspects of the system works, click on the label at the bottom of this post.



Saturday, April 11, 2009

New Swing Trading Signals for April 10, 2009

This post is to announce that our weekend batch of new swing trading signals is available at the TradeRadar Alert HQ Swing Signals page.

After Wells Fargo pre-announced robust earnings, stocks took off this week. As a result, we have a lot more BUY signals on our list.

Our system looks for those stocks and ETFs that have exceeded their upper or lower Bollinger Bands and then have moved back inside the Bollinger Band envelope by a certain amount. Our interpretation is that there is a reversal underway and a short-term trading opportunity has presented itself.

Today we have a total of 58 swing trading signals or which 39 are BUYs and 19 are SELLs.

To see today's list you can check out the TradeRadar Swing Signals page. All 58 stocks are listed, plus we provide a free download in the form of a CSV text file which can be easily opened in Excel or any text editor. In addition to the signal and the stock symbol, we also provide some basic fundamental data to help you select the stocks that are of most interest to you.

For a more detailed explanation of how the system works, click on the label at the bottom of this post.



Free stock alerts, Trend Leaders, Bollinger Band Breakouts and Cash Flow Kings for April 10, 2009

This post is to announce that the latest list of free stock alerts is up and available at Alert HQ. Each week we scan about 7300 stocks and ETFs looking for fresh BUY and SELL signals. We apply a combination of proprietary and standard technical analysis techniques to identify those stocks that are beginning to move. Our goal is to identify stocks or ETFs that are undergoing reversals, either to the upside or to the downside.

In addition to alerts, we also have our lists of Trend Leaders, a collection of stocks in strong up-trends, Cash Flow Kings whose free cash flow yield is 25% or greater and Bollinger Band Breakouts, stocks or ETFs that have moved at least 3% above their upper Bollinger Band or at least 3% below their lower Bollinger Band. These lists are all available at Alert HQ.

Here is what we have this week --

After another good week where the market registered a fifth straight gain, we are finding that all kinds of stocks and ETFs are moving up strongly. This is amply demonstrated by the preponderance of BUY signals our indicators are generating, the still hefty list of Trend Leaders and the ton of Bollinger Band Breakouts to the upside.

Here is the detailed breakdown for Alert HQ for this week:

  • based on daily data, we have 55 Alert HQ BUY signals and only 4 SELL signals.
  • based on weekly data, we have 286 Alert HQ BUY signals and 1 SELL signal.
  • based on daily data, we have 888 Trend Leaders, a modest decrease from last week.
  • based on daily data, we have 421 Bollinger Band Breakouts which is a big jump from last week. We also have 389 Breakouts based on weekly data.
  • finally, we have 1103 Cash Flow Kings.
Visit Alert HQ and download your free lists of stock alerts. The alerts based on weekly data show those stocks that have exhibited some good follow-through after a recent trend reversal. If you want to be early in identifying the newest trend reversals, the lists based on daily data are for you. No matter which preference you have, there are bound to be a few stocks you will want to add to your watch list.

Don't forget to download the free lists of Trend Leaders, Bollinger Band Breakouts and Cash Flow Kings, also at Alert HQ. If you're a momentum trader, the TrendLeaders list is a good place to go shopping. If you have no faith in technical analysis, the Cash Flow Kings may be just what you are looking for.




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Disclaimer: This site may include market analysis. All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise.




 
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