Saturday, October 31, 2009

Weekend Winners and Losers - Alert HQ BUY and SELL signals for October 30, 2009

This is a quick post announcing that the weekend's stock signals are now available at Alert HQ.

Today we have the following:

  • Based on daily data, we have 1 Alert HQ BUY signal and 458 SELL signals
  • Based on weekly data, we have 1 Alert HQ BUY signal and 80 SELL signals
  • We have 260 Bollinger Band Breakouts based on daily data and 201 Breakouts based on weekly data.
  • We have 849 Cash Flow Kings
  • 45 Swing Signals -- 44 BUY signals and 1 SELL Signal.
  • 58 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 10 stocks that are new additions to the list and 40 that fell off the previous list.
  • 162 Trend Busters based on daily data of which 25 are BUY signals and 137 are SELL signals. We also have 219 Trend Busters based on weekly data.
  • 231 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed. We also have 65 Gap Signals based on weekly data.
The view from Alert HQ --

Looks like no treats for investors this Halloween weekend. Instead, traders have to digest losses ranging from 2.6% on the Dow to 6.3% on the Russell 2000. Trend lines were broken and 50-day moving averages were violated. Despite the GDP-driven rally on Thursday, it was not a pretty week.

Our signals today show the effects, with SELL signals well outnumbering BUY signals and the Trend Leaders list whittled down to less than 60 stocks out of the 7200 or so we evaluate each weekend.

Interestingly, there were quite a few stocks that refused to sink with the markets on Friday. Many of these stocks populate our Swing Signals list this weekend. Check out Athena Health (ATHN), for example, Direct TV (DTV), Las Vegas Sands (LVS) and Zumiez (ZUMZ). This implies there is still life life left in the dip-buyers and that there is hope for this market.

Yes, stocks ended the week in trouble but I'd be very surprised if markets fell more than 3% or 4% further from here. When we can call it a real correction, then I suspect it will be time to start buying again. Keep an eye on Alert HQ, we always have a great variety of investment candidates.

Using our signals --

Visit Alert HQ to view or 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.

If you're a momentum trader, the Trend Leaders 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. If you do favor technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas. See them all at Alert HQ.

Remember, we also provide our latest updated Swing Signals, Trend Leaders, Gaps and Trend Busters on Tuesday and Thursday nights.



Friday, October 30, 2009

While the market plunges OPNET rallies - here's why

Major market averages fell roughly 2.5% Friday but not everything went down. OPNET Technologies (OPNT) gained 4.7% today in the face of relentless selling in most other stocks. What gives?

Background --

OPNET Technologies, Inc. provides software products and related services for managing networks, servers and applications. The company's products are used to troubleshoot performance problems in production applications and perform capacity planning and design optimization of networks and servers. Products are also used to provide centralized, real-time visibility of network topology, traffic, and status in a single, integrated view and perform modeling of designs and configuration changes. The company also has products that perform some of the same functions but on wireless networks. Finally, OPNET offers consulting and professional services.

Financials --

OPNET is a profitable small-cap that actually pays a dividend, unusual for a tech company of its size. My several measures, it is not inexpensive: PEG is high at 3.61 and the 12 month trailing PE of 63 is definitely at nosebleed levels.

Given the economic backdrop, it's not surprising that trends in revenue and earnings have been lackluster. The company actually suffered losses in the first two quarters of 2009.

On Thursday after the close, however, OPNET reported results for the third quarter of calendar year 2009 (which, if you're interested, is equivalent to the second quarter of their fiscal year 2010). The company recorded earnings per share of $0.09 which soundly trounced analyst expectations of $0.03. Revenue for the quarter was $30.6 million, which compares favorably to the estimate of $28.69 million.

Software license revenue grew 30.9%, or $2.8 million over last quarter, and operating margin went from negative 2.3% to positive 7.2% over the last quarter. The company also ended the quarter with record deferred revenue of $34.9 million.

Though the year-over-year revenue comparison was negative, the solid profit was enough to fire up investors. The chart below shows Friday's nice up-move on strong volume. The stock was on the TradeRadar Swing Signals list as a BUY on Thursday night. I wish I could say all the Swing Signals worked out as well as this one.


Outlook --

Despite a stronger than expected quarter, management remains cautious. OPNET sees Q3 revenues of $30.5-$32.5 million, versus the consensus of $30.3 million. They see Q3 EPS of $0.03-$0.09, versus the consensus of $0.06. The CEO claims to be seeing more normal buying patterns after the previous year where deals dried up or were yanked at the last minute.

The company seems resilient and responsive to changes in the industry and committed to growth through innovation. As an example, with virtualization an increasingly important strategy for more and more corporations, OPNET has introduced a product for troubleshooting application performance problems in virtualized environments.

For those who like to see management put their money where their mouth is, fully 36% of shares are owned by insiders.

Though a player in infrastructure performance management (IPM), the company's primary strength is in application performance management (APM) which, as it turns out, is not the strong suit of their biggest competitors (all known by their initials) BMC, CA, HP and IBM. The other competitors are mostly on the same level as OPNET or even smaller so OPNET still has wide open opportunity to grow market share. The company could even be a buy-out target as one of the big four look to shore up their APM product suite.

Conclusion --

As networks and applications grow in complexity, OPNET is there to offer tools that more efficiently identify root causes and potential solutions. As customers routinely seek fast performance and 24/7 availability, OPNET's products provide the ability to monitor in real-time and troubleshoot quickly.

Despite a tough environment OPNET has managed to deliver bottom-line growth. In an improving economy they should do even better. When the current market correction has run its course, OPNET could add to gains.

Disclosure: no positions



Thursday, October 29, 2009

Did GDP sound the "All Clear"? - Thursday Swing Signals, Gaps, Trend Busters and Trend Leaders for Oct 29, 2009


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

Today we have the following:

  • 210 Swing Signals -- 207 BUY signals and 2 SELL Signals plus 1 Strong BUY.
  • 88 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 25 stocks that are new additions to the list and 96 that fell off the previous list.
  • 30 Trend Busters of which 7 are BUY signals and 23 are SELL signals.
  • 251 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed.
The view from Alert HQ --

Third quarter GDP came at a 3.5% annualized rate, exceeding almost everyone's expectations. The usually infallible Goldman Sachs had recently dialed down their GDP estimate to less than 3% so even they weren't ready for this. In any case, stocks started strong and just got stronger as the day progressed.

I often look to our Swing Signals as the early indicator of market direction. When there are a ton of BUY signals, the market often turns up. That's what we got today with 207 BUYs, a big spike up from what we have been seeing during the last few weeks. Conspicuous by their absence, however, were semiconductor stocks. Nvidia and ASML were on the list but that was about it. With semis being the leading indicator for the tech sector, it's not a good sign to see that they are not recovering as well as some of the broken financial stocks, for example.

In a contrary kind of indication, our Trend Leaders list has dwindled down to only 88 stocks. When it gets this low, it is often a signal that an intermediate term bottom has been reached. One day's rally isn't enough to turn around the Trend Leaders so we'll have to give it some time before it begins to ramp up again.

As for the Gap Signals, we look for gaps that have occurred during the last five days or that were closed during the last five days. So far, there are almost three times as many bearish gaps as bullish gaps. It will take some time to work this off, as well.

In the meantime, the good GDP number is making investors forget the lackluster durable goods report and the fact that this week's initial jobless claims were again over 500K. Major averages have probed their 50-day moving averages and handily recovered.

Still, this is only a one day recovery so far. Let's see if we can put a few more good days together.

Using our signals --

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals or Gap Signals may provide some good trading ideas.



Wednesday, October 28, 2009

Durable Goods headline number masks weakness in Tech

The advanced report for Durable Goods for September came out Wednesday. The headline number for new orders showed a 1% month-over-month improvement after a surprisingly poor showing in August. How did things go in the tech sector?

Shipments --

Typically, investors pay the most attention to shipments and new orders. Shipments had the worst outcome in September. This first chart shows the results for Computers and Electronics Products which is the summarized category encompassing most high tech hardware manufacturing including computers, peripherals, storage, semiconductors, communication and networking equipment.

Yup, two down months in a row and we are now approaching the lows that were last seen in March and May.

This next chart shows shipments for the Computers and related products sub-category. Here we have a slight improvement though the previous month was revised downward a bit.


Next is the chart for Communications Equipment. The numbers include both defense and non-defense equipment. Here a nice spike in shipments is heading back toward the basement.


This next chart shows Semiconductor shipments. The declines here are small but there are still two in a row. It is encouraging that it still seems like the recent turnaround is holding on.



New Orders --

Now for the forward looking measure. This next chart shows New Orders for the tech sector as a whole. We have a slight droop in results here but it still looks like a working up-trend to me.


Our next chart shows new orders for the Computers and Related Products sub-category. Happily, we have a slight increase in new orders here. It looks like a bottom is in place but the level of new orders is still far below what was typical back in more normal times.


New orders for Communications Equipment are presented below. What looked like a nice developing up-trend just got slapped down.


Conclusion --

I've been positive on tech for months and tech stocks have certainly performed well -- until the last week or two, anyway. Seeing the results of this report, however, does give me pause. And the fact that I was just stopped out of my position in the ProShares Ultra Semiconductor ETF (USD) only seems to confirm the sense of doubt.

Many of the categories we examined above have now shown declines two months in a row. These declines are jeopardizing the upside reversals that seemed to be playing out just a few months ago.

The slight improvements in the Computer and related products category don't seem to measure up to some of the rosy guidance we have heard from companies such as Intel. Some bloggers have wondered whether enough consumers will show up to absorb all this inventory that is being manufactured. It's a good question but we'll have to wait a few months to find the answer.



Keep an eye on OmniVision

OmniVision Technologies (OVTI) has seen its stock price decline roughly 40% since mid-September. Can we expect things to turn around?

Background --

The company designs and manufactures CMOS image sensors (CIS) for consumer electronics products such as digital cameras, videocams, phones, PCs, netbooks and notebooks. It is also establishing a presence in the automotive, medical and security markets. Image sensors are the chips that allow all these gadgets to take pictures, capture movies, see what is behind your car, etc. The market for these chips is clearly growing and, though Omnivision has serious competitors, they are one of the leaders in their field.

Financials --

Here is a company that actually showed a sequential quarter-over-quarter increase in revenue when they reported back in August. Unfortunately, they couldn't quite translate that into a profit. Though revenue was up 18.5% to $105.6 million, the company still managed to lose $9.9 million or $0.19 per share. While still a loss, it was a big improvement over the earlier quarter.

Margin also increased as older inventory manufactured at higher cost was used or written off and newer inventory was built up at a more recent lower cost. Better average selling prices (ASP) were also obtained due to the higher resolution and higher complexity of some newer products.

Explore more OVTI Data on Wikinvest


With revenue and margins up, how did OVTI still manage to lose money?

For one thing, R&D was over 17% of revenue; high but not exceedingly so for a high tech semiconductor firm. Cost of Goods Sold was up $8 million or 10.8% from the previous quarter while G&A costs held steady. There wasn't one big item you point to that prevented the company from being profitable and none of the analysts probed the issue during the last conference call.

Outlook --

The company has stated that the current quarter, due to be reported on in late November or early December, should show further growth in revenue. Management indicates that the company has garnered a number of design wins including one for Microsoft's next generation webcam. Guidance provided back in August was quite positive with management saying they expect fiscal year second quarter revenues to be in the range of $155 million to $170 million representing a 47% to 61% increase quarter-over-quarter and GAAP earnings expected to range from break even to a net income of $0.10 per diluted share.

As this current quarter draws to a close, does it look like they are on track to achieve the expectations described in their guidance?

There are reports that the company can barely keep up with orders. The following was reported at DigiTimes.com:
OmniVision Technologies has notified clients to expect upcoming limited supply of CMOS image sensors (CIS) due to strong iPhone 3GS demand for the end-year holiday season, according to market sources. Tight supply is not expected to ease until late November 2009, the sources pointed out.
OmniVision happens to be a supplier to Apple and it is said that Apple has increased fourth-quarter orders for the iPhone 3GS by 17-20%. In addition, OmniVision is the sole supplier for 3.2-megapixel CIS products for new iPod nano, iPod classic and iPod Touch models, all of which were launched last month in preparation for the holiday selling season.

Further tightening supplies, PC and notebook vendors are gearing up to introduce new models following the launch of Windows 7.

Conclusion --

It appears that OmniVision is on track to hit their revenue target for this quarter. The question is, with supplies so tight, did they leave money on the table by not ramping up their inventory sooner? It looks like perhaps they did.

In any case, with the stock down over 40%, the company seems like a low risk proposition. Their relationships with Apple and Microsoft and numerous other tier one customers should support the growth that management is predicting.

The overall market for image sensors reminds me of that for telecom chips where successful small companies like Starent (about to be bought by Cisco) are able to prosper by delivering progressively more complex and integrated offerings, the so-called system-on-a-chip (SOC) solutions that make it easier and easier for OEMs to design in higher value functionality for customers. Leadership in these SOC solutions also make it harder for competitors to keep up. OmniVision is going down that path and, hopefully, should be able to return to profitability and bottom-line growth.

Disclosure: no positions



Tuesday, October 27, 2009

A couple of sectors fall out of favor - Tuesday Swing Signals, Trend Busters, Trend Leaders and Gap Signals for Oct 27, 2009

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

Today we have the following:

  • 24 Swing Signals -- 11 BUY signals and 12 SELL Signals and one Strong BUY.
  • 159 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 34 stocks that are new additions to the list and 293 that fell off the previous list.
  • 87 Trend Busters of which 23 are BUY signals and 64 are SELL signals.
  • 218 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed.
The view from Alert HQ --

This post is a little late but the signals were up on the web site on time. Some of today's signals, though, were not too pleasant.

Case in point: the Trend Busters. The BUY signals on this list were almost exclusively short or ultra short ETFs. That in itself is not a serious sign unless there is confirmation from the ETFs that are based on the same or similar underlying indexes. Unfortunately, we do have some confirmation. Here is the list of regular, non-leveraged ETFs that have violated their up-trend since this pullback began:

IWC ISHARES RUSSELL MICROCAP INDEX FUND
IWO ISHARES RUSSELL 2000 GROWTH INDEX FUND
IYT ISHARES TRUST DOW JONES TRANSPORTATION AVERAGE INDEX FUND
KBE SPDR KBW BANK ETF
KBW KBW, INC.
PZI POWERSHARES ZACKS MICRO CAP PORTFOLIO
RMT ROYCE MICRO-CAP TRUST INC
RTM RYDEX S&P EQUAL WEIGHT MATERIALS ETF
RWK REVENUESHARES MID CAP ETF
RZV RYDEX S&P SMALLCAP 600 PURE VALUE ETF
VFH VANGUARD FINANCIALS ETF
XLF FINANCIAL SEL SECT SPDR FD

Its clear from this list that small-caps and financials have fallen out of favor.

On the Trend Leaders list, I see that the number of stocks in strong up-trends has fallen to such a low level, only 159, that I am beginning to think we are getting close to the end of this correction already. At least, I hope we are.

Our other signals this week are all over the place, with no one sector standing out. With plenty of variety, there should be something for everyone. Just be careful with those small-caps and financials.

Using our signals --

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals or Gap Signals may provide some good trading ideas.



Sunday, October 25, 2009

Down week for stocks - little blip or start of something bigger?

Should investors be worried?

Stocks actually closed with losses this week. This is something we haven't seen much of lately so every time it happens, I begin to think maybe this is finally the long awaited pullback.

Certainly, price action in the stock market was not particularly reassuring. Despite a sequence of better than expected earnings from most companies and some spectacular earnings from the likes of Apple (AAPL) and Amazon.com (AMZN), stocks were unable to shake off the blahs. The three major averages lost a fraction of a percent, most of it on Friday. Small-caps got spanked as the Russell 2000 lost a big 2.5%

Economic reports presented a so-so picture of the U.S. struggling to rebound. Initial jobless claims were the big disappointment, rising again after economists predicted a decrease. Coupled with an upward revision of the previous week's numbers, it confirmed that the job market could be much worse than merely a lagging indicator. Real estate also showed that it didn't know which way was up as Existing Home Sales came in higher than expected while Housing Starts and Building Permits were lower.

Let's review some charts and see if the worry is justified.

The view from Alert HQ --

Charts of some of the statistics we track at Alert HQ are presented below:


This first chart tracks our moving average analysis. The count of stocks above their 50-DMA (the yellow line) is decreasing. The line has also again failed to cross above the magenta line which tracks the number of stocks whose 20-DMA is above their 50-DMA. This is a bearish setup that is developing. The only hopeful indication is that the number of stocks tracked by both of these lines are still at reasonably high levels.

The next chart provides our trending analysis. It looks at the number of stocks in strong up-trends or down-trends based on Aroon analysis.


Here we see that barely 30% of stocks can be considered to be in strong up-trends. This is not the kind of level we have previously seen at market tops or at market bottoms. According to this indicator, we are stuck in no man's land. As the number of stocks in strong down-trends is starting to show a bit of an uptick and the number of stocks in up-trends drops, it suggests that the underpinnings of this rally are weakening.

Looking at the S&P 500 as a proxy for the market, things actually don't look too bad. Up-trend is intact and Aroon indicates it's a reasonably strong trend. All the moving averages are moving up in concert and the index hasn't even broken below the 20-DMA. This implies the major trend remains solidly positive though a short-term downswing could easily be in the offing.


Indeed, stocks seem to be topping out on a short-term basis. MACD is providing a glimmer of confirmation. The overall trend of MACD has been going down while stock prices have been going up. This is a divergence that many investors believe presages a turn in the trend. The faster moving average (black line) has just fallen below the slower moving average (red line). This is a classic short-term bearish setup.

Conclusion --

I've used the phrases "short-term" and "primary trend" several times in this post and for good reason. Investors need to separate the two and understand how their trading strategy plays into this dichotomy. The evidence today seems to be pointing to a short-term pullback, beginning about now. On the other hand, it is hard to think that such a pullback would be a threat to the primary long-term trend which thus far is solidly up.

Consider the outcome of a pullback that more or less looks like the last three pullbacks. This would result in the S&P 500 dropping to the range between 1030 and 1040. This implies a drop of another 4% of so from here. This would confirm the 50-DMA as support, leave the primary up-trend intact and suggest that this pullback should be looked at as a buying opportunity.

So am I worried? Maybe a little bit but so far stocks just seem to be following the usual ebb and flow.



Saturday, October 24, 2009

Weekend Winners and Losers - Alert HQ BUY and SELL signals for October 23, 2009

This is a very quick post announcing that the weekend's stock signals are now available at Alert HQ.

Today we have the following:

  • Based on daily data, we have 6 Alert HQ BUY signals and 33 SELL signals
  • Based on weekly data, we have no Alert HQ BUY signals and 24 SELL signals
  • We have 122 Bollinger Band Breakouts based on daily data and 233 Breakouts based on weekly data.
  • We have 803 Cash Flow Kings
  • 32 Swing Signals -- 24 BUY signals and 5 SELL Signals plus 3 Strong BUYs.
  • 418 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 43 stocks that are new additions to the list and 161 that fell off the previous list.
  • 19 Trend Busters of which 7 are BUY signals and 12 are SELL signals.
  • 199 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed. We also have 64 Gap Signals based on weekly data.
Unfortunately, I have no time this morning for analysis of this weekend's signals. Stay tuned. I expect to have a post out on Sunday.

Using our signals --

Visit Alert HQ to view or 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.

If you're a momentum trader, the Trend Leaders 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. If you do favor technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas. See them all at Alert HQ.

Remember, we also provide our latest updated Swing Signals, Trend Leaders, Gaps and Trend Busters on Tuesday and Thursday nights.



Friday, October 23, 2009

NASDAQ getting shaky - is it on thin ice or in thin air?

Another day when a bellwether couldn't save the market. Apple couldn't do it last week and Amazon couldn't do it this week. Even Microsoft's earnings beat today didn't help.

You can see in the chart below that the NAZ was up nicely on Friday but couldn't hold on.


Distressing signs that are developing include the fact that MACD is sneaking negative. The 12-day EMA has moved below the 26-day EMA, a bearish signal if it continues. Williams %R shows the index falling out of an over-bought situation. Where it goes from here is, of course, the big question but it does seem to be skating on thin ice now.

I've been trying to examine the Alert HQ signals over the last couple of weeks and losing confidence in the ability of markets to make significant new highs without some kind of pullback happening first. It seems like tentative signs of that pullback are starting to show up.

Is the NASDAQ Now in Thin Air?

Readers of this blog may be familiar with one of our affiliates, MarketClub. They have created a new video entitled "Is the NASDAQ Now in Thin Air?"

Of the three major indexes they track, the DOW, the NASDAQ and the S&P 500, only the NASDAQ is in thin air.

What do they mean by thin air? So far the NASDAQ is the only index to make it past the 50% Fibonacci retracement levels as measured from the highs seen in 2007 and the lows that were made in March of this year. Fibonacci levels are something we only occasionally discuss on this blog so it is good to see this indicator explored in more detail in a real-life situation playing out this week.

Both the Dow and the S&P 500 have rallied strongly from their March lows but have not made it over the 50% retracement level. Many professional traders - including Adam Hewison at MarketClub - are looking at the NASDAQ’s Fibonacci retracement as it represents a potentially key turning point for this year’s market.

While not all the pieces are in place to go short or get out of long positions, one of the first clues was put in place Wednesday by the Japanese candlestick charts. We can also see some divergences developing that need to be pointed out.

In this new video, Adam at MarketClub shares with you the NASDAQ retracement levels and a deeper discussion of MACD as well as one of the key components that could lead to a potential reversal to the downside.

As always, the video is free to watch and there is no need to register.

Enjoy!



Thursday, October 22, 2009

Thursday Swing Signals, Gaps, Trend Busters and Trend Leaders for Oct 22, 2009

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

Today we have the following:

  • 47 Swing Signals -- 32 BUY signals and 13 SELL Signals plus 2 Strong BUYs.
  • 535 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 111 stocks that are new additions to the list and 254 that fell off the previous list.
  • 28 Trend Busters of which 11 are BUY signals and 17 are SELL signals.
  • 202 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed.
The view from Alert HQ --

Stocks came from behind today and finished with solid gains. This doesn't change the fact that stocks have been more or less treading water for the last seven sessions or so. It's been a narrow trading range with the S&P 500 essentially flat and the NASDAQ showing only a small gain.

Our signals absolutely reflect this situation. Trend Leaders list decreasing, more SELL signals than BUY signals on the Trend Buster list and the Gap Signals list. If it wasn't for more of those municipal bond funds enjoying snapback rallies, the Swing Signals list would also show more SELLs than BUYs.

The question for those considering trading tomorrow is whether blow-out earnings from Amazon can lead the market to another gain. Apple failed to carry the market forward but perhaps Amazon has the required mojo.

In another "it's a wacky world" data point, we have a Strong BUY signal for AIG on the Swing Signals list. Though this company has been left for dead several times since the Great Recession began, it has more than rebounded. It now sits astride its 50-day moving average which is moving in a positive direction.


More intriguing even than the BUY signal is the fact that the Bollinger Bands have been getting narrower and narrower. This is generally considered to be a precursor to a big move in one direction or another. Our BUY signal suggests that move could be to the upside. Maybe that's what you get when the CEO gets to keep his ten million dollar salary courtesy of Obama's pay czar.

Using our signals --

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals or Gap Signals may provide some good trading ideas.



Wednesday, October 21, 2009

Why two semiconductor companies bucked the downtrend

Wednesday the market sold off in the last hour and major indexes ended the day with losses. Semiconductor indexes were underwater pretty much the entire day. The iShares Semiconductor ETF (IGW) ended down 1.72%.

Two well-known semiconductor companies were able to buck the downtrend and close with gains. Who were they and what were the reasons? Are there clues as to else might benefit?

Buried in the semiconductor supply chain are the companies that actually produce the chips for the firms that do much of the design work and handle sales to end users and OEMs.

The two biggest contract manufacturers of semiconductors are Taiwan Semiconductor Mfg. (TSM) and United Microelectronic Corp. (UMC). The item that gave both these stocks a boost was an article on the DigiTimes web site discussing utilization rates.

The article quoted sources that indicated that both companies have

...seen a surge in demand for networking and wireless solutions. TSMC's 65nm-process capacity has been almost fully utilized, while UMC's average utilization rate at its 8-inch fabs remains at above 90%.
There is now an expectation that this will lead to both companies beating earnings expectations when they report later this month. Investors seem to believe it as TSM gained 2.72% today and UMC gained 0.54%.

Other implications --

Who else could be on track to beat based on this information? Some of the prominent customers mentioned in the article are Qualcomm (QCOM) , Broadcom (BRCM) and Atheros Communications (ATHR).

Tellingly, the article says that many of these chip orders are for short lead times. This suggests that OEM companies may be revising their demand expectations upward. This is good news for the tech sector in general. Maybe consumers, especially the gadget-buyers, are finally getting ready to open their wallets.

The following chart contrasts some of the stocks mentioned above:

Explore more UMC Data on Wikinvest


Disclosure: none



Tuesday, October 20, 2009

Tuesday Swing Signals, Trend Busters, Trend Leaders and Gap Signals for Oct 20, 2009

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

Today we have the following:

  • 110 Swing Signals -- 88 BUY signals and 22 SELL Signals.
  • 678 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 140 stocks that are new additions to the list and 199 that fell off the previous list.
  • 19 Trend Busters of which 9 are BUY signals and 10 are SELL signals.
  • 208 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed.
The view from Alert HQ --

It's just a world of wackiness out there. Last week we got a ton of SELL signals on municipal bond funds. A little research revealed that real carnage had been occurring in the muni market. This week we're seeing many of those same muni funds pop up as BUYs on the Swing Signal list. Some have yet to struggle back above their 50-DMA but some look like they might really be in recovery mode. Something to keep an eye on...

Other than munis, the Swing Signals list doesn't offer many other BUY signals. On the other hand, there is a pretty good grouping of materials/energy stocks generating SELL signals. I often use the Swing Signals list as a leading indicator and the current situation is not particularly bullish.

On the list of Gap Signals, 94 out of 208 are bearish gaps down. Among the bullish signals there seems to be a preponderance of tech stocks, especially small-cap tech.

All in all, the market remains noncommittal and future direction is difficult to discern. Apple reported a blow-out quarter last night and the major indices spent most of the day underwater. When an exciting bellwether like Apple can't move the market, it puts me on my guard. Some analysts said the market fell because of a bad housing number. I don't buy it. Everyone should have expected a bad housing number as the selling season is now essentially over.

On the other hand, the number, breadth and variety of stocks on the Trend Leaders list would seem to indicate that the recent bull market is still very much alive. Keep in mind, however, the Trend Leaders are the last ones to roll over and the last ones to show real recovery. This is due to the heavier filtering on the daily price data making this indicator slower to react.

We all know how volatile earnings season can be so at this point it might be considered prudent to grab a few of today's BUY signals and just put them on a watch list. It's not unusual for some of our BUYs to pull back after generating a signal and then resume their upward trajectory. After all, there's nothing wrong with being patient.

Using our signals --

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals or Gap Signals may provide some good trading ideas.



Monday, October 19, 2009

Tips for TradeRadar users - setting stops

Stocks are making new highs these days. This is the time when you should be preparing to lock in profits. That means setting stops.

Setting stops usually entails looking for levels where a stock's descent is liable to halt. If the stock falls below one of those levels, it is sold automatically.

The TradeRadar software can help. Here's how.

Assume you are long a particular stock. You want to set a stop that preserves a reasonable amount of your profit or prevents unacceptable losses. The trick is to set the stop at a point that is high enough to limit losses but low enough so that the stock has some room to move. After all, you don't want to be stopped out and then see the stock rebound.

To accomplish this delicate balancing act, investors commonly look at moving averages, trend lines, Fibonacci retracement lines and support levels.

As it turns out, the TradeRadar software automatically generates three of the four indicators mentioned above. Let's use Yahoo (YHOO) as an example.

All you have to do is click the Auto check box, select Sell Signal-Smooth and click the Update Chart button. The result is shown below (be sure to click the chart to see a larger image).


The TradeRadar software calculates and displays the 20-day moving average and the 50-day moving average. The 20-DMA is often considered too volatile to use as a stop but the 50-DMA is often used by traders. That would mean setting a stop a bit below the 16.25 level that the 50-DMA is currently sitting at.

The software also draws the upward sloping trend line. You could set the stop, therefore, a bit below the 15.03 level.

The software displays the Fibonacci retracement lines based on the price action within the window of data. In this example, the 38.2% retracement line at 14.50 makes a good stop since we see that prices had previously touched and held at this level several times earlier this year.

The Fibonacci lines also make it easier to identify support levels based on previous price peaks. You can see that between the 38.2% retracement line and the 50% retracement line, there are several price peaks that might provide support.

Conclusion --

This post shows how TradeRadar can help you quickly evaluate several alternative candidates for stops. Based on your tolerance for pain, you can choose the one that works for you.

Keep in mind, though, these methods should not be used directly on leveraged ETFs. You should always evaluate the underlying index and then translate the results using our Stop Calculator for Leveraged ETFs.

If you'd like to try the TradeRadar software, you can get it free at the Download page.



Sunday, October 18, 2009

Divergence a threat - can stocks keep pushing higher?

Stocks seem to have continued their winning ways these week. Or did they?

Major averages turned in varied results. The Russell 2000 barely managed a 0.2% gain while, on the other end, the S&P 500 gained 1.5%. The first couple of days of the week stocks meandered. Wednesday saw a big jump. Thursday saw some consolidation and Friday was a definite down day.

Earnings reports were decent but investor reactions were mixed. The market applauded Google and JP Morgan Chase but gave Goldman Sachs, Citi and Bank of America the raspberry.

Economic reports were also decent with retail sales beating expectations, initial jobless claims less than expectations and the Empire State Manufacturing Index coming in at a level almost twice the consensus.

Where do we go from here? We'll look at some of the charts that follow and see if we can figure that out.

The view from Alert HQ --

Charts of some of the statistics we track at Alert HQ are presented below:


This first chart tracks our moving average analysis. What jumps out at me here is that SPY, the SPDR S&P 500 ETF, is moving to new highs while the number of stocks above their 50-DMA (the yellow line) has not. A further worrisome factor is that the number of stocks above their 50-DMA has failed to cross above the number of stocks whose 20-DMA is above the 50-DMA.

The next chart provides our trending analysis. It looks at the number of stocks in strong up-trends or down-trends based on Aroon analysis.


Here we see a similar pattern. While SPY hits new highs, the number of stocks in strong up-trends just can't seem to get going. Fortunately, the number of stocks in strong down-trends is also knocking around at a reasonably low level.

Conclusion --

It's all about the divergence this week. Major averages hit new highs this week but our statistics tell us that we are starting to see fewer stocks participating. This is seldom a recipe for a strong run to new sustainable highs.

This leaves investors dependent on some kind of strong catalyst that could turn things around. With tons of earnings on tap, good results from a few bellwethers might do the trick. Economic reports this week don't seem sufficiently important to offset the parade of earnings.

So hope for the best as those earnings reports come through. We'll need them to turn divergence into convergence.



Saturday, October 17, 2009

Weekend Winners and Losers - Alert HQ BUY and SELL signals for October 16, 2009

This post is to announce that the weekend's stock signals are available from Alert HQ.

Each week we scan about 7300 stocks and ETFs, checking fundamentals, performing technical analysis and looking for fresh BUY and SELL signals. Out of this process we generate the following lists:

  • Alert HQ stock alerts - based on a combination of proprietary and standard technical analysis techniques, we identify stocks or ETFs that are undergoing reversals, either to the upside or to the downside
  • Trend Leaders - just like it says, a collection of stocks in strong up-trends
  • Cash Flow Kings whose free cash flow yield is 25% or greater
  • 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
  • Swing Trading Signals - stocks that have bounced off a higher or lower Bollinger Band
  • Trend Busters - stocks or ETFs that have violated a current trend.
  • Gap Signals - stocks or ETFs gapping up or down during the last 5 sessions
The view from Alert HQ --

Though Friday's market action was ugly, stocks actually finished the week with gains.

Trading was driven by earnings reports this week and that was both a blessing and a curse. A few stocks solidly beat expectations (Google, for example), some beat but topline growth was anemic (IBM and GE), some beat but still failed to satisfy (Goldman Sachs) and some missed completely (Bank of America).

In the meantime, the dollar continued its descent and the Dow fell back below 10,000. We had a huge sell-off in municipal bond funds as mentioned in Thursday's Alert HQ post and then a big bounce in munis on Friday. The result of all this is that signals this week are inconclusive and confusing. Take the munis. We've got plenty of them on the daily Alert HQ list of SELL signals and we've a good subset on the Swing Signals list as BUYs. Go figure...

On many of our signal lists we see SELLs outnumbering BUYs. The Trend Leaders list seems stuck now in the mid-700's. If you held a gun to my head, I'd say the market is poised for a modest sell-off. On the other hand, stocks are still close to 2009 highs, many upward-sloping trend lines remain intact and 75% of stocks remain above their 50-day moving averages.

So it's anybody's guess where we go from here. Pop a few of our signal stocks on your watch lists and give them a little time to resolve their ultimate direction. For traders, this might be a good week to concentrate on individual stocks rather than sectors.

This week's results --

Here is the detailed breakdown for Alert HQ for this weekend:
  • Based on daily data, we have 8 Alert HQ BUY signals and 86 SELL signals
  • Based on weekly data, we have 2 Alert HQ BUY signals and 10 SELL signals
  • Based on daily data, we have 738 Trend Leaders. 64 new stocks joined the list since Thursday and 52 fell off the list since Thursday.
  • We have 88 Bollinger Band Breakouts based on daily data and 324 Breakouts based on weekly data.
  • We have 786 Cash Flow Kings
  • Based on daily data we have 55 Swing Signals of which 48 are BUY signals and 7 are SELL signals.
  • We have Trend Busters with 30 signals based on daily data (16 BUY signals and 14 SELL signals) and 39 based on weekly data (4 BUY signals and 35 SELL signals).
  • Finally, we have 187 Gap Signals based on daily data of which 77 are SELL signals and 110 are BUY signals. Added this week are 54 Gap Signals based on weekly data including 17 SELL signals and 37 BUY signals.
Using our signals --

Visit Alert HQ to view or 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.

If you're a momentum trader, the Trend Leaders 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. If you do favor technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas. See them all at Alert HQ.

Remember, we also provide our latest updated Swing Signals, Trend Leaders, Gaps and Trend Busters on Tuesday and Thursday nights.



Thursday, October 15, 2009

Beware Muni Bond Funds - Alert HQ for Oct 15, 2009

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

Today we have the following:

  • 22 Swing Signals -- 15 BUY signals and 7 SELL Signals.
  • 726 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 277 stocks that are new additions to the list and 71 that fell off the previous list.
  • 129 Trend Busters of which 29 are BUY signals and 100 are SELL signals.
  • 168 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed.
The view from Alert HQ --

Markets were wobbly today but our signals have remained reasonably positive with one exception. We'll get to that exception is a minute but first the positive news.

Our Swing Signals list continues to be on the short side but BUY signals again outnumber SELL signals. We have more upside gaps than downside gaps on our Gap Signal list. The Trend Leaders list has been steadily growing and, as we approach 1000, we know the short-term top will be at hand. But we're not there yet.

But what happened on our list of Trend Busters?

We got SELL signals for 90 municipal bond funds. That's out of a total of 129 signals or about 70% of the total list. Today many of these funds were little changed but as stocks surged upward over the last two weeks, many muni funds dropped and broke below their trend lines, below their 50-day moving averages and below their lower Bollinger Bands. We've got funds from many of the major fund managers including Alliance, Blackrock, Eaton Vance, Federated, Morgan Stanley, Nuveen, Pimco and Van Lampen represented on the losers list.

Since the March lows, these funds have been trading like stocks; many were up 100% before the carnage of the last week or so. It appears that they just ran out of steam as there has been no particularly horrible news like a default or major changes in rates. The sudden downturn looks real and has occurred on increased volume.

To end on a more positive note, we do have plenty of attractive BUY signals. One example is also on the Trend Busters list. It is O'Reilly Automotive (ORLY). These guys run auto parts stores which isn't a very sexy business; however, as people have been keeping their cars longer these days, ORLY has reaped the benefit by selling more and more replacement ports.

Using our signals --

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals or Gap Signals may provide some good trading ideas.



Tuesday, October 13, 2009

Tuesday Swing Signals, Trend Busters, Trend Leaders and Gap Signals for Oct 13, 2009

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

Today we have the following:

  • 14 Swing Signals -- 8 BUY signals and 6 SELL Signals.
  • 520 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 196 stocks that are new additions to the list and 62 that fell off the previous list.
  • 24 Trend Busters of which 16 are BUY signals and 8 are SELL signals.
  • 177 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed.
The view from Alert HQ --

We're seeing a rotation in our signals now. Note that the number of stocks on the Trend Leaders list has increased to over 500. At the same time, the number of Swing Signals has been decreasing. This shows the up-trend has been in place long enough to move all the lagging indicators that make up the Trend Leaders. It also shows that there aren't as many stocks left at the bottom of their Bollinger Bands that are candidates for the Swing Signals lists.

This isn't necessarily a bad thing or a sign that we are approaching another near-term top. It does mean that the current up-trend has had legs and has brought many stocks along with it. Given that the Trend Leaders list has not come anywhere near holding a 1000 stocks suggests that there is more upside to go. With Intel (INTC) soundly beating expectations today, another surge in the averages could be in store. Note that we have Taiwan Semiconductor (TSM) as a BUY on our Swing Signals list today. Now that TSM does manufacturing for Intel, we could see some nice follow through on that signal.

In addition, our other signal lists are registering more BUYs than SELLs.

In general, we are seeing this as a broadbased move benefiting many, many sectors. We have ETFs of every stripe among the BUY signals. I encourage you to take a look!

Using our signals --

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals or Gap Signals may provide some good trading ideas.



Sunday, October 11, 2009

Weekly Review - on the rebound

What a rebound! Five straight days of gains are certainly a welcome comeback from the previous two weeks of declines. Time for the bears to take control again?

We'll look at where we are today in some of the charts that follow and see if we can figure out where we are going.

The view from Alert HQ --

Charts of some of the statistics we track at Alert HQ are presented below:

SPY vs.Moving Average Analysis, 10-09-2009This first chart tracks our moving average analysis. With stocks doing a quick about-face this week we see the number of stocks above their 50-day MA surging upward (the yellow line). It is close to crossing above the magenta line, the number of stocks whose 20-day MA is above their 50-day MA. If this does come to pass, it will be a bullish signal.

The next chart provides our trending analysis. It looks at the number of stocks in strong up-trends or down-trends based on Aroon analysis.

SPY vs.Trend Analysis, 10-09-2009
As can be expected, we can see the number of stocks in a down-trend has decreased. What I didn't expect is that the number of stocks in up-trends would continue to decline. These two usually move in opposite directions so this is a bit of a worrisome sign.

Conclusion --

One chart bullish, the other chart half-bullish. I guess you can't have everything.

So, the chart setup is pretty decent; however, the real catalyst this week will be in the form of earnings reports. The bellwethers will be out in force: Johnson & Johnson (JNJ), Intel (INTC), JP Morgan Chase (JPM), Citigroup (C), Goldman Sachs (GS), Nokia (NOK), Google (GOOG), IBM (IBM), Bank of America (BAC) and General Electric (GE).

Though earnings may the primary objects of interest, there are a decent set of economic reports on tap this week including retail sales, the consumer price index, the Philadelphia Fed index and industrial production.

It can be assumed that economic reports will continue the "less bad" theme so the market's short-term direction will surely be dependent on earnings. A big miss by a few of those bellwethers and rebound could turn into slump.

Disclosure: no positions in any stocks mentioned



Saturday, October 10, 2009

Weekend Winners and Losers - Alert HQ BUY and SELL signals for October 9, 2009

This post is to announce that the weekend's stock signals are available from Alert HQ.

Each week we scan about 7300 stocks and ETFs, checking fundamentals, performing technical analysis and looking for fresh BUY and SELL signals. Out of this process we generate the following lists:

  • Alert HQ stock alerts - based on a combination of proprietary and standard technical analysis techniques, we identify stocks or ETFs that are undergoing reversals, either to the upside or to the downside
  • Trend Leaders - just like it says, a collection of stocks in strong up-trends
  • Cash Flow Kings whose free cash flow yield is 25% or greater
  • 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
  • Swing Trading Signals - stocks that have bounced off a higher or lower Bollinger Band
  • Trend Busters - stocks or ETFs that have violated a current trend.
  • Gap Signals - stocks or ETFs gapping up or down during the last 5 sessions
The view from Alert HQ --

Just when it seems like downside momentum is gathering and support levels are in danger, the market turns on a dime and puts together 5 back-to-back up days.

As I said on Tuesday and Thursday, the signals at Alert HQ are leaning heavily bullish. Given that there are only 386 stocks on our Trend Leaders list, it very much looks like this week's rally still has room to run. So browse our signals at Alert HQ, there are sure to be a few that will help you catch this rally.

This week's results --

Here is the detailed breakdown for Alert HQ for this weekend:
  • Based on daily data, we have 19 Alert HQ BUY signals and 9 SELL signals
  • Based on weekly data, we have 2 Alert HQ BUY signals and 10 SELL signals
  • Based on daily data, we have 386 Trend Leaders. 96 new stocks joined the list since Thursday and 16 fell off the list since Thursday.
  • We have 95 Bollinger Band Breakouts based on daily data and 336 Breakouts based on weekly data.
  • We have 791 Cash Flow Kings
  • Based on daily data we have 35 Swing Signals of which 30 are BUY signals and 5 are SELL signals.
  • We have Trend Busters with 36 signals based on daily data (33 BUY signals and 3 SELL signals) and 19 based on weekly data (4 BUY signals and 15 SELL signals).
  • Finally, we have 217 Gap Signals based on daily data of which 79 are SELL signals and 138 are BUY signals
Using our signals --

Visit Alert HQ to view or 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.

If you're a momentum trader, the Trend Leaders 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. If you do favor technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals may provide some good trading ideas. See them all at Alert HQ.

Remember, we also provide our latest updated Swing Signals, Trend Leaders, Gaps and Trend Busters on Tuesday and Thursday nights.



Friday, October 9, 2009

The Price of Safety

I have written several posts on stable value funds over the last year or two. With the financial crisis easing, the topic needs revisiting.

It is worth reviewing some of the issues around stable value funds a year ago and contrasting the situation with where we are today.

Back from the brink --

Back when Lehman Bros. was failing and the stock market was collapsing, many people moved portions of their 401Ks into stable value funds. These funds guaranteed principal and paid a modest interest rate. It came out that this was a popular strategy for employees even at the Federal Reserve.

I, myself, took this same action and wrote about it on this blog. The reaction among readers ranged from agreement on the strategy to "what, are you crazy?" The reason for the latter opinion is that many stable value funds held bonds that had always been solid and conservative in the past but, in the midst of a real estate melt-down, were now at risk. I am talking about mortgage-backed securities issued by the likes of Fannie Mae and Freddie Mac.

What if?

Many observers began to suspect that some stable value funds could find themselves in trouble. If some fund holdings deteriorated, the funds could offset that problem by reducing the interest rate delivered to investors. If fund holdings really went south and large numbers of investors tried to redeem shares at the same time, there was a fear that shareholders would not receive full value of their principal. There was even speculation that a fund might fail.

A sigh of relief --

Well, we have come quite a ways from the dark days of late 2008 / early 2009 and there haven't been any outright failures of stable value funds and very few instances of shareholders failing to receive full value of their principal upon cashing out.

Not so fast --

On the other hand, stable value funds have not skated through this mess without feeling some impacts. Though investors did lot lose funds, they also failed to make much money.

The primary impact to stable value funds has been a decrease in the rate of return. Funds used to promise that investors would receive a certain interest rate on the cash invested. As stable value funds worked their way through the crisis, however, interest rates seemed to drift lower and lower.

I have not done a wide ranging survey but using my own fund as an example I see that rates have dwindled to practically nothing, probably due to the fact that U.S. Treasury bonds now make up a larger proportion of fund holdings.

What next --

The question at this point is what to do with those stable value fund holdings. The market has moved up strongly since March of 2009 yet stable value funds have returned very little.

It's decision time. If you still have substantial sums stashed in your stable value fund, it's time to think about redeploying some portion of it. Otherwise, it is virtually dead money. Are you willing to pay that price for safety?

To read more posts from TradeRadar on 401Ks and stable value funds click this link.



Thursday, October 8, 2009

Thursday Swing Signals, Trend Busters, Trend Leaders and Gap Signals for Oct 8, 2009

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

Today we have the following:

  • 88 Swing Signals -- 85 BUY signals and 3 SELL Signals.
  • 306 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 147 stocks that are new additions to the list and 25 that fell off the previous list.
  • 40 Trend Busters of which 33 are BUY signals and 7 are SELL signals.
  • 229 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed.
The view from Alert HQ --

On Tuesday I looked at the day's Alert HQ signals and dared to predict new highs were on the way. Here we are on Thursday and all I can say is "so far, so good."

Our signals at Alert HQ have stayed bullish. Our Swing Trading Signals list is shorter today than on Tuesday but the BUY signals still way outnumber the SELL signals. The Trend Leaders list is expanding again. There are more upside breakouts on the Trend Busters list than downside breakouts. Even our list of Gaps is leaning bullish.

Earnings season is here and there haven't been any nasty surprises. Alcoa actually kicked off the "silly season" as some analysts call it by beating Wall Street expectations and that has set a hopeful tone.

So after registering gains four days in a row, markets are probably ready for a breather. If our signals are truly pointing to higher prices, and I think they are, it might be "buy the dip" time again.

Using our signals --

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals or Gap Signals may provide some good trading ideas.



Wednesday, October 7, 2009

Free course in technical analysis - now that's a pretty good deal!

Those of you who follow this blog and check out our Alert HQ BUY and SELL signals know that I'm always jabbering about trends, moving averages, Aroon, MACD, Bollinger Bands and other techniques for technical analysis.

Today we have a guest post from Adam Hewison who is a co-founder of our MarketClub affiliate. He has a program that will bring you up to speed on many of these technical analysis methods and tell you how to use them in your trading. I think it could be very educational so, without further ado, here's Adam...

First of all I wanted to thank Trader Radar for having me as a guest today!

My name is Adam Hewison. You might want to Google me to confirm what I am about to share with you.

There are plenty of people out there that create “exclusive email courses” with little or no credentials to actually backup their teachings. So, I think it’s right that I share a little bit about myself with you before we even start.

I was a former floor trader on the IMM, IOM, NYFE and LIFFE as well as a risk manager of a large, multinational corporation in Geneva, Switzerland. I also have written books on forex trading and trend following. In 1995, I founded INO.com and later co-founded MarketClub. I’ve been in the trading biz for over three decades and have seen it all. I created this course as a way to give back and share trading tips and techniques that I still use in my trading today.

In my Free Mini Email Course, I will show and explain the tools and strategies you need to increase your success rate in the marketplace.

(1) The importance of psychology in price movement

(2) How to spot mega trends

(3) Understanding of technical price objectives

(4) How to picture price objectives

(5) How to trade with moving averages

(6) How to use point and figure trading techniques

(7) How to use the RSI indicator

(8) How to correctly use stochastics in your trading

(9) How to use the ADX indicator to capture trends

(10) How to capitalize on natural market cycles.

Plus, you will you will learn all about fibonacci retracements, MACD, Bollinger Bands and much more.

Just click this link and fill out the form and we’ll get you started right away.


Every success,
Adam Hewison
President, INO.com & Co-Creator, MarketClub



Tuesday, October 6, 2009

Kick the tires and light the fires - Tuesday Swing Signals, Trend Busters, Trend Leaders and Gap Signals for Oct 6, 2009

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

Today we have the following:

  • 209 Swing Signals -- 197 BUY signals and 8 SELL Signals plus 4 Strong BUYs.
  • 184 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 80 stocks that are new additions to the list and 40 that fell off the previous list.
  • 22 Trend Busters of which 14 are BUY signals and 8 are SELL signals.
  • 227 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed.
The view from Alert HQ --

Pullbacks these days sure seem to be short and shallow. Two weeks of declines and now the market is taking off like a jet.

Our signals at Alert HQ have swung way bullish again. I don't think we've ever had such a preponderance of BUYs on our Swing Trading Signals list. I don't want to go out on a limb here, but this really suggests we're going to new highs and pretty soon, too.

Furthermore, the other signal lists are registering more BUYs than SELLs. It seems like we're getting confirmation across the board.

As long as earning season doesn't let us down, investors should strap in and get ready for a fun ride

Using our signals --

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals or Gap Signals may provide some good trading ideas.



Monday, October 5, 2009

Software a defensive sector? Who knew?

I often write about tech stocks on this blog. Today I read an interview with one of the most well-known managers of a technology mutual fund.

The Wall Street Journal had a conversation with Paul Wick, manager of the Seligman Communications and Information fund (SLMCX). With 20 years as manager of this fund, he has consistently ranked in or near the top 10% among his peers.

Mr. Wick makes several points that will be familiar to fans of tech stocks. He comments that many tech stocks have "grown up" (my phrase), have solid business models and have reacted to the downturn by cutting costs and finding other ways to remain profitable. He contends that the tide is turning for many tech sectors and, therefore, the run-up in many tech stocks is justified. Even some of the lower quality companies have reasons to bounce.

These are ideas that are not unusual though they are open to dispute among those who feel less bullish on the economy in general or tech stocks in particular.

Prompted by the WSJ, Mr Wick described why software is his favorite sector and the best business in technology:

  • Stickiest, with the highest switching costs for customers
  • Best pricing power in the tech sector
  • Many companies in the sector that are not especially correlated with each other as they operate in significantly different areas of the tech sector
  • It is a consolidating industry
  • Many companies have a great deal of cash on their balance sheets
As he went through this list, it occurred to me that he was describing a defensive sector, one that is resilient and has a growth component but still has many of the characteristics of a defensive investment including cash on hand, pricing power, a wide moat (stickiness) and non-correlation. All of these factors tend to reduce risk.

Another aspect of a defensive sector is that it will grow but not as fast as more "rocket-stock" oriented sectors. For example, the semiconductor and networking sectors have outperformed the software sector this year. We compare them in the chart below with the sectors represented by the iShares Software ETF (IGV), the Semiconductor ETF (IGW) and the Networking and Media ETF (IGN).

At the worst points in the downturn, software managed to do a bit better than the other two sectors though they sometimes traded places. At no time, however, was software the worst performing sector. Subsequently, software delivered the kind of growth tech investors generally expect in return for the kind of volatility and risk tech often exhibits.

The lesson here is that if you are building a tech portfolio, it is important to include the software sector either in the form of an ETF like IGV or via a carefully researched selection of software stocks. It can help smooth out the overall performance and provide some confidence when the economic environment gets shaky.

Disclosure: long IGN and USD



Sunday, October 4, 2009

The trend may not be your friend this time...

I know that it really isn't proper to do technical analysis on leveraged ETFs. I know that it is always better to analyze an underlying index.

Nevertheless, I was struck by the fact that out of the 25 BUY signals on our Trend Busters list this weekend, fully 23 of them are inverse or inverse leveraged ETFs. In other words, they have all broken above downward-sloping trend lines and are threatening to initiate a new upward trend. Here they are listed below:

SymbolName
DPK DIREXION DAILY DEVELOPED MARKETS BEAR 3X SHARES
EDZ DIREXION DAILY EMERGING MARKETS BEAR 3X SHARES
ERY DIREXION DAILY ENERGY BEAR 3X SHARES
FAZ DIREXION DAILY FINANCIAL BEAR 3X SHARES
DRV DIREXION DAILY REAL ESTATE BEAR 3X SHARES
TYP DIREXION DAILY TECHNOLOGY BEAR 3X SHARES
SEF PROSHARES SHORT FINANCIALS
RWM PROSHARES SHORT RUSSELL2000
SBB PROSHARES SHORT SMALLCAP600
SPXU PROSHARES ULTRAPRO SHORT S&P 500
SMN PROSHARES ULTRASHORT BASIC MATERIALS
DXD PROSHARES ULTRASHORT DOW 30
SIJ PROSHARES ULTRASHORT INDUSTRIALS
EPV PROSHARES ULTRASHORT MSCI EUROPE
JPX PROSHARES ULTRASHORT MSCI PACIFIC EX-JAPAN
SJH PROSHARES ULTRASHORT RUSSELL 2000 VALUE
TWQ PROSHARES ULTRASHORT RUSSELL 3000
SDK PROSHARES ULTRASHORT RUSSELL MIDCAP GROWTH
SJL PROSHARES ULTRASHORT RUSSELL MIDCAP VALUE
SDS PROSHARES ULTRASHORT S&P500
SDD PROSHARES ULTRASHORT SMALLCAP600
SRS PROSHARES ULTRASHSORT REAL ESTATE
RSW RYDEX INVERSE 2X S+P 500

The knee jerk reaction here is to think the market is headed for a major fall if all these inverse ETFs are making such a concerted move upward.

Is there a confirmation found when looking at the SELL signals? In other words, are some of the ETFs based on some on the same underlying indexes showing up as Trend Busters on the SELL side of the equation?

Well, the answer here is yes and no. There are actually quite a few non-leveraged ETFs generating SELL signals on the Trend Busters list, 15 to be exact. The collection is, however, a bit of a hodgepodge. The list of ETF SELL signals is listed below and you can see that there isn't a clear correlation with the inverse ETFs in the list above.

SymbolName
DPD DOW 30 PREMIUM & DIVIDEND INCOME FUND, INC.
EOS EATON VANCE ENHANCE EQUITY INCOME FUND II
EOI EATON VANCE ENHANCED EQUITY INCOME FUND
IYG ISHARES DJ US FINANCIAL SERVICE INDEX
VNM MARKET VECTORS VIETNAM ETF
PKB POWERSHARES DYNAMIC BUILDING & CONSTRUCTION PORTFOLIO
PTJ POWERSHARES DYNAMIC HEALTHCARE SERVICES SECTOR PORTFOLIO
PRN POWERSHARES DYNAMIC INDUSTRIALS SECTOR PORTFOLIO
PWT POWERSHARES DYNAMIC SMALL CAP GROWTH PORTFOLIO
PJM POWERSHARES DYNAMIC SMALL CAP PORTFOLIO
UPRO PROSHARES ULTRAPRO S&P 500
RKH REGIONAL BANK HOLDRS TRUST
KME SPDR KBW MORTAGE FINANCE ETF
IPK SPDR S&P INTERNATIONAL TECHNOLOGY SECTOR
WMH WIRELESS HOLDRS TRUST

Unfortunately, there is enough of a correlation to make anyone worry. We see ETFs tracking the S&P 500, the Dow 30, small caps, financials, real estate and industrials on both lists with the underlying indexes generating the SELL signals and the inverse ETFs generating the BUY signals.

Unless stocks hold at their support levels, these new breakouts could create some ugly trends, ones that will not be friendly to investors.

Disclosure: no positions




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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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