Tuesday, December 29, 2009

Alert HQ signals for Tuesday, Dec 29, 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:

  • 19 Swing Signals -- 10 BUY signals and 9 SELL Signals.
  • 554 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 122 stocks that are new additions to the list and 118 that fell off the previous list.
  • 45 Trend Busters of which 41 are BUY signals and 4 are SELL signals.
  • 157 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed. 84 are bearish gaps and 73 are bullish gaps.
The view from Alert HQ --

The weekend's signals suggested further gains for stocks but instead markets have struggled every day this week. Lack of news and low volume are putting the brakes on last week's rally.

Today's signals are somewhat mixed. Trend Busters and Trend Leaders are still registering strongly bullish results while the Swing Signals are fading a bit. Still, there are plenty of BUY signals today so be sure 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.

Found a few stock picks you are interested in? If you are looking to refine your entry and exit points, you should take a look at what our friends at Hottinger's E-Zone Signals have to offer.




EBIX - solid pick in the software sector

Ebix, Inc. (EBIX)  showed up this weekend as a new addition to our Trend Leaders list. It earned this distinction by registering bullish indications via MACD and DMI analysis. Here is the chart:




The chart shows that the stock has been in a downtrend since October. Now, however, it's beginning to show some life. It's making a strong recovery from the area around $45 and has broken resistance in the area around $50 as well as making a move above that downward sloping trend line.

Background --

According to Yahoo! Finance, Ebix provides software and e-commerce solutions for the insurance industry primarily in North America, Australia, New Zealand, India, and Singapore. It focuses on the sale, customization, development, implementation, and support of insurance carrier system platforms. It also sells and supports broker/agency management systems.

A major channel for the company is the EbixExchange, On-Demand Software Exchange that offers products and services that automate, expedite, and improve the process for the life insurance, annuity, property & casualty, and health insurance industries. EbixExchange currently supports a broad range of insurance agencies, brokerage and clearing firms, and operations centers at over 100 of the leading insurance carriers and their affiliates. EbixExchange enables CRM solutions, Order-entry platforms, Quoting Engines, Risk Administration tools, Loss Reporting compliance, Data Transformation solutions and much more for the Life, Annuity, Health and P&C Insurance Industry.

Another growing area for the company is BPO or business process outsourcing. The company offers services including new business quotes, application data entry, requirements processing, contact center, help desk, inbound customer service, product support, policy inquiry, renewal processing, policy cancellation and change, billing and payments and claims processing.

Ebix has a market cap of $581 million and, as such, is considered a  small cap.

The financials --

So the stock is looking promising from a technical analysis point of view but how are the financials? The chart below shows that the revenues and earnings have steadily increased every quarter despite the recession. Margins are looking pretty good, too.


Explore more EBIX Data on Wikinvest

In terms of valuation, the stock is still reasonably priced. Trailing PE is under 20 which is OK for a growth stock in the tech sector. PEG is under 1 which implies that the company's growth is not yet priced in. Price-to-sales is a little high but Price-to-book is reasonable. The Enterprise Value/EBITDA ratio is 15.8 which implies the company is in the vicinity of fairly priced.

In terms of management effectiveness, both return-on-equity (ROE) and return-on-assets (ROA) are pretty good and the combination is a sign that company resources are being used well. The company has very little debt.

The outlook --

In January, the stock will undergo a three-for-one split. After a positive performance at an investors conference in early December, where management confirmed the split, the stock ran into some headwinds. Some of the items discussed included the following:
  • Organic growth Rate for 2010 and 2011: The Company forecasted its organic growth rate for 2010 and 2011 to be between 10 to 15%. 
  • Exchange customer deals: The Company announced that since 1st October 2009, it has won a number of key deals in the exchange area that are forecasted to help the Company's revenues to keep growing organically. Some of the new deals announced at the meeting were Fidelity Investments, Bank of America, Wells Fargo, US Bank, National Western Life Insurance Company, Genworth Financial, Principal Financial Group, AXA Equitable Life, American General Life insurance, Nationwide Mutual Insurance Company, and Ameriprise and Consolidated Health Plans.  
  • Business Process Outsourcing customer deals: The Company also announced that since October 1, 2009 it has signed new deals in the BPO arena like FED-EX, Anheuser Busch, Meritage Homes, City of Phoenix, Bechtel Jacobs, Los Angeles County Office, Disney Consumer Products, AON Risk Services Southwest, Sempra, Marsh, Logan Property Management, Greenspoint Plaza, Business Finance Group, Alachua County, Los Angeles County office of Education, Calpine Corporation, EBS-RMSCO, Westcore Properties, United Stationary Supply Co. and Pioneer Natural resource. 
  • Workers Compensation and Risk Exchange Deals: The Company's Division head for the Risk management and Workers Compensation Division (Formerly Peak) announced that the division had signed 27 new customer contracts since its acquisition by Ebix. 
The company is also planning further acquisitions which will increase its footprint internationally.

Conclusion --

Ebix is a little known small-cap in the software sector that appears to have navigated the economic downturn handily. In fact, they probably prospered by providing cost reduction to companies that opted to discontinue in-house processing and instead adopt Ebix's web-based on-demand services or BPO services. The company seems well positioned to continue riding this trend and, indeed, management has already gone on record projecting double digit growth rates for the next two years.

With the chart turning up, it appears that the current pullback is coming to an end and investors may want to pull the trigger on this stock soon.

Disclosure: no positions



Sunday, December 27, 2009

Tech takes bull by the horns

Investors focused on the positive and drove stocks to new highs in a low-volume, holiday-shortened week. It could have gone the other way as economic reports were mixed. Investors cheered improvements in existing home sales and a drop in initial jobless claims and they shrugged off much worse than expected new home sales and the revision of Q3 GDP down to a paltry 2.2%.

Also released just before Christmas was the Durable Goods report for November. At a summary level, shipments, new orders and unfilled orders were all up while inventories declined. The numbers beat expectations and helped the market rise. From the point of view of the tech sector, shipments were down month-over-month but new orders were up nicely. Here is the chart for the tech sector as a whole:

Durable Goods - Tech Sector - Nov-2009

Investors tend to focus on the new orders numbers since shipments are ancient history. This chart shows new orders have hit the highest level in twelve months so it is clearly a welcome development. Even though new orders can be canceled or delayed, it is still encouraging to see the bottom holding.

So much for economic statistics, how are things doing from a technical analysis point of view?

The view from Alert HQ --

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

Moving Average Analysis - SPY versus the market, 12-24-2009

This first chart presents our moving average analysis.The number of stocks above the 50-day moving average surged higher this week and crossed above the magenta line that represents the number of stocks whose 20-day moving average is above their 50-day moving average. Also note that the magenta line is trending upward in concert with the yellow line. This suggests a very bullish outlook.

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.

Trend Analysis - SPY versus the market, 12-24-2009

Here we also see stocks finally moving in a decisively bullish direction. The number of stocks in strong up-trends has increased nicely while the number of stocks in down-trends has stayed at a relatively low level.

Conclusion --

In last week's weekly review I pointed out that tech would be in the spotlight with Jabil Circuit, Progress Software, Micron Technology, Red Hat, TIBCO and 3Com reporting earnings. Every one of them met or exceeded expectations. This followed the previous week when Research in Motion and Oracle also beat. So it appears tech stocks are indeed poised to turn in good results and, if this week is any indication, they will lead this market to further highs. Unfortunately, there are no significant tech earnings coming up this week so I don't know if we can keep the momentum going.

On the other hand, there are some economic reports of note coming up including the Case-Shiller 20-city home price index, the Conference Board Consumer Confidence Index, Chicago PMI (Purchasing Managers Index), crude oil inventories and the weekly initial jobless claims and continuing claims numbers.

With our Alert HQ statistics showing broad-based strength in the market and investors rotating into tech and other economically sensitive sectors, things are looking up. The zig-zag sideways action we have seen for the last month or two looks to be giving way to a trending market, one that is trending to the up-side. Thanks Santa!



Saturday, December 26, 2009

Weekend Winners and Losers - Alert HQ BUY and SELL signals for December 24, 2009

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

Today we have the following stock picks and signals:

  • Based on daily data, we have 30 Alert HQ BUY signals and 2 SELL signals
  • Based on weekly data, we have 5 Alert HQ BUY signal and 6 SELL signals
  • We have 71 Bollinger Band Breakouts based on daily data and 263 Breakouts based on weekly data.
  • We have 818 Cash Flow Kings
  • 46 Swing Signals -- 42 BUY signals and 4 SELL Signals.
  • 551 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 206 stocks that are new additions to the list and 37 that fell off the previous list.
  • 82 Trend Busters based on daily data of which 80 are BUY signals. We also have 46 Trend Busters based on weekly data.
  • 140 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed. We also have 52 Gap Signals based on weekly data.
The view from Alert HQ --

Markets exhibited holiday cheer this week with the S&P 500 making a new high and the NASDAQ looking like it's really breaking out. Even a laggard like the Russell 2000 has surged to a new high.

The improved tone is quite apparent in our Alert HQ signals.

Over the course of the last couple of weeks, the Trend Leaders list has gone from barely 300 stocks and ETFs to 551 this week. There is a nice proportion on tech on the list of most recent additions but, in general, many sectors are represented and that suggests the gains are broadbased.

The Alert HQ BUY signals are also increasing in number while on the Swing Signals and Trend Busters lists, BUY signals strongly outnumber SELL signals.

All in all, things are looking pretty bullish at this point. I suspect there is still room for stocks to run. In addition to tech, I see a good number of China stocks and ETFs showing up with BUY signals. Healthcare and pharmaceuticals continue to outperform and, in a vote for the economy, it appears that steel stocks are reasserting themselves.

As you can see, with so many sectors looking good, Alert HQ has something for everyone. Take a look today!

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.

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 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. 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.

Found a few stock picks you are interested in? If you are looking to refine your entry and exit points, you should take a look at what our friends at Hottinger's E-Zone Signals have to offer.




Tuesday, December 22, 2009

Breakout beginning - Alert HQ signals for Tuesday, Dec 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:

  • 46 Swing Signals -- 39 BUY signals and 7 SELL Signals.
  • 379 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 150 stocks that are new additions to the list and 72 that fell off the previous list.
  • 88 Trend Busters of which 83 are BUY signals and 5 are SELL signals.
  • 171 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed. 85 are bearish gaps and 86 are bullish gaps.
The view from Alert HQ --

On the weekend I asked whether tech could lead the market higher. We almost have the answer. The NASDAQ appears to breaking out to the upside. The other major averages have not been able to follow suit, at least not yet.

Our signals tonight, though, make me optimistic that we'll see the S&P 500, the Dow and the Russell 2000 catch up to the NASDAQ.

Tonight we have a nicely bullish set of signals. The Swing Signals and Trend Busters lists both have expanding numbers of BUY signals that are thoroughly outnumbering the SELL signals. The Trend Leaders list is also growing and the number of stocks being added to the list is double the number that fell off the list. This shows less rotation and more stocks exhibiting strong bullish trending. Even the Gap Analysis list shows a majority of bullish upside gaps compared to bearish downside gaps.

So across the board we have a set a good signals tonight.Dig in, take a close look and find a few stocks that fit your investment style.

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.

Found a few stock picks you are interested in? If you are looking to refine your entry and exit points, you should take a look at what our friends at Hottinger's E-Zone Signals have to offer.




Monday, December 21, 2009

Ciber surges - is there a larger meaning?

Ciber (CBR) has sure been volatile these last few days. Here's why I find that interesting.

First the breakout --

The company showed up this past weekend on the Bollinger Band Breakout list at Alert HQ. A look at the chart below shows how sharp the breakout has been. Even though the stock gave up some ground today, it's still up dramatically. Does this mean the company is about to announce surprisingly good quarterly results?




Note that the stock has managed to hold above the lower blue horizontal line which was the first level or resistance and which is now acting as the first level of support. The stock has not yet broken through the upper blue horizontal line which is the current resistance level. On the plus side, MACD and Aroon are both starting to indicate a new trend that is pushing to the upside.

Now the interesting part --

Many analysts and economics regard temporary staffing as a leading indicator of employment recovery, because many companies, being cautious, will bring on temporary help before hiring permanent employees.

Ciber is a tech out-sourcing vendor. They provide system integration and information technology (IT) services to large and mid-size businesses. Their primary expertise is related to development, maintenance and integration of both custom and packaged enterprise software. Contracts are often for temporary engagements.

Is the recent surge in the stock price a sign that Ciber's business is looking up?

If Ciber is starting to do well, can we consider them to be the leading indicator for the tech sector or at least the enterprise software sector?

If so, it might be a good time to consider the iShares - S&P North America Software ETF (IGV). Indeed, IGV hit a new high today. The fund includes companies that are producers of client/server applications, enterprise software, application software, and personal computer (PC) and home entertainment software. An improvement in software consulting now could be the precursor to improving sales in enterprise software and subsequent hiring in this sector. If so, IGV and Ciber could both benefit. Let's see if Ciber can break on through that next support level.

Disclosure: no positions



Sunday, December 20, 2009

A tiresome sidewise market - can tech lead it higher?

Stocks gyrated this week in response to the release of the latest FOMC policy statement and developments in Greece including the corresponding downgrade of Greek government bonds. Economic reports were mixed. The Producer Price Index (PPI) rose more than expected in November and that was looked on as negative inflationary news. The higher prices, however, weren't reflected in the Consumer Price Index (CPI) which was in line and implies price increases were not being passed on to consumers like you and me. Industrial Production beat expectations and Initial Jobless Claims rose for a second straight week while the moving average declined.

All in all, economic fundamentals were OK this week and how important is Greece, anyway? Yet stocks didn't do much. except for tech stocks and small-caps that did actually manage to show gains this week. So how are things doing from a technical analysis point of view?

The view from Alert HQ --

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



This first chart presents our moving average analysis.The number of stocks above the 50-day moving average again declined a tiny bit while the number of stocks whose 20-day MA is above the 50-day MA increased a little. This has happened two weeks in a row so far but the changes have been so small as to almost be meaningless.And, not surprisingly, the market has more or less moved sideways.

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 also see the effects of a sideways market. The number of stocks in strong up-trends has barely budged and neither has the number of stocks in strong down-trends.

Conclusion --

As we said last week, what little change in markets we have seen has been slightly bearish.On the other hand, the inability of the bears to make much headway I take to be a positive. It is clear from the charts above that stocks are not over-bought so there is plenty of room for stocks to rally.

The first of two holiday shortened weeks is upon us. With many traders on vacation, volume will likely be thin and stocks volatile.

Holidays or not, there will actually be few reasonably important economic reports this week including  the final revision to Q3 GDP, existing home sales, new home sales, personal income, personal spending, University of Michigan Consumer Sentiment Index, the usual weekly initial jobless claims and the Durable Goods report.

It seems like earnings season just ended but some earnings reports started to trickle out. last week. Tech stocks were the center of attention with Research in Motion (RIMM) and Oracle (ORCL) reporting better than expected results. This week, tech will again be in the spotlight with Jabil Circuit, Progress Software, Micron Technology, Red Hat, TIBCO and 3Com reporting. So for those of you who, like me, tend to focus on the tech sector, this week will provide a small preview of what's to come as 4th quarter earnings season plays out.

This seems like a good time for sector leadership to rotate. Healthcare, consumer staples and utilities have been leaders lately. These are typically not the sectors that lead significant rallies. With imminent passage of healthcare reform, it's not unlikely that this will slow down healthcare stocks. And with tech stocks grabbing investor attention this week, we could get a positive reaction if they turn in some good results.

After all, aren't we all tired of this sidewise market?



Saturday, December 19, 2009

Weekend Winners and Losers - Alert HQ BUY and SELL signals for December 18, 2009

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

Today we have the following stock picks and signals:

  • Based on daily data, we have 21 Alert HQ BUY signals and 17 SELL signals
  • Based on weekly data, we have 2 Alert HQ BUY signal and 13 SELL signals
  • We have 158 Bollinger Band Breakouts based on daily data and 226 Breakouts based on weekly data.
  • We have 835 Cash Flow Kings
  • 43 Swing Signals -- 35 BUY signals and 7 SELL Signals and 1 Strong BUY.
  • 301 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 53 stocks that are new additions to the list and 70 that fell off the previous list.
  • 53 Trend Busters based on daily data of which 49 are BUY signals. We also have 122 Trend Busters based on weekly data.
  • 174 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed. We also have 57 Gap Signals based on weekly data.
The view from Alert HQ --

Markets ended the week mixed. The nature of the outcome, however, is positive for the market overall. I was pleased to see the small-caps on the Russell 2000 and the tech-heavy NASDAQ as the leaders this week, logging gains of 1.7% and 1.0% respectively, while the large cap indexes, the S&P 500 and the Dow lagged. Seeing small-caps and tech stocks making a move tells me the leadership may be falling into place for another leg up. These are the most economically sensitive stocks and seeing them move ahead suggests some investor confidence is returning to the market.

As for the signals at Alert HQ, things certainly seem to have perked up a bit from Thursday. The number of stocks and ETFs on the Trend Leaders list has managed to stay above 300 this week. We are again seeing a surge in the number of BUY signals on the Trend Busters and Swing Signals list. That is always a welcome sign that implies a period of weakness may be reversing to the upside. A further bullish characteristic is that there are virtually no inverse ETFs on these lists. It is also good to see that the number of upside Bollinger Band Breakouts outnumbers the downside breakouts.

So given the state of our signals, there doesn't seem to be any strong rationale for bearishness. Why not find a few candidates for your watch list at Alert HQ?

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.

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 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. 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.

Found a few stock picks you are interested in? If you are looking to refine your entry and exit points, you should take a look at what our friends at Hottinger's E-Zone Signals have to offer.



Friday, December 18, 2009

Can Synopsys rise from the dead?

Last night I published the Thursday Swing Trading Signals and there was an interesting mid-cap tech company on the list. The company is Synopsys (SNPS).

Why do I question whether it can rise from the dead? Take a look at this chart:



You can see that the stock got slammed in early December and was left for dead. The sell-off was induced by an earnings report where the company announced lower quarterly profit and sales as well as higher expenses.

Today, the stock opened with an upside gap and so far is holding its gains.

Company Background --

Synopsys, Inc. and its subsidiaries provide electronic design automation (EDA) software and related services for semiconductor design companies in the United States, Europe, Japan, and the Asia Pacific. The software provides design and verification, optimization, simulation and timing analysis capabilities. The company supports both digital and analog chip design and provides professional services.

Synopsys, a $3 billion company, is a clear market leader in the EDA field. The following chart compares by revenue Synpsys to its competitors:


Explore more SNPS Data on Wikinvest

Financial Background --

The company is not cheap but neither is it especially expensive. Value indicators are at moderate levels with a PEG of 1.4, price-to-sales at 2.26 and an Enterprise Value/EBITDA ratio a little over 6.

The company is cash flow positive and has no debt. The following chart shows revenue, net income and net margin over the last five quarters.


Explore more SNPS Data on Wikinvest

As you can see, revenues sagged during the worst of the downturn but are making a comeback. The best you can say about net income, however, is that it has been stuck in neutral for the last few quarters. Margins have declined recently, as well. Even as the semiconductor industry has been picking up in the last quarter or two, Synopsys and the EDA sector in general have continued to struggle.

The outlook --

Truth be told, Synopsys didn't do a bad job during the economic downturn, remaining profitable and comfortably in a leadership position in their industry.

At the time of their last earnings report, Synopsys predicted for fiscal 2010 a profit of $1.01 to $1.20 per share, or $1.52 to $1.62 per share when excluding items, and revenue of $1.33 billion to $1.35 billion, essentially flat with the previous year. Analysts polled by Thomson Reuters had projected adjusted earnings of $1.68 per share on $1.37 billion in revenue.

The fact that the company's earnings are lagging those of the chip manufacturers is not surprising. Before EDA vendors or semiconductor equipment manufacturers can see significant growth return, the chip manufacturers need to begin to exhibit stronger demand. Providing we don't see a double-dip next year, that demand should return and companies like Synopsys should be able to return to growth.

As for today's move? I would be stunned to think that my simple site caused the buying so I am assuming that somewhere there is an analyst who upgraded the stock. Or perhaps management pre-announced better than expected earnings as we near the end of this quarter. In either case, the news has not been picked up by Google yet. Nevertheless, one could make an argument that decent growth in 2010 would mean the stock is cheap today. And technically, it appears the downdraft in the stock price has been arrested at the 200-day moving average so maybe it's just ripe for a swing trade.

Disclosure: no positions



Thursday, December 17, 2009

Alert HQ signals for Thursday, Dec 17, 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:

  • 20 Swing Signals -- 12 BUY signals and 8 SELL Signals.
  • 318 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 103 stocks that are new additions to the list and 95 that fell off the previous list.
  • 34 Trend Busters of which 26 are BUY signals and 8 are SELL signals.
  • 173 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed. 92 are bearish gaps and 81 are bullish gaps.
The view from Alert HQ --

A sour day in the market today led to losses in all major averages. The financial sector especially fell into disfavor again with Citi's misfire of a stock offering and Meredith Whitney's downgrading of Goldman Sachs and Morgan Stanely. For the second week in a row, initial jobless claims ticked up slightly while the four-week moving average declined and the prior weeks number were revised lower. Remaining economic reports were fairly positive with the Philadelphia Fed index comfortably beating expectations and the index of Leading Indicators showing another improvement.

Be that as it may, the dollar was up and that's all traders needed to know. The rise in the US Dollar Index almost exactly matched the decline in major averages.

The impact on our Alert HQ signals was clear. The most responsive signals, the Swing Signals and Trend Busters saw several similar changes: total number of stocks on each list decreased and number of SELL signals increased. On the other hand, there's always a bull market somewhere and today it was again in the energy sector. There are too many companies to list here so if you're interested in finding some energy stocks on the move, I encourage you to check out these two lists.

Interestingly, the slower moving indicators that drive the Trend Leaders list actually allowed that list to grow despite today's dismal action. The total number of stocks on the list increased a bit since Tuesday.

In general, stocks and our signals are clearly slumping but I still don't see serious weakness looming. With BUY signals still outnumbering SELL signals I am disposed to stay optimistic. How about you?

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, December 16, 2009

Healthcare is on fire -- is this stock deep value or value trap?

One of the features of this web site is what I refer to as the "super list" where I combine the results of two or more of the screens that the Alert HQ software performs and publish the resulting set of stocks.

Today I'd like to feature a stock that seems to keep popping up on individual screens and was brought to my attention when I checked a few combinations of screens.

This stock is one of the Cash Flow Kings from this past weekend and it's on Tuesday's Trend Leaders list. It's in my recent Q3 Growth Report because it showed gains in both its year-over-year and sequential earnings per share. Finally, it again exceeded it's upper Bollinger Band which earned it a place on Tuesday's Bollinger Band Breakout list.

The name of this stock is Amedisys, Inc and its symbol is AMED.

Normally, I focus on tech stocks but here we have a different animal. Amedisys is a healthcare company. It specializes in home healthcare and hospice services. Here are some snippets from the company's profile on Yahoo Finance: "Its home health services include skilled nursing and home health aide services; physical, occupational, and speech therapy; and medically oriented social work to eligible individuals who require ongoing care... It provides hospice services to patients using an interdisciplinary care team comprising a physician, nurses, home health aides, social workers, therapists, dieticians, volunteers, counselors, chaplains, and bereavement coordinators... As of December 31, 2008, the company owned and operated 480 Medicare-certified home health agencies and 48 Medicare-certified hospice agencies; and managed the operations of 4 Medicare-certified home health and 2 Medicare-certified hospice agencies in 37 states within the United States, the District of Columbia, and Puerto Rico."

Financials --

Amedisys is considered a small-cap; it has a market cap of $1.28 billion. The company seems to be incredibly undervalued. It's trailing PE is 10, it's forward PE is 9, it's PEG is a mere 0.54, price-to-sales is less than 1 and price-to-book is less than 2. The company's Enterprise Value/EBITDA ratio is roughly 6 which is low enough to be approaching the level of "deep value".

As I mentioned above, the company is one of the growth leaders when it comes earnings. Year-over-year EPS growth is 53% though sequential EPS growth slowed down considerably in the latest quarter. Revenue is also growing, up more than 20% year-over-year. So those good EPS numbers are not coming from only cost cutting, there's top line growth going on here. The following chart shows it graphically.


Explore more AMED Data on Wikinvest

Finally, the company is cash flow positive and has no debt.

The technical analysis --

Here we have the chart of daily data for Amedisys.



You can see the stock has surged recently. MACD and Aroon are very bullish. Amedisys has bounced vigorously off its 200-day moving average and moved decisively above the 50-day and 20-day moving averages. The stock seems to be engaging in a textbook upside reversal.

The outlook --

At the time of its last earnings report, Amdedisys reaffirmed its outlook for the year which ends in December. The trailing twelve month EPS is currently $4.53 and the company is projecting that 2009 EPS will be in the range of $4.75 to $4.90. Revenues are also projected to show an increase.

In terms of analyst recommendations, Stifel Nicolaus upgraded the company from Hold to Buy at the end of October.

The fundamentals appear to be terrific but there is considerable controversy surrounding the company. Citron Research has published a highly critical analysis of doings at the company. They point to sudden departures of top executives and note that investigations into Medicare fraud are ramping up and Amedisys has had numerous requests for documents from the government.

To combat this kind of negative analysis, Amedisys engaged Marwood Group Advisory, a healthcare consulting company, to review its "procedures, controls, clinical infrastructure, corporate compliance processes, technology offerings and future strategies." Marwood essentially gave Amedisys a clean bill of health (no pun intended).

Conclusion --

So technically speaking, the stock is showing all kinds of positive behavior. Fundamentally things look pretty good, as well. The issue surrounding Amedisys is whether fraud will upend the company.

On paper this company looks great. For some investors it may take a certain leap of faith to buy into the Amedisys story. Judging by the increase in volume as the stock has surged upward, though, there is a sizable number of other investors who are willing to put aside the negative rumors and just go with the momentum.

Disclosure: no positions



Tuesday, December 15, 2009

Tuesday Swing Signals, Trend Leaders, Trend Busters and Gaps for Dec 15, 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:

  • 29 Swing Signals -- 20 BUY signals and 7 SELL Signals plus 1 Strong BUY and 1 Strong SELL.
  • 308 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 115 stocks that are new additions to the list and 61 that fell off the previous list.
  • 61 Trend Busters of which 54 are BUY signals and 7 are SELL signals.
  • 162 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed. 84 are bearish gaps and 78 are bullish gaps.
The view from Alert HQ --

 Stocks couldn't repeat Monday's winning ways today but neither did they erase all the upward momentum. Tonight's Alert HQ signals are actually rather positive and I'm pretty encouraged by this.

The number of stocks on the Trend Leaders list has finally managed to sneak above 300. And an encouraging sign that the move is becoming more broad-based is shown by the number of sector ETFs that are on the list of stocks and ETFs that are new additions to the list today. For example, now showing strong up-trends we see VANGUARD NATURAL RESOURCES (VNR), VANGUARD UTILITIES ETF (VPU), RYDEX S&P EQUAL WEIGHT HEALTH CARE ETF (RYH) and, surprisingly, the ISHARES DJ US REAL ESTATE (IYR). ETFs already on the list include ISHARES DJ SELECT DIVIDEND (DVY), CLAYMORE/NYSE ARCA AIRLINE ETF (FAA) and some other real estate ETFs. A level of 300, however, is far from an indicator of a frothy market so, in my opinion, the market could easily accommodate a move to the upside before being considered overbought.

The other lists are clearly showing a big bias toward BUY signals.  BUY signals outnumber SELL signals more than 2 to 1 on the Swing Signals list. The situation is even more bullish on the Trend Busters list which is running nearly 8 to 1 in favor BUY signals. And there sure seems to be a lot of energy companies on the list today.


So my interpretation is that stocks are stubbornly resisting the bears. As those Bollinger Bands narrow and the doomsayers predict soaring inflation and falling stocks, these signals suggest to me an upside breakout is likely.  Browse the Alert HQ lists for stocks and ETFs with potential to lead the next rally.

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, December 13, 2009

Bulls and bears go toe to toe - slight edge to the bears?


Well, it seems like the markets are going nowhere fast. Major averages had nothing to show for the week's trading but fractional gains and losses.

There was a limited news stream but what news we had ranged from neutral to positive. Weekly jobless claims ticked up but investors took comfort in the fact that the four-week average moved down. The Trade Deficit for October was released and it showed an increase in exports which supported sentiment on the manufacturing sector. Retail sales for November was quite a bit better than expected, providing hope the holiday shopping season would be profitable for retailers. The University of Michigan Consumer Sentiment Index advanced, as well.

So economic fundamentals were again reasonably positive this week. How are things doing from a technical analysis point of view?

The view from Alert HQ --

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

SPY versus the market, Moving Average Analysis, 12-11-2009

This first chart presents our moving average analysis. The number of stocks above their 20-day moving average (not shown) and the number of stocks above their 50-day moving average both decreased slightly this week. Yet the number of stocks whose 20-day moving average is above their 50-day moving average actually increased slightly this week. Slight edge to the bears.


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 versus the market, Trend Analysis, 12-11-2009

Here we also see just a minor bit of negativity creeping into the chart. Number of stocks in strong up-trends declined slightly and number of stocks in strong down-trends increased ever so slightly. Again, slight edge to the bears.

Conclusion --

We have now experienced four full weeks in a trading range. Take a look at the chart below of the ETF that attempts to track the overall stock market. You can see that we have been stuck in a box for a while now.



In addition, the Bollinger Bands on the major averages are starting to contract. This would seem to indicate that the market is getting ready for a big move -- eventually.

With economic reports mostly positive these days, it's not unreasonable to think that the next move will be UP. With many technical indicators currently on the fence, for now, we play the waiting game.

In the meantime, the bulls and bears continue to fight it out with neither obtaining the advantage. In the search for a catalyst, investors will have plenty to look at among this coming week's economic reports including the Producer Price Index (PPI), Empire State manufacturing index, Capacity Utilization, Industrial Production, Building Permits, Housing Starts, Consumer Price Index (CPI), more weekly initial jobless claims, the Conference Board's Leading Indicators Index and the Philadelphia Fed Business Outlook Index. The Fed will also release its policy statement.

So the tug of war between bulls and bears is entering its fifth week.  With the Fed, a raft of economic reports and the first stirrings of the next earnings season coming at us, we may finally see a resolution of this impasse.



Saturday, December 12, 2009

Weekend Winners and Losers - Alert HQ BUY and SELL signals for December 11, 2009

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

Today we have the following stock picks and signals:

  • Based on daily data, we have 20 Alert HQ BUY signals and 12 SELL signals
  • Based on weekly data, we have 2 Alert HQ BUY signal and 11 SELL signals
  • We have 78 Bollinger Band Breakouts based on daily data and 197 Breakouts based on weekly data.
  • We have 850 Cash Flow Kings
  • 46 Swing Signals -- 37 BUY signals and 9 SELL Signals.
  • 255 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 42 stocks that are new additions to the list and 41 that fell off the previous list.
  • 75 Trend Busters based on daily data. We also have 114 Trend Busters based on weekly data.
  • 158 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed. We also have 62 Gap Signals based on weekly data.
The view from Alert HQ --

Markets ended the week with pretty much no change. Our Alert HQ signals more or less followed suit.

In terms of the number of signals, things are not far from where they were last weekend. The BUY signals on the Swing Signal and Trend Buster lists outnumber the SELL signals; however, the situation is reversed when looking at the Gap Signals list. Daily signals look like the bulls are perking up while weekly signals show bears taking control. The bottom line seems to be a near stand-off between the two camps.

Luckily, a sidewise market can present opportunities for investors, especially those who believe the next move is up. Browse our signals and I'm sure you'll find a few good candidates for your portfolio or your watch list.

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.

Found a few stock picks you are interested in? If you are looking to refine your entry and exit points, you should take a look at what our friends at Hottinger's E-Zone Signals have to offer.



Thursday, December 10, 2009

Adtran breaking out?

On Tuesday we saw a BUY signal for Adtran (ADTN) on our Swing Signals list. Back on Tuesday, after checking the chart, it looked to me like the stock was looking quite promising but was coming up against some serious resistance.

Now that it's a couple of days later, let's take a look at the chart below and see how things are working out.

 

You can see how the stock fell from around $26 all the way down to $20. You can also see the major resistance indicated by the green-blue horizontal line. As of the close on Tuesday, Adtran was poised just below this line. As of the close today on Thursday the stock has managed push roughly 2% above this resistance line. MACD has also turned bullish now. It looks like the stock is ready to run.

Background --

Adtran is a $1.39 billion networking company whose products support voice, data, video, and Internet communications. They are essentially in competition with companies like Cisco. Adtran sells primarily to large corporate customers and telecom companies.

Financials --

Financially, the company isn't doing too badly. The following chart shows the last five quarters:


Explore more ADTN Data on Wikinvest

The last three quarters show steady improvement. The outlook for tech continues to be favorable and there are no reasons to believe Adtran won't continue to benefit. The growth in gross margins shown on the chart should support further improvement in earnings. The company is cash flow positive and pays a dividend.


Currently however, the stock is not exactly inexpensive. The PEG of 1.88 suggests the stock is reasonably priced and is not cheap.The Price-to-Sales ratio, the trailing PE and forward PE are consistent with this assessment.

Outlook --

Valuation suggests upside could be limited in the near term but the chart looks like the stock might be on a roll. It looks like that dip below the 200-day moving average was just a head fake.

Disclosure: no positions



Alert HQ signals for Thursday, Dec 10, 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:

  • 49 Swing Signals -- 38 BUY signals and 9 SELL Signals and 2 Strong SELLs.
  • 253 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 60 stocks that are new additions to the list and 89 that fell off the previous list.
  • 52 Trend Busters of which 48 are BUY signals and 4 are SELL signals.
  • 162 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed. 89 are bearish gaps and 73 are bullish gaps.
The view from Alert HQ --

Stocks continue to plug along in a range. Today's action set no new highs nor short-term lows. We had a small tick up in weekly jobless claims and a small decrease in the four week average. This mixed result took a bit of the edge off the market's bullishness but, after a day of modest ebb and flow, major averages finished with passable gains.

Alert HQ continues to exhibit a slowly growing bullish bias.The number of Swing Trading BUY Signals increased again (though we do have 2 Strong SELLs). The number of Trend Buster BUY signals has also increased. Just so no one gets too over-excited, some of our signals just can't get out of neutral. The number of Trend Leaders is stagnant and there are more gaps in a bearish direction than gaps in a bullish direction.

Nevertheless, this ambivalence in the major averages doesn't mean that there aren't good buying opportunities out there. We still see some Turkish ETFs on the BUY lists, like TKF and TUR. There are a few REITs starting to move including CLI and BKD. We're seeing some energy companies perking up including UNT and BTU. And there's plenty more...

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, December 8, 2009

Tuesday Swing Signals, Trend Leaders, Trend Busters and Gaps for Dec 8, 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:
  • 20 Swing Signals -- 12 BUY signals and 8 SELL Signals.
  • 282 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 98 stocks that are new additions to the list and 76 that fell off the previous list.
  • 38 Trend Busters of which 35 are BUY signals and 3 are SELL signals.
  • 161 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed. 76 are bearish gaps and 85 are bullish gaps.
The view from Alert HQ --

I hate writing about days like today.

Stocks were down for no particular reason and the drop was sizable. The major averages all closed below their 20-day moving averages except for the Russell 2000 which, after lagging the other indexes, is now hanging in there better than the rest.

Despite today's losses and Monday's losses, too, stocks in general have not really rolled over. Some will say they are seeing double tops in the major indexes but my own suspicion is that we are stuck in a range for a while.

Our Alert HQ signals reflect the lack of clarity with respect to the current trend though perhaps they show a slight bias to the bullish side. We still have more BUY signals than SELL signals but the Trend Leaders list just can't seem to expand past the range around 280. That is quite low and indicates a market where stocks are treading water.

So once again we are seeing some of the leveraged inverse ETFs giving us BUY signals on the Trend Busters list (brief list: BZQ, DPK, DRR, EDZ, EEV, EFU, EPV, EUO). More importantly, however, we don't see ETFs representing the underlying indexes generating SELL signals. This says to me that the usual volatility is playing out but there is no reason to panic yet.

On the contrary, we see more stocks being added to the Trend Leaders list than are falling off so there is still some strength out there and perhaps some rotation. I'm seeing some tech (Cypress Semiconductor, KLA-Tencor, Anadigics, Rambus and Ametek to name a few), some biotech and even some REITs.

The point is, markets are weakening but the major averages have not even reached their lower Bollinger Band yet. Another day or two of weakness, and it might very well be time to put on some trades from the long side. Remember Alert HQ when you're looking for promising candidates.

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, December 7, 2009

Multi-Fineline Electronix - biggest little small-cap you might want to know

This past weekend we generated a nice list of Alert HQ BUY signals. Despite a drooping market on Monday there were some stocks that still registered gains. One of them is Multi-Fineline Electronix (MFLX).

Take a look at the following chart. You can see this stock is really perking up.



MACD and DMI are all swinging bullish and the stock has made it above it's 50-day moving average on a day when most other tech stocks sagged. The down-trend starting in September has been broken to the upside. All good signs.

Background --

Here is the descripition from Yahoo! Finance: “Multi-Fineline Electronix, Inc. engages in the engineering, design, and manufacture of flexible printed circuit boards and related component assemblies for the electronics industry. The company’s products are used in feature phones, smart phones, consumer electronic devices, portable bar code scanners, computer/storage devices, and medical devices… It operates primarily in the United States, China, Singapore, Malaysia, and the United Kingdom.”

The company may be a small-cap but they have over 17,000 employees, the vast majority in China. R&D is performed in the U.S. and manufacturing takes place in China and Malaysia. The company was founded in 1984 and went public in 2004

Financials --

MFLX has a market cap of $693M. Despite the nice pop in the stock price as exhibited in the chart above, the stock is still quite reasonably priced: the PEG is only 0.66, way down in value stock range. Similarly, Price-to-Sales is a mere 0.88.

The chart below shows revenue, net income and net margin over the last five quarters.


Explore more MFLX Data on Wikinvest

This chart allows us to see the year-over-year change. Yes, revenues have taken a hit but net income has actually registered a nice increase y-o-y. Sequentially, net income has rebounded from a low in the March quarter of this year though it has been essentially flat for the last two quarters.

The details on revenues and earnings per share over the last three years are displayed below:

Revenues

Periods

2007

2008

2009
December
123.887
184.152
216.63
March
113.406
163.936
174.097
June
104.138
167.623
174.533
September
166.716
213.095
199.172
Totals
508.147
728.805
764.432

Earnings Per Share

Periods
2007
2008
2009
December
0.1449
0.53809
0.55716
March
0.12193
0.41055
0.34387
June
-0.27338
0.34455
0.45984
September
0.12053
0.2971
0.45098
Totals
0.12073
1.59155
1.8099

MFLX is cash flow positive and has practically no debt. The company has a trailing PE of 15 and a forward PE of less than 12. For a tech stock in growth mode, these PE numbers are quite reasonable, some would say cheap.

Outlook --

Back in November the company announced that for the first quarter of 2010, it expects net sales to range between $225 and $240 million. According to Reuters Estimates, analysts on average were expecting the company to report revenue of $223 million for the same period. This would exceed the highest revenue the company has reported in the last 10 quarters.

MFLX benefits from concentrating on a niche: flexible circuit boards. In contrast, the company's much larger and more well-known competitors, Jabil Circuit (JBL) and Flextronics (FLEX), are trying to be all things to all customers, doing everything from design to procurement to assembling all kinds of circuit boards and building complete products.

In contrast, MFLX concentrates on flexible circuit boards which tend to be in a range of the the smallest and most popular components and products, things like disk drives, digital cameras, MP3 music players, cell phones of all kinds, etc. With the holiday shopping season upon us, and indications that electronic gadgets are selling well, MFLX is poised to turn in a good quarter. Whereas semiconductors are first to benefit months before end products are sold, the companies that assemble products tend to benefit much later in the build cycle, essentially just before products are shipped to stores. That timing is what is juicing the company's revenues in its current quarter.

As the economy improves, MFLX should continue to do well and continue to benefit from its low cost offshore manufacturing capabilities. The company will also benefit from the continued movement to outsourcing manufacturing and assembly operations.

The technicals and the fundamentals are all coming together for MFLX. This is a company you might want to keep an eye on.

Disclosure: no positions



Sunday, December 6, 2009

Payroll report last piece in the puzzle?


As so many economic reports have begun to show that the Great Recession is beginning to recede, many analysts have pointed to the employment situation as a nearly intractable problem. It was expected that employment would be picking up by now, given how many other indicators were showing recovery. Yet job creation has been lagging and layoffs have continued at uncomfortably high levels.

Friday, however, the Nonfarm Payrolls report delivered the last piece in the puzzle. The report was better-than-expected in a number of different dimensions. Only 11,000 jobs were lost in November, far less than the 125,000 median estimate. Prior months were revised to show smaller drops. Also providing a big surprise, the unemployment rate declined to 10.0%, from a previous reading of 10.2%.

So economic fundamentals are looking up. How are things doing from a technical analysis point of view?

The view from Alert HQ --

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



This first chart presents our moving average analysis. We have observed that when the number of stocks above their 50-day moving average exceeds the number of stocks whose 20-day MA is above their  50-day MA, stocks tend to rally. Stated simply when looking at the chart above, when the yellow line moves above the magenta line, stocks should rise. That is the situation that is just beginning to play out now. A further move in this direction should lead to clear new highs in the major market averages.

Not shown in the chart above is that we now have 4426 stocks and ETFs above their 20-DMA compared to only 2811 at the end of the previous week. That shows stocks are beginning to surge and bodes well for further gains.

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 also see some very positive developments. Finally, after several weeks when this chart has been essentially non-committal, the number of stocks and ETFs in strong up-trends is beginning to move up noticeably. Now, as the yellow line surges upward, it becomes very unlikely that stocks will weaken.

Conclusion --

The Alert HQ statistics are painting a bullish picture. Last week's economic reports supported the bullish outlook.Yet stocks didn't break out to significant new highs. What catalysts can we expect?

A very modest set of economic reports is due this week. We will see consumer credit, wholesale inventories, crude inventories, initial jobless claims, continuing claims, export and import prices, retail sales, University of Michigan consumer sentiment and business inventories. The focus, therefore, will primarily be on the consumer this week, which takes on added importance during this holiday shopping season.

The other factor that will influence stocks is the dollar. Appreciation in the dollar was credited with keeping a lid on Friday's rally. With many analysts saying the dollar is still oversold, the dollar could play the spoiler here. On the other hand, I find it unlikely that stocks will reverse their up-trend and begin to head down.

In summary, the pieces of the puzzle are falling into place. Maybe employment is not yet on a new positive trajectory but "less bad" has almost become "better".



Saturday, December 5, 2009

Weekend Winners and Losers - Alert HQ BUY and SELL signals for December 5, 2009

This is the usual quick post announcing that the weekend's stock signals are now available at Alert HQ. I apologize for the delay but we had a struggle with our systems today and it took some time to get things squared away and operating properly.

Today we have the following stock picks and signals:

  • Based on daily data, we have 31 Alert HQ BUY signals and 4 SELL signals
  • Based on weekly data, we have 1 Alert HQ BUY signal and 14 SELL signals
  • We have 105 Bollinger Band Breakouts based on daily data and 200 Breakouts based on weekly data.
  • We have 849 Cash Flow Kings
  • 32 Swing Signals -- 26 BUY signals and 6 SELL Signals.
  • 262 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 57 stocks that are new additions to the list and 52 that fell off the previous list.
  • 78 Trend Busters based on daily data. We also have 67 Trend Busters based on weekly data.
  • 172 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed. We also have 62 Gap Signals based on weekly data.
The view from Alert HQ --

Whew! Stocks dodged a bullet when the Nonfarm Payrolls Report far exceeded expectations. Dubai became a distant memory and, though stocks were unable to hang onto Friday morning's very strong gains in the face of dollar appreciation, markets still finished the week with decent gains. Small-caps especially were standouts this week with the Russell 2000 sporting a 4.4% gain.

At Alert HQ, moderate bullishness continues. The signals based on daily data are reacting and we see 31 BUY signals today compared to only a few BUY signals a week ago. On the Swing Signals and Trend Busters lists BUY signals greatly outnumber SELL signals. It would be nice, however, if the Trend Leaders list would start to grow. With only 262 stocks and ETFs on the list it can only be considered "anemic."

In summary, our signals are mostly bullish, the primary trend continues to be UP and economic reports are supportive. It's a good time to be browsing our signals and looking for some good candidates for your portfolio or watchlist.

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, December 4, 2009

Open Text - not so expensive today and growth is on the way

Thursday's TradeRadar Trend Busters had some BUY signals on a number of tech stocks. Among them was Open Text (OTEX). Looking at daily data, the stock has been surging, bouncing off its 200-day moving average and moving above its 50-day moving average. Bursting above a short-term down-trend earned the stock a place on the Trend Busters list.

Let's pull back a bit and take a longer term perspective. The following is the weekly chart and a nice steady, up-trend appears to be solidly in place.



Background --

Open Text Corporation develops and sells Enterprise Content Management (ECM) solutions primarily in North America and Europe. Its products enable corporations to manage traditional forms of content, such as images, office documents, graphics, and drawings, as well as to manage electronic content, including Web pages, email, and video. They facilitate document management, collaboration, social media, Web content management, digital asset management, records management, email management, archiving, capture and delivery, business process management and content reporting.

Open Text has over 46,000 corporate customers servicing 50mm users in 114 countries.

Financials --

Open Text is a $2.2B company. The PEG of less than one indicates the stock is not currently expensive. On the other hand, ratios like Price-to-Sales and Price-to-Book are not quite in the range expected for a value stock. But as a growth stock those ratios are not so important.

What is important is a measure of growth. Here, things are split. Quarterly revenue growth is strong at 15.8% year-over-year. Quarterly earnings growth, however, has been somewhat erratic and was hurt by bad results in the most recent quarter. The following tables show how revenue has been steady but earnings occasionally take a dip.

Revenue

Periods
2008
2009
2010
September
163.967
182.623
211.422
December
182.534
207.651

March
178.762
192.035

June
200.269
203.356

Totals
725.532
785.665


Earnings Per Share

Periods
2008
2009
2010
September
0.15111
0.27667
0.03064
December
0.20279
0.01429

March
0.13766
0.41232

June
0.51114
0.36474

Totals
1.00764
1.06884


After a bad quarter the trailing PE is a high 48 but the forward PE is a quite reasonable 12. In other words, growth expectations are strong.

The Outlook --

The company just garnered a recommendation from Canaccord Adams. The target price was upped from $38 to $48. A Canaccord analyst says they "expect a sequential pick-up in demand" and that "more material improvements in spend are projected for the first calendar quarter of 2010 based on our checks with industry participants. We believe that consulting utilization rates have begun to quickly improve in recent weeks because enterprise accounts are aggressively planning new projects that were deferred over the past 12-18 months." In other words, growth is on the way.

Furthermore, Canaccord has raised expectations that new product lines involved in the management of mobile and social media channels will begin to make more significant contribution to earnings now.

I've written before how the enterprise software sector is less volatile than many other tech sectors yet delivers solid growth. Open Text fits well into this concept as the weekly chart above shows. The Canaccord analysis seems reasonable enough. My own feeling is that Open Text is well positioned for an era where more companies are generating more and more documents that need management and collaboration across time zones and continents. As a leading company in document and content management, Open Text should be able to surf a rising tide in a growing niche.

Disclosure: no positions



Alert HQ signals for Thursday, Dec 3, 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:

  • 19 Swing Signals -- 17 BUY signals and 2 SELL Signals.
  • 257 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 71 stocks that are new additions to the list and 45 that fell off the previous list.
  • 50 Trend Busters of which 44 are BUY signals and 6 are SELL signals.
  • 212 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed. 103 are bearish gaps and 109 are bullish gaps.
The view from Alert HQ --

Today started optimistically, then stocks took a dip when the ISM Services index disappointed. After struggling to regain positive ground, stocks slid abruptly into the close to finish with modest losses.

Fear of Friday's Nonfarm Payrolls report was blamed for the last minute sell-off. Here at Alert HQ, however, the indications are still fairly bullish. BUY signals still outnumber SELL signals by a mile.Some themes continue like the BUY signals on Japan ETFs and now some action in Turkish stocks and ETFs adding to the international mix.

Another theme I'm seeing is a bunch of small-cap pharmaceutical and biotech companies showing up with BUY signals. Some examples include BioMimetic Therapeutics (BMTI), Arca Biopharma (ABIO), Sangamo BioSciences (SGMO) and Theragenics (TGX).

Finally, it's good to see more tech stocks on the BUY lists, too. We have stocks like Cymer (CYMI), KLA-Tencor Corporation (KLAC) and Open Text (OTEX).

Tomorrow all eyes are on employment-related reports: monthly Nonfarm Payrolls is the big one that can move the market all by itself but we will also get the unemployment rate, average workweek and hourly earnings. Economists and analysts are looking for continued modest improvement.in these numbers.A big miss could tank this market but, after several weeks of shrinking initial jobless claims, NFP should end up in a "less bad" mode which should, in turn, provide some upside for stocks.

And so, with the primary trend still UP, it seems reasonable to remain bullish. So check out our lists today for an interesting selection of BUY signals.

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.




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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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