Thursday, June 30, 2011

20 growth stocks with improving moving averages

The market is firming these days and what was out of favor is now meeting demand.

Growth stocks had certainly been weak while investors fled to defensive sectors. That is beginning to change now. Using the Premium Stock Screener at out sister site TradingStockAlerts.com, we have identified a list of growth stocks whose 50-day exponential moving average (EMA) has, within the last few days, started to turn up in a bullish direction.

SymbolNameSectorIndustry
ACN Accenture plc. Miscellaneous Business Services
AGP AMERIGROUP Corporation Health Care Hospital And Medical Service Plans
ALV Autoliv, Inc. Capital Goods Auto Parts:O.E.M.
BKI Buckeye Technologies, Inc. Basic Industries Paper
CPSI Computer Programs and Systems, Inc. Technology EDP Services
CYOU Changyou.com Limited Technology Computer Software: Prepackaged Software
DCI Donaldson Company, Inc. Capital Goods Pollution Control Equipment
ENTR Entropic Communications, Inc. Technology Semiconductors
FN Fabrinet Public Utilities Telecommunications Equipment
IPGP IPG Photonics Corporation Technology Semiconductors
KRO Kronos Worldwide Inc Basic Industries Major Chemicals
LEA Lear Corporation Capital Goods Auto Parts:O.E.M.
MA Mastercard Incorporated Miscellaneous Business Services
MMS Maximus, Inc. Miscellaneous Business Services
NDSN Nordson Corporation Capital Goods Industrial Machinery/Components
NEU NewMarket Corporation Basic Industries Major Chemicals
NEWP Newport Corporation Capital Goods Medical Specialities
SNHY Sun Hydraulics Corporation Capital Goods Metal Fabrications
TRW TRW Automotive Holdings Corporation Capital Goods Auto Parts:O.E.M.
XLNX Xilinx, Inc. Technology Semiconductors

Our criteria for growth stocks is as follows:
  • Company must be profitable
  • Year-over-year quarterly revenue increase 
  • Year-over-year quarterly earnings increase
  • ROE over 20%
  • Debt-to-Equity less than 1
Five out of the twenty stocks are Technology stocks and that's a good sign for the recent rally -- tech often leads the stock market out of bottoms and into a bullish trend. Seven of the twenty are Capital Goods stocks -- these stocks tend to follow the economic cycle and this suggests investors are much more comfortable with global growth picking up as we enter the second half of the year. I might also note that one of the stocks is Mastercard -- that's a vote for the consumer.

With earnings season coming up soon, we could see a real resurgence in those growth stocks that manage to put up decent numbers despite the last few months of economic softness. There's a good chance that today's list contains some of those future growth leaders.


Disclosure: no positions in any stocks mentioned in this post



Thursday, June 23, 2011

Seven Profitable, Dividend-paying Bollinger Band Breakouts

We've been presenting our Bollinger Band Breakouts at Alert HQ for quite a while now. What's nice is being able to use the stock screeners at our sister site TradingStockAlerts.com to refine the selection.

Accordingly, I started with bullish Bollinger Band Breakouts (those whose price exceeded the upper Bollinger Band) and selected those stocks that were profitable and offered a dividend. The following seven stocks popped out.

Symbol Name Last Price Sector Industry
AVD American Vanguard Corporation $13.38 Basic Industries Agricultural Chemicals
FUL H. B. Fuller Company $23.64 Basic Industries Home Furnishings
MLHR Herman Miller, Inc. $26.75 Consumer Durables Office Equipment/Supplies/Services
NYMT New York Mortgage Trust, Inc. $7.82 Consumer Services Real Estate Investment Trusts
RBN Robbins & Myers, Inc. $49.03 Capital Goods Fluid Controls
WAC Walter Investment Management Corp. $19.95 Consumer Services Real Estate Investment Trusts
WSCI WSI Industries Inc. $5.70 Technology Industrial Machinery/Components

These stocks range from micro-caps to small caps. All have charts that show bullish moves upward within the last couple of days.

For those of you who are interested in the dividend aspect, there are two real standouts on this list. First, we have New York Mortgage Trust, Inc. (NYMT) with a generous yield of 12.8%. The second is Walter Investment Management Corp. (WAC) which offers a yield of 11.1%. Note that both of these are Real Estate Investment Trusts.

Neither is without risk. For example, this is the description of Walter Investment Management: "Walter Investment Management Corp. is an asset manager, mortgage servicer and mortgage portfolio owner specializing in non-conforming, less-than-prime, and other credit-challenged mortgage assets." What is giving WAC a boost is that the company was able to successfully float a new securitization of residential mortgages, building and installment sale contracts, promissory notes, related mortgages and other security agreements. The proceeds will be used to compete an acquisition.

As for New York Mortgage Trust, Inc., there have been a number of bloggers and analysts highlighting the stock and its substantial dividend.

One more stock I'd like to highlight is Robbins & Myers, Inc. (RBN). This stock has an extreme chart. The big jump appears to be due to an enthusiastic analyst upgrade. R.W. Baird raised its price target on Robbins & Myers following solid Q3 results citing better than expected demand, strong execution, and raised guidance. The company is an illustration of the resurgence in U.S. manufacturing. They provide fluid management systems for energy, waste water processing and related industries and packaging solutions for pharmaceutical, food and cosmetic industries. Not as sexy as an iPad but profitability can come from some unlikely sources.

One thing I'd like to mention before closing. There is a saying among investors: "don't buy the breakout". Some of these stocks appear to be breaking out sharply. As such, you may want to be patient. Keep an eye on them and see what happens next. There may be a better entry price in the offing.

Disclosure: no positions in any stocks mentioned in this article



Sunday, June 19, 2011

Hints of a bottom continue to accumulate

This is another installment of our weekly market update where we look at the state of the market and try to divine where stocks might be headed.

Last week we opined that the technicals of the market suggested a bottom was imminent as we were getting very close to the extremes that in past downturns signaled a rally. The market cooperated somewhat by breaking its six week losing streak. Read on to see how this call is working out...

The view from Alert HQ -- 

For those readers who are new to TradeRadar or who don't remember what this is all about, the data for the following charts is generated from our weekly Alert HQ process. We scan roughly 6200 stocks and ETFs each weekend and gather the statistics presented below.

In this first chart below we count the number of stocks above various exponential moving averages and count the number of moving average crossovers, as well. We then plot the results against a chart of the SPDR S&P 500 ETF (SPY).




With SPY just barely turning in a gain this week, the number of stocks above their 50-day EMA stopped dropping. The number of stocks whose 20-day EMA is above their 50-day EMA, however, dropped a little further. Last week I said we could expect to see a bit of further weakness as well as some choppiness before this downturn resolved itself. So far, there is nothing that negates that outlook.Things continue to look "bottomish".

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.


This chart also reinforces the expectation of a bottom. The count of stocks in up-trends has stopped falling and the count of stocks in down-trends has  stopped rising.

As I mentioned last week, the turn-around will likely take weeks. And that assumes that Europe (and the rest of the global financial system) doesn't fall into disarray over a Greek default.

A few other observations --

There are many contrarians who take the position that when the ProShares inverse ETFs are leading the market, it signals a bottom. That is certainly the case today. Take a look at our ETF Scorecard based on daily data. The top 28 positions are taken by 2X inverse ETFs, 3x inverse ETFs and short ETFs.

Another interesting development at Alert HQ this week is shown in the Swing Signals list. This weekend we have 86 stocks on the list, easily two or three times the usual number and every single one is a BUY signal. That almost never happens so, to me, it seems to suggest there is a hint of bullishness creeping into the market. Not a lot, just a hint.

Conclusion --

So far there is nothing that suggests we are not in the process of painfully carving out a bottom.

Yet event risk remains strong. All eyes are on Greece and whether the European Union can muster a consensus to follow through on a bailout.A Greek default and all bets are off, including my expectation of a bottom.

Disclosure: none



Tuesday, June 14, 2011

A turn in the bond market? Six reasons to avoid TLT

Bonds got clobbered today, going in the opposite direction as stocks.

I've been watching the iShares Barclay's 20+ Year Bond Fund (TLT) for a while and wondering if the rally was getting tired. Today's action suggests TLT is really pooped and that perhaps the rally is over for now. Let's go through the chart:


Here are six reasons that suggest the rally may have run its course:
  1. Big gap down today on decent though not extraordinary volume
  2. Over the last couple of weeks, Slow Stochastics have been trending down while TLT was trending up. This implies TLT was running out of steam. Slow Stochastics have broken down in a bearish manner now with the value dropping below 50.
  3. MACD has also been trending down slightly while TLT was trending up. MACD has now failed to climb above its signal line (the red line) for a couple of weeks and, after today, is noticeably pointed downward.
  4. Wilder's DMI just showed a crossover where the -DM (bearish Directional Movement) indicator moved above the +DM (bullish Directional Movement)
  5. They aren't shown on the chart above but Money Flow Index and Relative Strength are both looking very much like the Slow Stochastics
  6. Also not shown, Williams %R has dropped like a rock and is actually showing an oversold condition already!
So from a technical point of view, it appears that  the steep up-trend has been interrupted. The indicators discussed above suggest there is further downside.

From a fundamental perspective has anything changed? No nothing has changed except, perhaps, perceptions. Investors may have changed their attitudes about the following:
  1. The end of QE2 - losing the Fed as a buyer of bonds is something the bond market seemed to have shrugged off. Now that the date is drawing closer maybe bond investors are getting nervous.
  2. The game of chicken being played in Washington regarding raising the debt limit - no one seemed to be concerned about this either but now, as the the weeks pass and progress seems to be minimal, this could be another reason for Treasury bond investor skittishness.
  3. Economic data out of China today was upbeat, suggesting that the global economy may have a few breaths of life left in it after all. Similarly, retail sales data today for the U.S. were not horrible, as the bears expected, but were actually decent ex autos. In the face of what might turn out to be a resurgent economy, the puny yields on bonds (and perceived safety of Treasuries) are perhaps not worth the price of missing a rally in equities.
Some might say that we simply saw another simple Risk On/Risk Off knee-jerk reaction today like we have seen so often during the last year where stocks rally and bonds falter and vice versa. On the other hand, there are signs that maybe something more is at work here.

Disclosure: long TBT



Sunday, June 12, 2011

A sinking market has to hit bottom sometime -- will it be soon?

It's been roughly six months since I've done one of these weekly market analysis posts but with stocks grinding lower for six straight weeks I thought this would be a good time to pull out the charts and see where we stand.

The view from Alert HQ --

For those readers who are new to TradeRadar or who don't remember what this is all about (and I don't blame you if you've forgotten), the data for the following charts is generated from our weekly Alert HQ process. We scan roughly 6200 stocks and ETFs each weekend and gather the statistics presented below.

In this first chart below we count the number of stocks above various exponential moving averages and count the number of moving average crossovers, as well. We then plot the results against a chart of the SPDR S&P 500 ETF (SPY).


This chart makes it clear we are reaching the extremes of last May and June. One could say that our "summer swoon" is right on schedule. Notice, however, that during the last sell-off, while our moving average indicators began hitting their extreme lows in May, SPY didn't bottom out until over a month later.

In the current situation, we are just barely approaching what might turn out to be a low for this downturn. If things proceed as they did last summer, we will likely need to work through a bottoming process before the market can move solidly higher again. That means several weeks of choppiness before the up-trend resumes.

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, too, we see the chart reaching extremes. Though this is a messy looking chart, there is some interesting data hidden in there. For example, for the last year or so, the Aroon data has oscillated between roughly 500 at the low end and 3500 at the high end. Comparing the latest data to that range, you could make the argument that we can't get much more oversold than this. Look especially at the red line showing how many stocks are  now in downtrends - it's just about reached the worst level that was hit during last year's significant downturn.

Conclusion --

I would submit that stocks are pretty close to a bottom. I base this expectation on two things. First, the charts presented above suggest that, as our indicators reach extreme levels, the sell-off doesn't have much further go. Second, economic growth may be anemic but it is growth nonetheless which, in turn, implies that the current negativity is overdone. The Old  Professor explains this well in [ this post ] at his site A Dash of Insight.

I'd also like to point out that the chart of SPY shown above is based on weekly data and is displayed on a non-logarithmic scale. Note that a trend line can be drawn connecting the lows in 2009 and 2010 and you will see that the latest price is just about on it. Will the trend line hold? Given how oversold the market is and the passable (though not great) economic backdrop, I believe it will (see previous paragraph). I wouldn't be surprised to see a temporary break below it, perhaps a big capitulation day, but I think a rebound is likely. We shall see if I'm right.

This week provides some data that has only a so-so chance of shaking the market out of its doldrums: Retail sales, the Producer Price Index (PPI) and Business Inventories.

So as the next few weeks unfold, let's see if the grip of the bears begins to weaken.

Disclosure: none





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.




 
X
Support our sponsors!
Close this ad panelX
Do you know what the "52 Week High Friday Rule" is?

Never before shared on the web, this secret technique has been working for 30 years. Check it out right now at MarketClub