It is still way too dangerous to load up on longs and that can be proven by the action in stocks like CEL KTII MANT and CALM. This market is still going nowhere, as my RealMoney column stated, and that can be confirmed by the lack of longs or shorts that are putting in very powerful and fast gains. This is the first market since 2000-2002 that leading longs are constantly reversing or breaking down on strong volume after going long. A few are working but it simply is not enough to get too excited on this market. Remember, in good, strong, and solid bull market you will get a lot of long candidates to choose from. There will be a lot of stocks out there loaded up with max green or just green BOP, with huge accumulation, and great price action all along the base building process. The stocks below do not fit my criteria of stocks to fall in love with as JST and IRW are very thin. While IRW is pure speculative trash that is just a simple small chart play, JST has some real growth in EPS and sales and that combined with the very green chart makes it a good long. But without 100,000 shares traded daily. Bottom line, if you are experienced JST is worth a play, if you are a newbie you still need to STAY IN CASH! FLO and COKE are both food stock which are definitely hot in this lame market and they both have very strong stocks making them good stocks to add to my portfolio. FLO is a very solid and strong Featured stock which makes it a good safe long for newbies but COKE does not have the fundamentals to be a large long or even a long at all for the new guys. However, if anybody makes any of these a big portion of your portfolio(s) you are not listening to the market and are making a newbie mistake of overtrading in a bad tape. CASH IS KING, until the market explodes to the upside on heavier volume.
new speculative Featured long position: JST
JST is breaking out of a long-term base on base and a short-term cup pattern, on very strong volume. This chart really started to look good back in August of 2007 when the stock gapped higher on strong volume and green BOP. It was a choppy ride higher from there but the stock slowly moved higher building bases along the way with low volume during the pullbacks, strong volume during the rally, and a lot of green BOP. Recently, the stock gapped higher on very strong volume with BOP going green. Today’s move with the RS line hitting a new high before price and with BOP going a higher green is very bullish. The fundamentals are very strong with EPS growing 150%, 59%, and 110% the past three quarters and sales growing 84%, 26%, and 68% the past three quarters. I would love to say that this is a great stock to get long but the truth is it is too dangerous for newbies. The stock only trades 53,000 shares daily and it is 20% extended from the 50 DMA making a normal pullback possibly a very painful experience. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.
new speculative long position: IRW
IRW is being acquired by ST Bancorp for 31 a share and is bouncing off support near the 50 day moving average, on strong volume. If I was not so “hard up” for a HOT chart I would DEFINITELY pass this one up as there would be other great longs to find. However, in this market the pickings are slim and this stock is moving on some volume which makes me believe it isn’t going to go out at only $31 a share like has been planned. Recently, I have gone long CMD and that one is up 2% since then which is better than 0%. Heck, I guess If I can get 2% out of this one, I’ll take it. This is a limit order only stock as it only averages 3,000 shares a day. I am ONLY buying $300 worth of this stock as I just want some action and a 2% return on my $300. It may be a silly trade but making money even a little bit of money is better than none. But this trade should clearly show how addicted I am to nice charts. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.
adding to existing long positions: FLO COKE
FLO is bouncing off support near the 50 day moving average, on strong volume. This stock has been part of an uptrend since 2000 but more recently in August and November of 2007 the stock started to get more active on strong volume as it found support at the 200 DMA both times. After another bounce off the 200 DMA on strong volume and this time green BOP, the stock blasted off to new highs on very strong volume. It then created one more base with volume drying up a little bit (except a few days of accumulation) which was then followed by last Friday’s near breakout on very strong volume with BOP going green again. The fundamentals are very impressive, with EPS growth between 6% and 45% the past eight quarters, sales growth between 7% and 11% the past eight quarters, and EPS estimates for 08 and 09 for YOY gains of 12% and 13% respectively. Mutual fund growth has gone from 108 to 119 to 130 to 132 the past four quarters, showing institutional money is gaining an interest in this leading stock/story. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.
COKE is putting in a bullish intraday reversal and bouncing off support near the 50 day moving average, on above average volume. COKE really hasn’t gone anywhere in the past year-and-five-months as it has been very volatile and range-bound. However, on 3/3 the stock had a very bullish reversal above the 50 and 200 DMA on very strong volume with BOP going green. The very next day COKE followed-through with that with a higher volume pop with BOP going max green. After that move, BOP stayed max green the entire time it made the most recent consolidation period. The breakout on Friday on very strong volume came with the stock hitting a new high for the year and with it closing at its HOD. That action, combined with the max green BOP recently, should be very bullish for this usually calm stock. The EPS growth was very strong but it is now going the wrong way and that combined with sales growth is very lame. Mutual fund ownership has even fallen in the most recent quarter from 41 to 39 funds. However, either a new mutual fund or one of the current ones loaded up on the stock this month because that sure is a lot of huge accumulation. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.
Check out DGLY today (4/1) . . . looks very strong