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Sunday, February 1st, 2009 | 4:44 PM
February 2009

 

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DOW 8,000.88 YTD -8.84% |  Nasdaq 1,476.42 YTD -6.38%  |  S&P 500 825.88 YTD -8.57% (As of 1/30/2009)
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    February       2009    CONTENTS
Economic Conditions Explain Why Most Stocks Are Flunking
- Adam Sarhan		 Stocks to Watch in This New Market
No Stocks Featured This Month Due To Adverse Market Conditions
- CANSLIM.net Research Staff
Market's Leading Groups
 CANSLIM.net News Staff		 Mutual Funds Have Slim Chances of Repairing Losses Quickly, But You Can Do Better
- Kenneth J. Gruneisen
Featured Stocks Month in Review
- CANSLIM.net Research Staff		 Information Is KEY in Today's Market!
- Frank DeBold
Indices at a Crossroads
- Frank E. Testa, CMT
CURRENT    MARKET    CONDITIONS

A review of market conditions over the prior month - the important "M" in CAN SLIM®

Economic Conditions Explain Why Most Stocks Are Flunking - Adam Sarhan, Registered Representative and Vice President of Investments with Source Capital Group (Member FINRA,SIPC)

The major averages experienced their worst January on record which, according to historical data, bodes poorly for the rest of 2009. Last year went down in history as the third worst year for the major averages, with the benchmark S&P 500 Index diving -38.5% for the year. In addition, 2008 was the single worst annual decline since the Great Depression! The bears showed up and sent nearly every major capital market across the globe plunging which, in turn, sparked a world-wide bear market in nearly every asset class. The two primary catalysts for 2008's carnage were the simultaneous collapse of the subprime and credit markets. Clearly, this resulted from contracting home values which had run up drastically in prior years.  Weak action has spilled over into 2009, which is best illustrated by January's dismal performance. The market is now flirting with multi-month lows that are considered a nearby support level, however leadership is virtually nonexistent. Caveat emptor!

Q4 Earnings Data: F

On the earnings front, the data has been poor to mixed at best. A plethora of high-profile companies have reported lower than expected earnings and only a few have topped the Street's estimates. Corporate America has slashed tens of thousands of jobs in a concerted effort to stay lean and combat this ugly recession. According to data compiled by Bloomberg, earnings fell over -40% for the companies in the S&P 500 that have released fourth-quarter results since the middle of January. This caused the average analyst to cut their earnings forecast and bodes poorly for the next few quarters. It is important to note that healthy earnings are the lifeblood of successful stocks. Therefore, it is very difficult to envision a robust stock market when the vast majority of stocks are reporting decelerating earnings data.

Economic Data: F

So far the economic news has been simply dreadful. At the beginning of January, the Labor Department said that US employers cut -524,000 jobs in December as the unemployment rate jumped to -7.2%. The US lost more jobs in 2008 than in any other year since 1945 as employers slashed -2.589 million jobs in 2008, just shy of the -2.75 million lost at the end of World War II. Meanwhile, the larger than expected unemployment rate was the highest level in almost 16 years!

The news from the housing front was equally disturbing. The National Association of Realtors said that sales of previously owned homes unexpectedly rose +6.5% from a record low in December. The stronger than expected sales stemmed from the largest slump in home prices since the Great Depression. The Conference Board said its confidence index unexpectedly plunged to a fresh record low, while the S&P/Case-Shiller index of home prices in 20 major US cities tanked -18.2% in November. The government said Q4 GDP shrank by -3.8% which was the largest quarterly decline in over 25 years and officially confirmed the recession. Spending, which accounts for approximately two-thirds of economic activity, shrank sharply last quarter as both businesses and consumers feel the pinch of a recession. These are just a few of several negative economic "headlines" that were released last month.

New Administration: C

President Barack Obama made history when he become the 44th President of the United States last month. To his credit, the new President hit the ground running as he tried to push his new economic stimulus plan. The White House said they plan on using the rest of the $700 billion bailout package differently than the Bush administration had, focusing instead on consumers. President Barack Obama met with House Republicans to lobby for support for his economic stimulus package and worked on concessions to appease their concerns. Rumors spread that the new administration would create a "good/bad" bank system to help shore up the ailing banking system. However, at the time of this writing, skeptics abound and a solid deal has yet to be drafted.

Price, Volume, & Leadership: D-

Looking back in our archives, at the end of January 2008 we noted that it was the worst monthly decline in the entire 80-year history of the S&P 500 Index. The old trading adage, "So goes January, so goes the year" was discussed and turned out to be true. Only time will tell what the rest of 2009 will bring, but if history is a good guide (and it usually is) it will probably get worse before it gets better. Remember that the best way to determine the underlying health of the market is to objectively analyze price and volume. The price and volume patterns are lousy.  Leadership, a critical component of a successful rally, is simply not there. One of the most important facets to this successful investment system is properly identifying leading stocks in leading sectors. A quick glance at what is actually "leading" the market higher in recent months has been a rash of low-ranked stocks that are bouncing from egregiously oversold levels. This is the exact opposite of what is needed for a new sustained rally to ensue - a fresh batch of high-ranked leaders breaking out of sound bases. Therefore, until these improvement occur (better price and volume patterns coupled with a new batch of high ranked leaders), prudent investors will be patient and protective of their capital, while expecting the market to continue moving sideways or lower.

On Wednesday January 28, 2009, the market produced another questionable follow-through day when each of the major averages jumped a few percentage points in heavier volume than the prior session. Perhaps, the most ominous event about the day was the dearth of leadership that participated in the rally. There have been a handful of failed follow-through days in recent months due that have failed for this exact reason. That said, a strong defensive strategy remains a very prudent course of action until a new batch of high ranked leaders emerge and begin triggering sound technical buy signals. Education stocks, one rare pocket of strength in this inordinately weak market, were recently sent to detention as a wave of selling pounded the group.

Technically, all the major averages are currently flirting with longer term support and trading below their downward sloping 50-day and 200-day moving average (DMA) lines. The S&P 500 was down -8.6% last month which was the worst January on record and higher than the -7.6% decline in January 1970.  According to the Stock Traders Almanac's January Barometer, the month of January tends to predict the direction of the market with a 91.4% accuracy ratio, with only five major errors recorded since 1950.  The indicator was developed by Yale Hirsch, chairman and founder of the Stock Traders’ Almanac, and built on the theory that the S&P 500’s first-month performance sets its course for the year. The Dow Jones Industrial Average and small cap Russell 2000 index both experienced their worst January's on record, falling -8.8% and -11%, respectively. Meanwhile, the tech-heavy Nasdaq Composite Index fell by -6.5% in 2009 thus far.  The market remains very weak until the major averages trade above their shorter term 50 DMA lines, and then above their longer term 200 DMA lines.

The ongoing Bear Market is one of the worst in history and has currently finished its 15 month.  Looking forward, we will continue to objectively analyze price and volume to better understand the market's underlying health. That is why it is of the utmost importance for you to continue to read the daily reports (including the CANSLIM.net After Market Report) for in-depth analysis of the current market conditions and new signs of leadership. Until then, never argue with the tape, and always keep your losses small.
Adam Sarhan is a Registered Representative and Vice President of Investments with Source Capital Group (Member FINRA,SIPC) and offers a suite of services for individual and institutional investors. Mr. Sarhan earned a BA and MA in Political Science from Florida Atlantic University and he is well versed in capital markets. In addition, Mr. Sarhan completed the CAN SLIM® Masters Program presented by Investor's Business Daily. Investors with a significant financial interest may inquire about opening an account by calling the office locally at 954-785-1990 or 1-888-237-8399 or emailing to asarhan@sourcegrp.com. Further information is always available upon request. Contact us if you know anyone that may have an interest in receiving this or any of our other products.

 
 MARKET'S    LEADING    GROUPS  
You stack the odds of making a winning trade in your favor by choosing a leading company in a leading industry group, so when buying stocks be sure to choose one with plenty of company, that is a stock trading among a group of several strong-performing peers!  Familiarize yourself with the list of the top performing industry groups and leading stocks listed below.  These symbols and related companies ARE NOT intended to be construed as a list of timely and proper choices based on the CAN SLIM® investment program.   These pace-setters in each of the currently top-ranked groups listed may not presently fit within the guidelines we suggest adhering to.  The point is that it is always wise to choose leaders in the same or a very similar business to that of the strongest stocks in the market.  Find companies that resemble other strong stocks' leadership characteristics.
 
RANK GROUP NAME GROUP LEADERS
 SYMBOL ,% FROM 52WK HIGH (AS OF 1/30/2009 CLOSE),
# OF DAYS MAKING NEW HIGHS ON THE LEADERS LIST
1 DIVERSIFIED SERVICES APOL, -9.5%, 4 | VSEC, -40.6%, 4 | BKR, -20.2%, 3 | ESI, -6.3%, 3 | 2 OTHER ISSUES TOTALED 2 APPEARANCES FOR A TOTAL OF 16 APPEARANCES FOR THIS GROUP.
2 COMPUTER SOFTWARE AND SERVICES NCIT, -9.3%, 3 | SXCI, -3.8%, 2 | MANT, -13.6%, 0 | FOR A TOTAL OF 5 APPEARANCES FOR THIS GROUP.
3 AEROSPACE/DEFENSE AVAV, -8.5%, 4 | STST, -31.1%, 0 | LLL, -31.5%, 0 | FOR A TOTAL OF 4 APPEARANCES FOR THIS GROUP.
4 DRUGS CSKI, -26.6%, 2 |  EBS, -18.8%, 1 |  TEVA, -17.1%, 0 |  FOR A TOTAL OF 3 APPEARANCES FOR THIS GROUP.
4 INSURANCE LPHI, -15.7%, 3 | AOC, -25.9%, 0 | BRO, -21.1%, 0 | FOR A TOTAL OF 3 APPEARANCES FOR THIS GROUP.
4 TELECOMMUNICATIONS SHEN, -14.2%, 3 |  NTLS, -32.6%, 0 |  VIV, -54.5%, 0 |  FOR A TOTAL OF 3 APPEARANCES FOR THIS GROUP.
7 HEALTH SERVICES GTIV, -15.7%, 1 | THOR, -13.3%, 1 | AFAM, -42.7%, 0 | FOR A TOTAL OF 2 APPEARANCES FOR THIS GROUP.
7 UTILITIES CWT, -9.9%, 1 | SJI, -8.5%, 1 | WTR, -5.7%, 0 | FOR A TOTAL OF 2 APPEARANCES FOR THIS GROUP.


Notes:

  • This is a list of the strongest groups based on the total number of new highs achieved in the group. For example, 1 stock making 10 new highs is the same as 10 stocks making 1 new high.
  • The source of the data is the cumulative appearances on the CANSLIM.net BreakOuts Page for the month.
  • If there were less than four stocks in the list of stocks making new highs then the top stocks in that group were added to the list.

- CANSLIM.net News Staff
SPECIAL REPORT ON THIS MONTHS MARKET LEADING GROUPS SECTION        
Market Leading Group Report for This Month / CANSLIM.net Staff

One of the major principles of the investment system we support at CANSLIM.net is to concentrate buying activities in the leading industries. Quoting William J. O’Neil on Page 200 of "How to Make Money in Stocks, A Winning System in Good Times or Bad", it has been observed that “The majority of leading stocks are usually in leading industries. Studies show that 37% of a stock’s price movement is directly tied to the performance of the industry group the stock is in. Another 12% is due to strength in the overall sector.”

The Market’s Leading Groups (MLG) section of CANSLIM.net News is a tool to help our members identify the industry groups that have performed the best.  This is a monthly snapshot, and it considers the current price performance from the strongest stocks on the CANSLIM.net Leaders List over the past month. We highlight the top groups by recognizing the specific stocks reaching new 52-week highs. If the stocks identified are close to their 52-week highs, one can acknowledge a strong group, and one may be wise to focus their attention on these strong groups. Conversely, if stocks identified in the MLG section are significantly off their respective 52 week highs, one can conclude that the group was strong at the beginning of the month, but the group (and/or market) has been losing favor - and should probably be avoided until strength returns. CANSLIM.net members can follow group performance daily in the newspaper and by looking at the Industry Group Watch section in the daily CANSLIM.net After-Market Update.

Given the past and current market conditions, a study of the Market Leading Groups section now highlights just how severe the lack of leadership in stocks has truly been. In total, there were only 21 individual stocks from the CANSLIM.net Leaders List making news highs during the month of January for a total 42 occurrences.. Generally, in a healthy market environment, any group having a total of only 42 appearances might not even show up in the "Top 10" groups.  This is further proof of just how poor the market performance has remained over the past month after seeing similar numbers in each month of Q4, 2008.

The above is highlighted to illustrate that this section should NOT be used for any buying considerations at this time. CANSLIM.net continues to advise caution in adding any new positions until the market has a confirmed follow through day AND there are some stocks making new 52 weeks highs and exerting leadership in the market. While investors are watching for new leadership, the market's New Highs and New Lows totals are highlighted each evening in the Market Commentary portion of the CANSLIM.net After-Market Update. The quality and quantity of issues listed in the daily CANSLIM.net Mid-Day BreakOuts Report is another helpful indicator as to the overall market's strength.  Simply taking the few minutes to scan the reports each day is all it takes to stay informed.

- CANSLIM.net News Staff
INVESTING   FOR THE NEW MILLENNIUM    
Mutual Funds Have Slim Chances of Repairing Losses Quickly, But You Can Do Better - Kenneth J. Gruneisen, CAN SLIM® Certified, Registered Principal, Source Capital Group, Inc. (Members FINRA, SIP
 
 

I don’t like to be the bearer of bad news, but if you lost -20% last year you now need a +25% gain to repair that loss.  If you lost -40% you need a +66.7% gain to get back to where you were before.  Many of you who are reading this may not have been following along at the time, however one of my earliest issues of this monthly column made the point that minimizing losses was critically important – providing a table that illustrated the percentage gains needed to repair losses (read here).

 

How much money might you have if you limited every loss at 7% and immediately sold any of your holdings that were already down by more than that small percentage?  Imagine if you did not make any excuses for "core holdings" or long-term positions that were just "too good to sell."  Imagine you took the painful losses automatically and without emotion.  You didn't take it personally, and you didn't blame the analysts or suggest that anyone misled you about your investment's health - you just sold!  Imagine you just did what the book says you need to do to be successful in achieving above average returns.  

Rather than imagining you did it, take some time to actually compute the results you could have had.  We might call this the "opportunity cost", because you had an opportunity to do something different.  Goofy moves by the Fed or Treasury Secretary had no bearing either, as they did not hold a gun to your head or make a law against moving your cash to a safer place.

“It will eventually come back”, you might say, thinking your patience will be rewarded if you survive the current Bear Market and stay blindly loyal to the mutual funds that may have dealt you painful losses.  And, over time, they very well could repair their losses. But can you afford to wait long enough for that to happen?

Investors stand the best chances of making up the damage by adhering strictly to the investment system’s rules.  No mutual fund I have seen follows the rules as well as disciplined individual investors might do on their own. Not following the rules strictly enough created big losses, right?  In a better market environment, why might we still be skeptical of mutual funds?  Just consider these quotes taken from the Certification Level IV workbook provided to me back in May of 2005 (pg. 194): 

  • “Concentration is the key, not diversification; we put all our eggs in just a few baskets and watch them carefully while having rules to protect us.”
  • “It’s only risky if you don’t follow the rules.”
  • “Key to your success: How many stocks do you own?” 
  • “Don’t own more than 8; Greatness is not achieved with a 20-stock portfolio.  More aggressive portfolio managers invest in only 6. During a bull market, this number can decrease.”

Diversification works to the disadvantage of investors who are looking for ways to grow their portfolios many-fold in just a few years.  While a mutual fund that diversifies into 50 or 100 stocks in a bullish market might be more concentrated than most of its peers, but it is still “over-diversified” with respect to the investment system’s rules.  That makes it likely to get results that are largely in line with the performance of the major averages.  Truly stellar gains are not to be expected by any mutual fund. 

I still hear those who argue that it is impossible to time the market.  They might suggest that it was just a lucky call that we eliminated all stocks and moved 100% to cash in actively managed portfolios (Listen to this minute and a half audio clip from a 7-11-08 interview where this fact was pointed out - click here.) Luck had nothing to do with it.  Opinions had nothing to do with it either.  This is a fact-based system that was proven long ago, and all we are doing is seeing it prove itself again.

 
Kenneth J. Gruneisen -  Has successfully completed the CAN SLIM® Certification Program.  Mr. Gruneisen is a Registered Principal and manages a Source Capital Group (Member FINRA,SIPC) branch office offering personalized assistance. Investors with a significant financial interest in equities may inquire about opening an account by calling the office locally at (954) 785-1990 or 1-888-237-8399 or emailing to kgruneisen@sourcegrp.com  Further information is always available upon request. Contact us if you know anyone that may have an interest in receiving this or any of our other reports.

The recommendations made by CAN SLIM® certified individuals are their own and may not be attributed to the CAN SLIM® Certification Program, William O'Neil & Co., Investor's Business Daily or their affiliates. The CAN SLIM® Certification indicates only that the individual has successfully completed the CAN SLIM® Certification Program. CAN SLIM®, William O'Neil & Co., Investor's Business Daily and any of their affiliates are in no way responsible for any loss or damage caused as a result of the services provided by these individuals.

Comments contained in the body of this report are technical opinions only and are not necessarily those of Source Capital Group, Inc. The material herein has been obtained from sources believed to be reliable and accurate, however, its accuracy and completeness cannot be guaranteed. Our firm, employees, and customers may effect transactions, including transactions contrary to any recommendation herein, or have positions in the securities mentioned herein or options with respect thereto. Any recommendation contained in this report may not be suitable for all investors and it is not to be deemed an offer or solicitation on our part with respect to the purchase or sale of any securities. Source Capital Group, Inc. is a FINRA/SIPC member firm.

Source Capital Group, Inc.

Members FINRA/SIPC

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Kenneth J. Gruneisen
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Lighthouse Point, FL 33064
954-785-1990 1-888-237-8399
Email: kgruneisen@sourcegrp.com
 
STOCKS    TO WATCH   IN   THIS NEW    MARKET
Our staff of experts researches and then compiles these detailed summaries of selected stocks which warrant further investigation by investors. These stocks show strong upside potential based on the CAN SLIM® investment system. Ideal buy candidates are also identified for members throughout each month, appearing in yellow in CANSLIM.net's Mid-Day Breakouts Report, or occasionally featured in timely CANSLIM.net Stock Bulletins which are promptly emailed to all members.

 
SPECIAL NOTICE FOR CANSLIM.net MEMBERS

This section of CANSLIM.net News is probably the most read by our members, as it usually includes a couple of high-ranked leaders that are among the most ideal looking buy candidates under the investment system's guidelines. If it were entirely up to our staff, we would have a long list of new ideas to present with detailed analysis and annotated graphs in every issue. However, the responsible thing to do for now is hold off on featuring new ideas, since leadership is still elusive after the worst January on record for stocks. Regular readers of CANSLIM.net's daily reports are well aware of the lack of leadership and dearth of strong stocks for consideration.

When conditions improve, patient and watchful CANSLIM.net members should be able notice that improvement in a number of ways. First, the list of stocks meeting the Mid-Day report's screen parameters will expand, and new ideas worthy of possible action will be highlighted in yellow with pivot points and max buy levels identified. This can only happen as the market action dictates. Our experts on staff will also produce more detailed Stock Bulletins including annotated graphs, when and only when healthy leaders are setting up and meeting all key criteria. Another thing to watch for will be a Special Report, just as new rallies have prompted in the past, and which is only possible with widespread leadership. And of course, CANSLIM.net News will have more ideas featured in this "Stocks to Watch in This New Market" section when the M criteria is finally saying that investor's odds are better in stocks.
 
  FEATURED STOCKS MONTHLY    REVIEW      

In the table below you will find all of the noteworthy stocks featured by CANSLIM.net in the prior month.

Symbol/Company Name/Industry Group

As of 1/30/2009
(Close)

 Last

 

 Chg Date
Featured		 Price
When Featured

(First)
(Last)		 % Gain / Loss Since Feat.
(First)
(Last)		 Resources Monthly Summary Notes
ACM - NYSE
 Aecom Technology Corp

 DIVERSIFIED SERVICES - Technical Services    		 $25.31 $(0.66)

9/17/2007
12/26/2008
 

 $28.84
$30.17
 		 -12.2%
 -16.1%
 

 

 C A N S L I M, StockTalk, News, Chart, SEC,
Daily Graphs Online Stock Checkup IBD Graphs
Zacks Reports		 Gapped down 1/15/2009, following considerable weakness on 1/14/09 with heavy volume while violating its 200 DMA line and its 50 DMA line. Based on poor action it was dropped from the Featured Stocks list that night, having failed to trigger a convincing buy signal after it was again featured in the 12/26/08 CANSLIM.net Mid-Day BreakOuts Report (read here). Lackluster volume was noted as it traded above its August chart highs on 1/02/09, then prompt distributional pressure arrived. Strong quarterly and annual earnings history satisfies the C & A criteria. Recent quarterly comparisons showed impressive acceleration in sales and earnings growth. The Building - Heavy Construction group has a history of being seasonal (slower in winter months). ACM was first featured at $28.84 in the 9/17/07 CANSLIM.net Mid-Day BreakOuts Report (read here), and surged nearly +30% afterward, but was dropped from the Featured Stocks list on 11/30/07, shortly after its last appearance with an annotated graph on 11/27/07 under the headline "Disappointing Technical Breakdown After Earnings News" (read here).
AFAM - NASDAQ
 Almost Family Inc

 HEALTH SERVICES - Home Health Care   		 $30.84 $0.34

5/21/2008
 

 $24.27
 		 +27.1%
 

 

 C A N S L I M,  StockTalk, News, Chart,
 Daily Graphs Online  Stock Checkup IBD Graphs  SEC, Zacks Reports 		Falling toward its 200 DMA line on 1/15/2009, it was deteriorating below its recent chart low ($39.33) adding to concerns after prior technical sell signals noted. Now -31% off its all time high, it was dropped from the CANSLIM.net Featured Stocks list that night. Gains above its 50 DMA line are needed for its outlook to improve. This high-ranked leader traded up as much as +122.89% since featured in a 6/04/08 CANSLIM.net Stock Bulletin.
ESI - NYSE
 I T T Educational Svcs

 DIVERSIFIED SERVICES - Education & Training Services      		 $122.51 $(1.19)

4/1/2003
12/01/2008

 $28.45
$90.08		 +330.6%
+36.0%

 

 C A N S L I M,  StockTalk, News, Chart ,
 Daily Graphs Online  Stock Checkup IBD Graphs  SEC, Zacks Reports 		Quietly holding its ground after at an "island reversal" pattern was created by its 1/26/09 gap down. Broke out with a considerable gain backed by 5 times average volume, indicative of heavy institutional buying demand as it rallied above its 1/09/09 high as a new pivot point. Mentioned by CANSLIM.net's founder in a 12/15/08 interview on WBBM 780AM - listen by clicking here. Featured in the December 2008 CANSLIM.net News (read here).
GMCR - NASDAQ
 Green Mtn Coffee Roastrs

FOOD & BEVERAGE - Processed & Packaged Goods     		 $38.26 $0.15 1/1/2008
01/04/2009
 		 $40.70
$39.09
 		 -6.0%
-2.1%
 

C A N S L I M | StockTalk | News | Chart |  
Daily Graphs Online  Stock Checkup IBD Graphs
 SEC | Zacks Reports

Held its ground today after a gap down and loss on heavy volume on 1/29/08 raised technical concerns. Its latest quarterly earnings increase was below the +25% guideline, raising fundamental concerns. This and other important details were provided in the latest "Featured Stock Update" summary. Color code was changed to green based on weakness and sub-par earnings just reported. Recent high volume totals have been noted as "indicative of distributional pressure." Meanwhile, only average volume was behind its 1/23/09 gain for a close above its previously cited pivot point. GMCR was a previously featured stock which was dropped, then featured again in the January 2009 CANSLIM.net News (read here).
LPHI - NASDAQ
 Life Partners Inc

 INSURANCE - Life Insurance 		 $38.00 $0.45 12/31/2008
 		 $42.86
 		 -11.3%
 		 C A N S L I M, StockTalk, News, Chart, SEC,
Daily Graphs Online Stock Checkup IBD Graphs
Zacks Reports		 Volume in continuing to dry up as it consolidates in a tight trading range above important support at its 50 DMA line. It was featured on Wednesday, December 31, 2008 in the CANSLIM.net Mid-Day Breakouts Report (read here). This company has only 5.82 million shares in its float, which helps explain its erratic price action in recent months since challenging multi-year chart resistance in the $42 area. It has high ranks and has shown strong sales revenues and earnings increases.
MANT - NASDAQ
 Mantech International

COMPUTER SOFTWARE & SERVICES - Business Software & Services  		 $53.63 $1.55 4/1/2008
1/4/2009
 		 $46.84
$54.19
 		 +14.5%
 -1.0%
 

C A N S L I M | StockTalk | News | Chart |  
Daily Graphs Online  Stock Checkup IBD Graphs
 SEC | Zacks Reports

Fell toward its 50 & 200 DMA lines today. Gapped down on 1/27/08 and considerable loss with 3 times average volume following an analyst downgrade. That amounts to a worrisome "island reversal" after the prior session's gap up gain had helped it rally beyond its max buy level. Featured again in the January 2009 CANSLIM.net News (read here), returning it to the CANSLIM.net Featured Stocks list after having rebounded nicely from its lows below its 50 & 200 DMA lines.
NCIT - NASDAQ
N C I Inc Cl A

 COMPUTER SOFTWARE & SERVICES - Information Technology Service  		 $30.00 $(0.67) 8/24/2007
11/26/2008
 		 $16.91
$27.46
 		 +77.4%
+9.2%
 		 C A N S L I M,  StockTalk, News, Chart,
 Daily Graphs Online  Stock Checkup IBD Graphs
 SEC, Zacks Reports 		Down on light volume for a third consecutive session after quietly reaching a new all-time high Wednesday, then reversing to close with a small loss. This high-ranked Computer - Tech Services firm has been consolidating in a tight trading range above prior chart highs in the $29 area, an important chart support level to watch. As previously noted, "Deterioration into its prior base would raise concerns." Concern was previously noted regarding the company's up and down annual (the A criteria) earnings history.
NFLX - NASDAQ
 Netflix Inc

SPECIALTY RETAIL - Music & Video Stores  		 $36.14 $(0.74) 1/29/200 $37.13
 		 -2.7%

 

C A N S L I M | StockTalk | News | Chart |  
Daily Graphs Online  Stock Checkup IBD Graphs
 SEC | Zacks Reports

Gapped down today after an analyst downgrade. Featured in the 1/29/09 CANSLIM.net Mid-day Breakouts Report (read here) as gains with above average volume for a third consecutive session had it getting extended from a prior base and on course to challenge all-time highs near $40. It gapped up on 1/27/09 clearing a bullish cup-with-handle pattern after its latest quarterly financial report showed accelerating sales revenues and earnings growth. Its 4 latest comparisons showed earnings increases above the +25% guideline (meeting the C criteria). Watch for the market environment to improve while patient and disciplined investors may have a future opportunity to accumulate shares on light volume pullbacks under its "max buy" level toward prior chart highs in the $33 area, which is now a key chart support level.
STRA - NASDAQ
 Strayer Education Inc

DIVERSIFIED SERVICES - Education & Training Services   		 $216.43 $(1.57) 11/25/2008
12/22/2009		 $226.62
$232.17
 		 -4.5%
-6.8%
 		 C A N S L I M,  StockTalk, News, Chart,
 Daily Graphs Online  Stock Checkup IBD Graphs SEC, Zacks Reports 		Holding its ground just above its 50 DMA line since a considerable loss on 1/26/09 with more than twice average raised concerns. Its color code was changed to green, as the weak action has been indicative of distributional pressure and coincided with large losses by other leaders in the group. Featured again in yellow in the 1/22/09 CANSLIM.net Mid-Day Breakouts Report (read here). Small supply of shares (the S criteria) has contributed to great volatility while it has been building a choppy base. Its gap up on 1/09/09 was a sign of solid institutional support, helping it rise above its 50 & 200 DMA lines. This high-ranked leader in the Commercial Services - Schools group has proven resilient since weak action prompted it to be dropped from the Featured Stocks list on 1/06/09.
SXE - NASDAQ
 Stanley Inc

COMPUTER SOFTWARE & SERVICES - Information Technology Service    		 $30.26 $(1.92) 11/02/2007
01/12/2009		 $31.83
$35.47
 		 -4.9%
-14.7%
 		 C A N S L I M | StockTalk | News | Chart |  
Daily Graphs Online  Stock Checkup IBD Graphs
 SEC | Zacks Reports		 Reported solid sales and earnings increases for the quarter ended Dec 31, 2008, yet ended the session down considerably on heavy volume and violated its 50 & 200 DMA lines -which are essentially coinciding now. Important details and an annotated graph are provided in the latest "Featured Stock Update" summary. Color code was changed to green based on recent weakness. Featured in the 1/12/2009 CANSLIM.net Mid-Day Breakouts Report (read here). Quarterly sales revenues and earnings increases have remained strong and above the +25% guideline. Proved resilient since dropped (based on weakness) from the Featured Stocks list on 10/27/2008.
THOR - NASDAQ
 Thoratec Corp

HEALTH SERVICES - Medical Instruments & Supplies  		 $28.97 $0.83 11/29/2005
12/05/2008		 $19.62
$28.62
 		 +47.7%
+1.2%
 		 C A N S L I M,  StockTalk, News, Chart,
 Daily Graphs Online  Stock Checkup IBD Graphs SEC, Zacks Reports 		Pulled back toward its 50 DMA line and prior chart highs in the $29 area - previously noted as a "technically an important support level." Mentioned in a 12/15/08 interview on WBBM 780AM - listen here. This high-ranked Medical - Products firm was featured in yellow in the 12/05/08 Mid-Day Breakouts Report (read here) Its annual earnings (the A criteria) history is unimpressive, however, its 2 most recent quarters showed giant sales and earnings increases that make it an interesting turn around story. THOR has rebounded impressively after being featured in the past, then subsequently dropped from the CANSLIM.net Featured Stocks list on 2/2/2006.
VSEC - NASDAQ
 V S E Corp

DIVERSIFIED SERVICES - Technical Services 		 $28.76 $0.86 10/9/2007
1/05/2009		 $55.53
$41.36
 		 -48.2%
-30.5%
 

C A N S L I M | StockTalk | News | Chart |  
Daily Graphs Online  Stock Checkup IBD Graphs
 SEC | Zacks Reports

Gapped down 1/20/2009 and suffered a huge loss while falling on very heavy volume, triggering technical sell signals while slicing under its 50-day and 200-day moving average (DMA) lines. The swift technical breakdown occurred after the military contractor announced that it lost its bid to continue working with the U.S. Army's Rapid Response program (read here). Based on the fundamental and technical disappointments it was dropped from the Featured Stocks list that night. The high-ranked leader had triggered a technical buy signal with a strong finish after featured in yellow in the 1/5/2009 CANSLIM.net Mid-Day Breakouts Report with a $40.42 pivot point (read here). The very small supply of only 3.96 million shares in float has contributed to greater volatility. The Commercial Services -Miscellaneous Group is still a strong group, satisfying the L criteria. Strong sales revenue growth and solid earnings history (good C and A criteria). It had maintained strong fundamentals and rebounded impressively since it this previously featured was previously dropped from the Featured Stocks list on on 1/3/08.

 

 SPECIAL    ARTICLE                    

Indices at a Crossroads -Prepared by Frank E. Testa, CMT

Long-term View of S&P 500 Index: 

The major indices are at a crossroads with the S&P 500 Index and Dow Jones Industrial Average presently testing long-term support levels dating back to the 2002-2003 periods. It is vital for the S&P 500 to hold its ground at the 800 level or else face yet another down leg that could drag the index to the 535 area, which represents a 76.4% Fibonacci retracement from the December 1987 low to the October 2007 peak. Interesting, the November 2007 low of 747.78 ended a mere 13.30 points above the 38% Fibonacci level of 734.48.   

From a short-term perspective, the S&P 500 remains range bound with the 1,000 level acting as resistance and the 800 area serving as support.

 

Long-term View of the Dow Jones Industrial Average:

 

 

The steep decline that began in mid-October 2007 erased nine years of gains in a matter of two and a half months, leaving the blue chip index at a critical phase with congestion arising at the 8,000 level in the Dow Jones Industrial Average, which also coincides with a 50% Fibonacci retracement from the low of 1987 to the peak of mid-October 2007. The downtrend has been replaced by sideways action as the markets attempt to repair the damages of the past year and a half. It is imperative that this line in the sand is not breached or else it becomes more likely to see a further move down to the 6,525 area – representing a 62% Fibonacci retracement. 

From a short-term perspective, the Dow Jones Industrial Average is presently trapped in a trading range with a ceiling near 10,000 capping the upside, while a floor at the 8,000 level is serving as support.


For those who follow this investment system, the best course of action remains one of continued patience.  Equities are unlikely to make a sustainable move until the uncertainties of the markets are alleviated and more robust leadership surfaces.
 
About Frank E. Testa :
Frank E. Testa has earned his Chartered Market Technician (CMT) designation and is a Director & Chief Technical Analyst at Ipreo. Frank is a devoted practitioner of the CAN SLIM® methodology and a regular contributor to CANSLIM.net. In addition, Frank is the author of "Candlesticks: Shedding the Light on Pattern Analysis" and developer of the Power Point and Figure Charting Method that was published in "The Journal of Technical Analysis." Frank can be reached at Frank.Testa@ipreo.com.
EDITOR'S LETTER                  

Information is KEY in Today’s Market! - Frank DeBold

Two of the more common questions we receive at CANSLIM.net from new members is “How do I best use your service?” and “How do I use the information during times like we are experiencing now?”. A quick study of the past market performance and the advice given to our CANSLIM.net members may best help to explain this. As has been expressed many times, “One either needs to study history or relive it.” This is one of the strengths of the investment system we support, as its principals have been developed by studying past winners (and losers) to understand what attributes to look for in stocks (and the market) in making individual investment decisions.

These past 5 quarters have proven to be a tough market for investors, with a lot of negative financial news along with an extreme level of volatility evident (and still remaining) in the markets. CANSLIM.net members who read the reports and correctly utilized the information presented were able to avert much of the negative market results as CANSLIM.net has been warning its members for some time now on the “Negative Bias” to the market. There are a number of specific instances that can be cited, including the June, 9, 2008 commentary pointing out the failure of the Nasdaq Composite Index as it undercut its May 23rd low, ending its March-May rally attempt (read here). Regular readers were aware of the market's technical signals suggesting a downward trending market.  Since then, commentaries have been suggesting that investors seek safety in cash as they locked in gains. Prior to that, earlier reports had advised extreme caution in late 2007, and throughout January of 2008.

I point this out as evidence why each CANSLIM.net member should monitor the daily reports in order to keep updated on the market conditions and how they impact current market opportunities. We provide reports and summaries, but each investor has to make their own intelligent investment decisions as to when to enter and exit the market and which stocks to buy and hold when they are in the market. We provide information and a reading of what the markets are telling us concerning market conditions and opportunities to consider when market conditions warrant consideration of the current leading issues. In markets like we have and are still experiencing, our goal at CANSLIM.net is to help you protect your capital so that you are positioned to enter the market when the market conditions are conducive to investing your hard earned capital profitably.

Every “Bear Market” in the past has been followed by great opportunities to invest and recognize significant gains. The question is “When” and “Which” stocks to buy. In order to ensure you are positioned to take advantage when the market confirms a follow through day, CANSLIM.net will continue to research and report on the market and advise members when the market has confirmed a buying opportunity. We will advise members with new buy candidates to study as soon as leadership appears and only when it is appropriate!

In anticipation of the expected opportunities, CANSLIM.net is pleased to remind you of our “Beat the Market” Renewal specials - in order to allow our members to take advantage of the opportunities when a healthy rally finally shows up. Sign up for a 2-year renewal membership at only $699.00 and receive 4 bonus months, adding 28-months to your current membership term. If you renew at the regular1-year membership rate of just $399.00, you will receive 2 bonus months, adding14 months to your current membership term.  You can make your choice of these great renewal options at http://premium.canslim.net/orderforms1/specialoffer.asp?aff=BeatTheMarket. The term purchased will be added to the end of your current membership; you will not lose any membership time purchased!

Please call at 1-888-CAN-SLIM (1-888-226-7546) or email to customercare@canslim.net with any questions you may have on the benefits of a CANSLIM.net membership.

As always, we remain dedicated to your investment success!
 

The recommendations made by CAN SLIM® Certified individuals are their own and may not be attributed to the CAN SLIM® Certification Program, William O'Neil + Co., Investor's Business Daily or their affiliates. The CAN SLIM® Certification indicates only that the individual has successfully completed the CAN SLIM® Certification Program. CAN SLIM®, William O'Neil + Co., Investor's Business Daily and any of their affiliates are in no way responsible for any loss or damage caused as a result of the services provided by these individuals.
 
Comments contained in the body of this report are technical opinions only and are not necessarily those of CANSLIM.net.  The material herein has been obtained from sources believed to be reliable and accurate, however, its accuracy and completeness can not be guaranteed. Our firm, employees, and customers may effect transactions, including transactions contrary to any recommendation herein, or have positions in the securities mentioned herein or options with respect thereto.  Any recommendation contained in this report may not be suitable for all investors and it is not to be deemed an offer or solicitation on our part with respect to the purchase or sale of any securities.  This is an unsolicited opinion, and CANSLIM.net has not been compensated in any way by the company(s) mentioned in this report.

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