John Pitera's Market Laboratory Message Board

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Strategies & Market Trends : John Pitera's Market Laboratory

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To: John Pitera who wrote (13973)	4/1/2013 2:59:41 PM
From: Augustus Gloop	2 Recommendations Read Replies (1) of 33421

Very long but stock pick contained within......................................................................................... <<Hi AG, it's time for a full blown......... 2013 TA thread... we have a group of great great contributors so .....if we build it they will come.>> Lets do it! <<you are a gifted man..........what are a couple of names we should consider>> Truly nice words but I don't consider myself gifted at all. Disclaimer & Disclosure My view of the market is being clouded by skepticism and here is why: I don't believe the economy has turned around I believe a correction is overdue I'm of the opinion that we potentially have sizeable leg down coming within the next 36 months. My logic or lack thereof is based on stats I've read on secular markets. It was suggested that secular cycles run about 17 years on average. If that holds true and we use 2000 as the start of a secular bear then the buying opportunity of a lifetime (BOL) could still be ahead Vs. the popular view that it happened in March of 2009 It would take an SPX collapse to below 675 to create the BOL. A significant leg down followed by a crossover into the next secular bull would make it the true BOL. With that in mind, I'll toss out the stock that has been my fav since last year. Gilead Sciences (GILD) finance.yahoo.com The Company / basics - Gilead Sciences (GILD). On a chart it's in the nose bleed section* It's up over 100% in a year. Sector - Biotech Niche - Hep C and HIV Projected Earnings growth over the next 5 = 20% PE = 29 Beta = .80 Divi = 0 *The Chart - I watch sticks but I mainly watch P&F. There are people far more sophisticated than I am who can analyze a different chart and provide a better, more logical entry point than my 40-42. Mine is simply a hope to see a reasonable PB without breaking a long term P&F chart. The longer term P&F chart - stockcharts.com For longer term I use a percentage chart and use 1.67 for box size. Doing this adjusts the box automatically rather than waiting for a stock to hit a certain price to enlarge the box. Gild is in a triple top breakout formation. These are good formations that suggest a high probability for upside but that doesn't mean we cant see a handsome PB first Traditional P&F - stockcharts.com This style simply uses $1.00 as its box size because the stock is over 20. Gild is in a long tail up formation. A long tail up can go on for a long time but it also suggests the stock is potentially ready for a PB. Moreover, it's harder to see of find a support point or max pain stop. It makes GILD look like it's been straight up when in fact the stock spent 7 months churning between roughly 22 and 28 last year. There was another 4 month stint between spent 30 and 38. These area's can bee seen by looking at the longer term P&F chart link. Turn ons - GILD is in the right sector GILD Has the momentum and drug pipeline to reach 60-70 per share. GILD has the earnings growth (provided they hit targets) to justify 70 GILD has been and has the potential to continue to be a high growth stock with a reasonable beta (.80) GILD has done well hitting its earnings projections Turn offs - The market needs a correction imo The biotech run reminds of the biotech run of the early to mid 90's which means be choose wisely because runs like this don't last forever The P/E is a little rich. You're paying a premium (today) for the high growth potential No Dividend but like the P/E - it's a trade off for buying high growth potential Basic Strategy - As mentioned, I'd like to see a PB in the stock to 40-42 range. Since I don't know if that will happen, the method I like to use for entry is scaling. I'm sure everyone on this thread knows what scaling is but if not - it's different than dollar cost averaging and I can post an outline later when I've got more time. If you're reading this and want me to do a scaling explained* post just give me the word *I only use scaling when I view a stock as a long term position that I'm going to own as part of my portfolio foundation.

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