"Perspectives" newsletter raises rating on WIN to 98 points:
Have they ever given a rating this high before?
S/S
----------Perspectives Weekend Edition - Oct 22
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Commentary
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Focusing on stocks that are consolidating into price ranges and
demonstrating a growing sense of optimism is an effective strategy for
finding winners. Taking a position in these stocks can often be rewarded by
strong upward moves. New information that is significant enough to change
the market?s view on the value of the company can break the stock out of a
period of low volatility into a strong trend.
Market volatility is the best determinant of uncertainty. Stocks that trade
with a good deal of volatility do so because the market is unsure about the
value of available information for the company. So, market participants
argue back and forth by buying and selling the stock, and eventually come
to some consensus on the value of the company. As they do so, volatility is
reduced, and the stock enters into a consolidation.
Stocks that consolidate are a demonstration of increased market confidence
on the value of the company. Where there is strong consensus, there is
certainty. For a stock to break out of one of these consolidation patterns
often requires significant new information about that company?s future
earnings potential. By taking a position in a stock that is consolidating,
we can get in before the start of a significant move and minimize risk
because we are taking a position in a stock that the market has confidence
in regarding its price.
The direction of the breakout from the consolidation pattern is often
indicative of the near term trend. Generally, we can anticipate the move of
the breakout based on the type of consolidation pattern we are seeing.
However, at the point of breakout, we can also see very quickly if our
expectations were correct and minimize losses if we are proven incorrect.
The upward consolidation pattern often comes before an upward move.
We want to scan the market for stocks that are consolidating and take
positions in those whose charts demonstrate this optimistic pattern. Be
fussy, and take positions as the stocks show a high degree of investor
consensus on value and start to show an increase in volume as a clue that a
breakout may be imminent. New information is what will cause the market to
break the stock out its consolidation pattern.
Look for charts that are showing well defined upward consolidating
triangles nearing overhead resistance and showing signs of wanting to break
through that resistance. Often, there will be a pick up in volume as we
near the breakout point, so watch for that as well.
Enough Said
Scores of Friday's Most Active Stocks (by number of trades)
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NASDAQ
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Company Symbol Stockscore
Cisco Systems CSCO 47
Sun Microsystems SUNW 55
Microsoft MSFT 50
Dell Computer DELL 41
Inktomi Corp. INKT 49
US Over the Counter Bulletin Board
==========================
Company Symbol Stockscore
Midisoft Corp MIDI 65
Wave Systems WAVX 31
FutureLink FLNK 70
MediConsult MCNS 53
Starnet Commun. SNMM 60
Alberta Stock Exchange
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Company Symbol Stockscore
Wi-Lan WIN 98
Kazz Industries KAZ n/a
Gallery Resources GYR 68
Commonwealth Engy CWY 68
Cell-Loc CLQ 71
Vancouver Stock Exchange
====================
Company Symbol Stockscore
Edispatch EWD n/a
Rocca Resources RRL 76
ID Internet Direct IDX 50
Olympus Pacific OYM 85
Trimark Oil and Gas TMK 68
Toronto Stock Exchange
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Company Symbol Stockscore
Nortel Networks NT 77
TD Bank TD 62
BCE Inc BCE 87
ATI Technologies ATY 44
Newbridge Networks NNC 29
Stocks to Watch
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Stewart Enterprises (STEI)
NASDAQ
Stockscore - 11
Rating - Bearish
Reference: (504)837-5880
- I featured this stock as a good shorting opportunity on Thursday to the
readers of the Daily Edition. The stock moved down about 20% on Friday,
with a break below critical support. Looks like it can still go lower,
although putting in a short sale now is a bit risky. For those that are
short the stock, it looks like there is a good chance of a greater move
downward. The company operates funeral homes and cemeteries and are the
subject of shareholder class action lawsuits for issuing a series of
materially false and misleading public statements about the effect on the
company of negative trends in the death care industry.
Novavax Inc. (NOX)
AMEX
Stockscore - 98
Rating - Bullish
Reference: novavax.com
- the stock made an abnormal gain on abnormal volume, with a breakout from
a lengthy trading range are technical indications that there is something
happening at this company. Looks like it could go into an uptrend from
here, although I won't be surprised if the stock pulls back to the $4 level
before starting that uptrend. Novavax is a biopharmaceutical company
engaged in the research and development of drug products, focused on
women's health, infectious diseases and cancer.
J2 Communications (JTWO)
NASDAQ
Stockscore - 82
Rating - Bullish
Reference: (310)474-5252
- J2 Communications is engaged in the licensing of the National Lampoon
name through motion pictures, TV programs and other media.. The Company is
also engaged in the videocasette market. The stock made a technical
breakout on abnormal volume on Friday, indicating that there are likely
dramatic fundamental changes coming in the near term which may motivate an
uptrend. Although there is some risk of short term profit taking after
Friday's 22% gain, there is a good chance of a move higher from here.
Komag Incorporated (KMAG)
NASDAQ
Stockscore - 27
Rating - Bearish
Reference: komag.com
- Last week, I discussed this as a good shorting opportunity as the stock
was testing the three dollar support level. It penetrated that critical
level on Monday of this week, and ended the week down about 23%. For those
that were able to get the short tickets in on time, it looks like KMAG
could make a bounce soon, so be watchful for the signs to cover the short
and move on with profits in your pocket.
The Scores - What They Mean
======================
***The scores that are attached to the stocks are based on a proprietary
model developed by Stockscores.com. This model factors in numerous
technical analysis indicators and utilizes the past 200 days of trading
data. Stocks that have not traded for 200 trading days will not have a
score calculated.
Scores greater than 70
Bullish
This stock is worth considering as a buying opportunity. Our model
indicates that the stock has good potential to go higher in the short term,
and is worth taking time to consider. Complete your due diligence on this
stock so that you can make your own judgement on the quality of the company
before making a decision, and remember that our score is valid for the
price that the stock is at when we applied the score. Of course, a score of
98 has more potential than a score of 72, but all stocks in this range
deserve your consideration. In addition, if you are short this stock, you
should consider covering the short position.
Scores between 60 and 70
Optimistic
Market activity is beginning to indicate improved optimism for this stock
and it should be put on a watch list as a stock to consider. If you already
like this company's fundamentals, you should now look for the signals that
the time is right to own the stock. If you own the stock, you are likely in
good shape but may want to consider taking profits if profits are high. If
you are short the stock, you should approach your position with some
caution and watch for the signal that it is time to cover.
Scores between 40 and 60
Neutral
Market activity is doing little to indicate the future direction of this
stock. The stock is likely in a trading range, or, if it has been in a
strong trend over the recent past, it may be starting to reverse that
trend. If you own this stock and are in a profitable position, you should
consider whether the stock is reversing and it may be time to take your
money off the table.
Scores between 30 and 40
Cautionary
Market activity is beginning to indicate caution is warranted for this
stock and it should be put on a watch list as a stock to sell or short. If
you believe that the company's fundamentals do not warrant the valuation
the stock has received, you should now look for the signals that the time
is right to short the stock. If you are already short the stock, you are
likely in good shape but may want to consider taking profits if profits are
high. If you are long the stock, you should approach your position with
some caution and watch for the signal that it is time to sell.
Scores less than 30
Bearish
Market activity is very negative on this stock and it may be very risky to
hold this stock. Shorting opportunities should be explored after doing the
appropriate due diligence. If the stock has suffered a major sell off
already, traders may want to watch for signs of a reversal bounce as a long
trading opportunity, but be sure to watch for the technical reversal which
will likely be accompanied by an increase in the stock score.
As a final thought on this new scoring system, it is important to consider
where the score has come from. A stock that moves from 60 to 75 is likely a
better opportunity than one that moves from 90 to 75. Also, consider where
the stock is relative to the score. Again, a stock that has made
considerable gains of late may have a good score, but entering the stock
given the gains it has made will be riskier. Risk is factored into the
model, but use some of this common sense.
Finally, remember that this model is generated by a computer and should not
be used to make investment decisions. It is a tool which can help you find
opportunities from the thousands of stocks that are out there. However, you
have to do the work to take the list of stocks with the scores you want
down to the stocks you want to put your money on.
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