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Publisher: Colin Alexander Editor: Ken Wilson (450-691-4617)
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Technically Speaking
Charts have turned convincingly bullish on all counts. No matter if we’re studying the tech sector represented by the Nasdaq 100 and the Nasdaq Composite or the broader indexes meaning the DJ-30 or the S&P 500, we come away with the same conclusion, market indexes are definitely on a roll and rallying into the year end.
We start with the tech sector. The ND-100 reached another new high for 2005 on Friday continuing the bullish rally despite being heavily overbought. Our only concern would be that these new highs are being established on weaker volumes as compared to earlier rallies staged in the final quarter of 2004 and in July of 2005. Naturally, it is important to consider that price is the absolute final determinant when analyzing the performance of a stock and in that regard, we accept that there is a cautionary note and endeavor to limit any potential losses.
There’s a similar story for the ND Composite though at the close on Friday, the Composite index failed to ring the bell marking a new high for 2005 closing a few points shy. Perhaps this is a significant shift for during the previous rally beginning in the spring and lasting until mid-summer, the leader in techs was the Composite index. Now with the ND-100 leading the rally, once again the leaders are the largest companies, an important distinction that should improve the reliability/durability of the rally.
As with most stock market rallies that have occurred in the last 15 years, it is the tech sector that has been at the forefront and leading the charge. This time is no exception. The DJ-30 and the SP 500 have both missed setting new highs for 2005 but appear to be on target to do so in the very near future. Specifically, the DJ-30 needs to gain 35 points simply to surpass the high from August of this year, while a new high would require a move to 11,000. In the case of the SP 500, the August high represents the high for 2005 and thus would need to be bettered in order to match the performance on the ND. While still lying south of this mark, the current rally appears to have the necessary strength required to accomplish this.
If we are to take a longer-term view of the current situation, we find that all of the aforementioned large cap indexes are setting up for Lindahl buy signals on the important monthly charts. We grant that it is still early not having passed the middle of the month yet, however we suspect that the rebound begun in October has not yet reached its zenith either.
New Buy Recommendations (in order of preference):
Capstone Turbine Corp (CPST) – Capstone is a producer of microturbines used in a variety of roles for onsite power production or as a backup source of energy. The share price reached its peak in September and has retraced a large percentage of the gain resolving to stay above the 200-day moving average, which provides support. Friday’s gap higher and strong gain was in response to respectable quarterly financial results and the large move surpassed the highs from the previous month on the daily chart. More importantly, it gave a Lindahl buy signal on the weekly chart. This is a share with a price below $5 and may be considered too speculative for some investors.
Tom Online (TOMO) – This fast-growing Chinese provider of wireless internet released its quarterly earnings this week and price jumped as a result. In all timeframes, daily, weekly and monthly, the charts are very strong and hint at oversized gains for stockholders.
New Short Sales
None.
Stock Positions to Sell/Exit:
None.
Portfolio Comments:
New stops have been added to the list while others have been modified. Those that have blanks, are being carried unstopped for now. Please see our complete list of stops in the table below.
List of Current Stock Recommendations:
Action Ratings. The following is the legend for designating immediate action
for our stock recommendations. The first is B, meaning the stock is timely
to buy but the case for doing so right here is not overwhelming. Either the
stock may have gotten ahead of itself and may be vulnerable to a retracement or
else the stock has been performing disappointingly but may simply be
regrouping. B+ and B++ indicate stocks for which there is a technical case
to buy now, with plusses adding weight according to how many there are, up
to a maximum of two. Stocks rated H are ones to hold, awaiting confirmation
to buy more or to sell. SELL, of course, means what it says. It seldom pays
to override this designation. In the case of stocks held short, the rating is S
where positions should be retained. S+ and S++ indicate stocks for which there
is a technical case to add to the positions with plusses adding weight similar
to long positions. The maximum number of plus signs is 2.
N.B. There are no longer restrictions on foreign stocks held in Canadian retirement savings accounts.
|
Date of Entry |
Name |
Symbol |
Entry Price |
Current Price |
Stop |
Action Rating |
|
|
Akamai Tech |
AKAM |
15.96 |
17.02 |
15.00 |
B+
|
|
|
Biovail |
BVF |
25.69 |
26.45 |
|
B+
|
|
|
Plexus Corp |
PLXS |
20.15 |
19.39 |
|
H
|
|
|
Qualcomm |
QCOM |
44.83 |
45.42 |
|
B
|
|
|
Redback Networks |
RBAK |
11.78 |
12.37 |
|
B
|
|
|
Transcanada Corp |
TRP |
21.34 |
29.85 |
27.50 |
B |
|
|
Viasat Inc |
VSAT |
27.43 |
25.01 |
23.00 |
B
|
New stops in BOLD
* Stop on a closing basis
** Buy if above entry price
*** Split-adjusted price