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Technically Speaking
Friday’s release of GDP figures for the fourth quarter was quite surprising for both the actual amount and the unexpected reaction. The increase of 1.1% is the lowest quarterly gain in three years and was the result of sharply lower automobile sales, weaker business investment and if one believes the opinion of some analysts, statistical error. In fact, there were a number of economists openly questioning the veracity of the data issued by the Commerce Department. The durable goods orders/shipment numbers from the past three months seem to support this line of questioning and regardless of the outcome many believe that upward revisions are not only likely, but also rather certain.
The unexpected reaction to the figures was a strong continuation of Thursday’s move higher developing into a solid buy signal on both the Nasdaq as well as the S&P 500. The Dow Jones remains the laggard and interestingly enough, this is the same scenario that we saw in October when the markets had hit their respective bottoms and began the steady climb higher. At that time, the Dow had broken through support at its August lows and was technically a sell. However, the Nasdaq and S&P succeeded in finding support above their respective August lows and once they began their bullish rally, the Dow chimed in with its own version.
The heavy volume supporting the move at the end of the week points the way to a continuation of the rally begun in January with the retracement now complete. Earnings have been the locomotive behind this rebound with upside surprises becoming the rule rather than the exception and these earnings are the driving force for many stock prices. Next week should see a continuation of the good results sustaining the rally.
New Buy Recommendations (in order of preference):
Nasdaq Stock Market (NDAQ) – This recommendation is to buy the shares of the corporation owning the Nasdaq market. There is an element of risk to this entry position that some may find a little disconcerting and that is the release of quarterly earnings is set for Monday Jan 30 after markets close. If the company misses expectations the stock could be in for a tumble but trading volumes increased in the fourth quarter so we believe that the risk is acceptable. On Thursday, a rumor that an offer from the London Stock Exchange to buy the company helped generate an 11% jump in the stock’s price. Certainly there are other technical reasons to buy this stock, not the least of which is the strong daily chart culminating in Thursday’s move. On the weekly chart, the completion of a Lindahl buy signal supports the buy recommendation and with the current price just below its all-time high, we believe that there is more gas in the tank.
New Short Sales
None.
Stock Positions to Sell/Exit:
USA Truck Inc. (USAK) – Though this company’s results were adequate, the shares were sold off and there is no longer any reason to participate in this share while other good opportunities present themselves. We have no patience for non-performing stocks.
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 |
|
|
Amer Sci & Eng |
ASEI |
71.08 |
64.90 |
|
H
|
|
|
Birch Mtn Resour. |
BMD |
6.65 |
7.57 |
|
B
|
|
|
Englobal Corp |
ENG |
10.86 |
12.11 |
|
B
|
|
|
|
MNG |
2.50 |
2.73 |
|
B
|
|
|
Nuvelo Inc. |
NUVO |
12.95 |
15.85 |
|
B
|
|
|
Progenics Pharma |
PGNX |
29.70 |
27.92 |
|
H
|
|
|
Radiant Systems |
RADS |
13.78 |
14.20 |
|
B
|
|
|
Redback Networks |
RBAK |
11.78 |
16.15 |
|
B+
|
|
|
Seabridge Gold |
SA |
9.49 |
9.19 |
|
H
|
|
|
Sierra Wireless |
SWIR |
13.60 |
12.96 |
|
H
|
|
11/21/05 |
Sigma Designs |
SIGM |
13.10 |
15.91 |
|
B
|
|
11/14/05 |
Tom Online |
TOMO |
20.66 |
22.00 |
|
B
|
|
03/08/04 |
Transcanada Corp |
TRP |
21.34 |
30.91 |
27.50 |
B |
|
12/05/05 |
USA Truck Inc |
USAK |
29.30 |
26.51 |
|
SELL |
New stops in BOLD
* Stop on a closing basis
** Buy if above entry price
*** Split-adjusted price