Stockscom Report for
Publisher: Colin Alexander Editor: Ken Wilson (450-691-4617)
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Technically Speaking
Stock indexes completed a very bullish week with respect to charts. All indexes finished higher with the tech-heavy ND market managing to finish higher each day marking a total of six consecutive days with a positive finish when including the previous Friday. Volume was very supportive of the rise in stock prices and breadth was essentially bullish with up volume far superior to down volume.
Analysts likely encouraged their clients to position themselves long given the time of year (autumn) and the improved odds that the Federal Reserve would pause once more when deciding on interest rate policy in the middle of the coming week. While we are cognizant of these factors, we do realize that the markets are generally overbought at this stage requiring some period of retracement before resuming their upward course. Plus we have a healthy dose of skepticism surrounding the overall bullish nature of the stock markets, which serves us well and breeds a certain amount of caution.
Interestingly, there are some very notable moves coming into focus and that is the high probability that a new all-time high will be reached on the Dow Jones and that a new 2006-high will be attained by the S&P 500. Both of these indexes are very close to their respective 2006-highs. As for the Nasdaq-100 market, it remains more than 7% off its highest close for 2006 though it is quickly closing in on its starting position for the year. Meanwhile the ND-Composite market is currently up more than 1% for the year though still down substantially from its peak.
All eyes this week will be on the statement from the Fed regarding interest rates. Investors are looking for an excuse to buy shares and a dovish statement with respect to inflation will be viewed as an opportunity for stocks to gain some traction. Perhaps more interesting will be any comments regarding the potential for a recession in 2007, which many analysts believe, is unavoidable.
New Buy Recommendations (in order of preference):
On Semiconductor Corp. (ONNN) – This semiconductor maker specializes in power and data management chips and components. It’s begun a breakout from a rather tight range on the daily chart that has developed since mid-May and its about to attempt a run at its 2006-high. On weekly as well as monthly charts, there is similar support for higher prices with Lindahl buy signals on each and the monthly chart’s pennant development suggests strongly that a break above 8.50 would generate a new leg higher.
Kendle International Inc. (KNDL) – This clinical research organization has returned to its low of 2006 but quickly bounced and appears ready to launch a new effort to top its 2006-high. The Lindahl buy signal on the weekly chart together with the gaps on the daily chart in late August and again this week demonstrate the inherent strength in this new leg.
XM Satellite Radio (XMSR) – This recommendation is perhaps a bit speculative but is based partly on the long term pattern suggesting that the rise from the low of 2002 retraced to its natural support level and partly it is based on the actual daily and weekly charts that indicate a new upward leg has begun. The weekly chart has just completed a Lindahl buy signal on increasing volume while the daily chart is remarkable for the two gaps – one in mid-August and the other this past Thursday. Heavy trading volumes, which were double or triple the normal daily volume, accompanied both of these moves.
New Short Sales
None.
Stock Positions to Sell/Exit:
NU Horizons Elec. (NUHC) – We were exited from this long this week at our stop.
Seabridge Gold (SA) – We were also exited from this long this week at our stop.
Getty Images Inc (GYI) – We were exited this past week from our short position in GYI.
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 |
|
08/21/06 |
Brush Engineered |
BW |
26.36 |
27.03 |
24.00 |
B
|
|
08/21/06 |
Nu Horizons Elect. |
NUHC |
13.20 |
12.00 |
12.00 |
SOLD |
|
07/03/06 |
Seabridge Gold |
SA |
12.11 |
12.00 |
12.00 |
SOLD |
|
09/05/06 |
US Global Invest |
GROW |
27.32 |
32.50 |
27.32 |
B
|
Short Sales:
|
Date of Entry |
Name |
Symbol |
Entry Price |
Current Price |
Stop |
Action Rating |
|
08/21/06 |
Caterpillar |
CAT |
68.25 |
65.43 |
70.00 |
S
|
|
07/10/06 |
Getty Images Inc |
GYI |
57.60 |
46.50 |
46.50 |
Covered |
New stops in BOLD
* Stop on a closing basis
** Buy if above entry price
*** Split-adjusted price