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Market News & Sector News June 6, 2006: Today's strong market sell-off was not reflected in the sector Bullish Percent. Of the 8 sectors that are positive, only 1 is close to a reversal. June 5, 2006: The market pulled back sharply today but the sectors held up. As it sits now, the 8 positive trend sectors are all still strong June 2, 2006: The markets have held up well. Sectors have advanced nicely. I will be unavailable for the beginning of next week so will be unable to do updates for Monday and Tuesday. I will be back on Wednesday. June 1, 2006: More strength in the markets today with the Wall Street sector going positive on the bullish percent charts. It moved from 78 to 40 on the BP charts. The only stock that is currently out performing it's peers is International Assets Holding Corporation (IAAC) which has held up throughout the market downturn and is now signalling a move to the upside. Closing today at $12.70 this stock will be a strong buy if it can breakout at the $13.50 range. IAAC has repeatedly come down to it's support line and then moved up and this next move is either a breakout (at $13.50) or a collapse below $11.00. Today has also given 50 new buy signals with 218 stocks reversing to an upward trend. There were only 26 new sell signals and only 58 stocks reversing to a down trend. Again the OIL and OIL SERVICES sectors are are having an unusual number of stocks giving buy signals with 10 more companies signaling a buy compared to the Retailing sector have 7 companies giving buy signals. Unlike Oil with only two sell signals, the Retail sectors has 3 companies giving sell signals. Watch the Semiconductor sector which had 5 stocks giving new buy signals and only 1 stock giving a sell signal. Watch the Telephone sector which has 7 stocks giving new buy signals, including QCOM (which I own this cycle) and GLW (which I own this cycle). Watch the Transports / Non Air which have 9 companies giving new buy signals. 1 company giving a sell signal. Now for the strongest buy signal on the market of all today: The INDICES today have the following giving single buy signals. .COMP - Dow Jones Composite Average The INDICES today have the following giving multiple buy signals. .DAINV,10 - Dow Jones U.S. Select
Investment Service. To be fair there were a few (5) sell signals with the indices. May 30, 2006: With the continuing consolidation at the bottom of the market strengthening, more and more stocks are improving with buy signals. 103 stocks reversed to to an up trend with only 75 reversing to a down trend. 26 new buy signals were giving today. Most notable in this collection is Monsanto Company (MON) which moved positive today with multiple buy signals. MON opened today at $82.18 and moved quickly to a high of $86.27. MON has a bullish objective of $91.50 and a current Reward to Risk of 2.76. Best of all, today it broke threw resistance and a Double Top at 85.5 and consolidated nicely to start an uptrend. Something nice is going on with the Oil and Oil Services companies. 12 different companies gave new buy signals today. *HOC - Holly Corp (83.43) An * next to a symbol indicates Optionable May 30, 2006: The market continues to strengthen today with the OIL SERVICES sector going positive. This sector went on a negative bullish percent trend on May 12 after reaching a high of 78 and then before todays reversal to the upside it was at 36 on the Bullish Percent charts. Of the group of stocks that were strongest on the 12th when the sector went negative. DWSN has held up well along with FTI, GLBL with a few joining the group in PAA, OII, XTXI. Dawson Geophysical Co (DWSN) did not reach $30 a share but did hit $31 from the $36.95 high on the 12th of May. The Reward to Risk ratio has improved from 3.98 on the 12th to 7.89 today. This stock still has a bullish price objective of $70 a share. Now that the market is improving,
here are a few other gems that are giving new buy signals:
There are dozens more companies in over 8 different additional sectors that have given new buy signals today. May 26, 2006:
The market strengthened more today to a BUY 2 Level
Metals Non Ferrous: This sector was at an 85%BP to a 46%BP before going positive today. That is a nice move. The following three stocks were the strongest when this sector went negative: FAL, AP and N They are still the 3 strongest in the group. Falcon Bridge Limited (FAL) $50.22 vs $47.73 on the 22nd. Ampco-Pittsburgh Corporation (AP) $34.75 vs $31.28 on the 22nd. Inco Limited (N) $65.29 vs. $61.50 on the 22nd. Oil: The Oil sector has moved from 72% BP last month high to a 32% BP low this month before finally going positive today. The companies that were strongest at the start of the reversal were CSPLF, HRTIF, INT, QRCP, and ALJ. Of this group, Canada Southern Petroleum Ltd. (CSPLF) $ 9.12 vs $8.46 on the 22nd is the only company that has maintained it's strength during the negative BP trend. HRTIF May 25, 2006: Finally after weeks of pull back and discounting the sectors have finally shown the first signs of improving with the Market indicators bullish indicators going 1+ from 0+ and the sectors improving to 4+ from 3+. The Steel/Iron sector is the first sector to go back to a positive trend on the bullish percent charts. This chart was at a bullish percent of 94% in January and at 82 before this current pullback. The sector went to 28% before finally moving back positive. This is the strongest signal a sector can make (by going below 30% BP to above 30%BP with an 80% chance of going to above 70% BP). The 3 stocks that were listed on May 16, 2005, when this sector trend turned negative were BDHHY, MITSY and VMI. BDHHY has since pulled back from 79.40 to 66.40 (22 May) to close today at 70.50. This is a 16.4% discount from the the 16th. It is a 23.9% discount from the high on the stock. Entering the stock today at $70.25 is a 16.4% discount from the the first signal. MITSY has pulled back from $316 on the 16th and is a 10.15% discount with today's price. VMI is still the strongest stock in this sector but has pulled back $2 from the May 16th negative signal. That is a discount of 4% and is a strong sign of a company holding up in a bear cycle. Today I finished moving into the market with my 401K into aggressive collection of mutual funds as follows: GGHCX @ $29.25, RGAFX @ $31.60, ACINX @ $38.39, ACTWX @ $23.90, ACRNX @ $29.76, CSCZX @ $50.06, NYVTX @ $34.50, KDHAX @ $46.46, TIVRX @ $25.99, and VASVX @ $19.15 Last Friday, BusinessWeek put out it's annual list of the 100 Hot Growth Companies. I have archived a copy of the top 50 under the archive button. May 24, 2006: The SectorTrendInvesting signal is now giving a stronger buy signal today with another sector moving to a negative trend on the bullish percent chart. Also several sectors have become Bear Confirmed today as follows: Drugs, Finance, Food Beverages/Soap, and Restaurants. IT IS NOW SAFE TO START CREATING POSITIONS IN STRONG STOCKS THAT HAVE PULLBACK TO DISCOUNTED (SUPPORT) LEVELS. Drugs: Almost every stock in this sector has gone to the oversold side with just a few companies holding up as follows: HSP, SHR, POLXF. Finance: About 60% of the companies in this sector are now oversold but most of the stocks have positive trends. The only stock I would possibly look at in this sector is Patriot National Bancorp (PNBK) at $29.69. This bank has sales of $28.4Mil with only 4.90 Net Profit Margin. The more I look at this the less I like. Food Beverages/ Soap: Now a better sector with a modest pullback. Only about half the companies in this sector are pulling back with most of the companies on a positive trend. The companies holding up the best are: MED, NAII, PSTA, KNBWY, JSDA, HSY, WNI, HANS, WILC, LQU and IBA. Restaurants: With the way most people seem to feel, I guess not many of them are eating out at restaurants these days. Only a few stocks are shining here with a few sticking out in the form of THI and Sonic Corporation (SONC) which has gone straight up since December from 12.50 to 23 a share. I would wait for this one to pull back to about 16 or 17 before considering an investment. May 23, 2006: The market is now reaching a base. I do not expect much more downside and historically the market should spend the next week consolidating before the summer run-up that usually starts at the beginning of June until late July, early August. Now is the time to find the stocks you wish to invest in for this cycle and enter your long positions. Entering positions now should put your positions at minimum risk to the downside. Today I reentered the market with the following picks: AOB @ $5.44, FRK @ $54.96, GLW @ 23.68, NETL @ 31.25 and QCOM @ 46.73. May 22, 2006: A
Telephone: Here is a sector with to many members and is overdue for both consolidation and shakeout. Most companies in this sector have moved to the left of the distribution report indicating an oversold condition. The best performers are FRNS, HANA, CHYS and CTCI. A company that does stick out though is QCOM. Qualcomm Inc. (QCOM) $46.63 was a stock that was featured by Jim Cramer of Mad Money last week and I have followed it since. It has a Bullish Price Objective of 59.00 and a Reward to Risk of 7.59. With Sales of 6.5Billion and no debt, gross margins of 74.70%, net profit margin of 35.60%, out performing it's industry with a price to cash flow of 31.20 vs 17.10, and current ratio of 7.6 and quick ratio of 7.0. This stocks look very very good. With a buy at this level, the stock only needs to hit $51 a share to get a 10% return and $55 to exceed 15%. This is what Sector Trend Investing is about. Find stocks that have a much better chance to move up versus move down in price. Textiles / Apparel: A nice small sector with most members oversold but a few stocks outperforming the rest as follows: ISAC, VGC, and TFR. Today I will feature V.F. Corporation (VFC) $62.24 with a bullish price objective of 82.00 and a reward to risk of 6.10. This stock is at a double top on the P&F chart with a recent breakout from a triple top and nice support at 58. Sales of 6.5billion, debt at .24, gross margins of 43.20%, net profit margin of 8.00% , price to cash flow is 10.40 ( a little low from the industry standard of 13.70) , current ratio is 2.2 and quick ratio is 1.0 (a little week but ok). May 19, 2006: One Sector To Go. Today the Sector Trend Investing Level reached +6 / -34 of bullish percent sectors. With Autos & Parts, Utilities/Gas and Protection Safety Equipment all reaching '0's and more sectors entering Bear Confirmed status. Watch for a buy (B1) signal that could be coming in the next few trading days. Autos & Parts: GPI, BWA, IMCO, TWI, CNSI, PCAR, JCI Utilities / Gas: ETP, EP Protection Safety Equipment: CXW, GGI, BCO May 18, 2006*: Finally the market has moved to the next stage of the pullback by entering the S8 stage. Now is the time to seriously start finding which stocks to invest in and patiently wait for the market capitulation which could follow in the next week or so. Today even more sectors turned negative on the bullish percent charts as follows: Aerospace Airline, Household Goods, Retailing, and Savings & Loans. I will follow-up with a stock pick for the following sectors over the weekend. Aerospace Airlines (64): KRSL, AVL, TTLG, LDSH, KFI, LCC, HSR, BAAPY Household Goods (56): GFF Retailing (56): DUCK, FTAR, MWRK, NTRI, SHLD, GYMB, SGDE, RENT, BAMM, MAKSY, MIK, SHOO Savings & Loans (60): NMIL, TSBK *Note: I have added the Bullish Percent Level for each of the sectors listed after the sector name.
Chemicals (66): Landec Corporation (LNDC) $9.59 seems to be a stock in a sector that is pretty spread out. About half of the companies in this sector are underperforming the market and the other have are outperforming. LNDC is a company with very little debt (.02), mild gross margins (18.0%), sleepy net profit margins (3.0%), sales are ok at 216M, they outperform their peer group with a price to cash flow ratio of 24.90 versus industry of 9.50, and there current ratio is at 1.5 with quick ratio a little light at 0.9. If they get there act together, this stock could fly with a bullish price objective of 10. I would be a buyer of this stock at between 7.5 to 8 a share. Other stocks in this sector to watch are: TRX.B, VHI, BOXS, NCEM, VLG, ZOLT, and OMG Computers (42): In a sector where most members are suffering there has to be a gem or two that float to the top. Netgear (NTGR) $23.72. Here is a company with NO DEBT, strong sales of 449.6M, gross profit margins of 34.50% and netprofit margins of 7.50%. The price to cash flow is 20.40 versus 17.60 industry, current ratio is 2.9 with quick ratio at 2.3. Netgear's bullish price objective is 26.50 with a reward to risk of .52. With a nice pullback to the 20 to 22 range should improve the reward to risk to a more acceptable level (min of 2.0). Other to watch are: FLSH Forest Products / Paper (64): Alico, Inc. (ALCO) $57.36 is a company on a rebound. Sales are at the entry sweet spot of 56.6M with Debt a little high at .38, but Gross margins look nice at 28.10% and net profit margins are at 15.90%. ALCO out performs it's peers with a Price to Cash Flow Ratio of 27.00 versus 9.60 industry. Current Ratio is 6.0 and Quick Ratio is 4.7. Bullish Price Objective has been reached at 56 and the Reward to Risk is at 0. On a nice pull back this could be our next pick if the stock retraces to the 48 to 53 a share level. It is the only candidate in this sector. Machinery and Tools (62): SVC, KMTUY Metals Non Ferrous (58): FAL, AP, N Precious Metals (68): NXG Transports / Non Airlines (56): TOD, CNW, UACL, ACLI, VTNC, PATR May 16, 2006: The Sectors continue to show that the market is starting to discount more and more stocks. If you are all in cash, or almost all in, this is a time to celebrate and research stocks for the coming buy cycle. The market is now 5 sectors away from enter the S8 level. At this level it is ok to start considering which stocks are right to purchase. I expect in the next 2 weeks that the market should enter both the S8 then the B1 level. When it does, be ready to pounce on a few well discounted stocks. Today a few more sectors moved to the discount level as follows: Biomedics / Genetics, Leisure, and Steel /Iron. Biomedics / Genetics (32): Here is a sector that has is solidly into a discount consolidation with most members at a bunching up negative. When you find one, feel overjoyed, because here is one to follow: American Oriental Bioengineering, Inc. (AOB) is engaged in the development and production of plant-based pharmaceutical products and plant-based nutraceutical products. AOB has no debt, high gross margins (65.80%), high net profit margins (24.50%), sales are growing at 54.7mil, income is at 13.4mil, the price to cash flow (24.80) is almost double it's industry (13.70), and current ratio (8.8) and quick ratio (7.7) are both very high. On a pull back from 5 to 5.5 this is a buy. The Bullish Price Objective is 9.75. The Reward to Risk is above 2.0 (our minimum level) at 3.20. Here are a few others to follow: CATG, SERO, DIL, and LIFC. Leisure (60): Starwood Hotels & Resorts Worldwide, Inc. (HOT) operates 850 properties in more than 95 countries and has moved up nicely in the last 3 years, from 19.5 a share to over 62 a share. On a pull back (discount) this would be a nice stock to look at owning around 50 to 54 a share. It has a Bullish price objective of 73 a share and the current Reward to Risk is a little low at 1.33 but will improve on a pull-back. Some other stocks to follow would be: CHH, LYV, AMIE, and HLT. Steel / Iron (46): Not many good candidates in this sector. Another sector that has run up quite a bit but now is waiting for a nice correction. A few stocks in this sector to follow are: BDHHY, MITSY and VMI May 15, 2006 : Over the last week the market has finally turned negative, hopefully signaling a coming buy cycle. Today a new group of sectors have turned negative on their bullish percent charts as follows: Building, Business Products, Electronics, Internet, and Oil. Building (48): Stantec Inc. (SXC) is a recent IPO that has done well over the last 6 months. It does not have much history which tends to make me avoid newbie stocks, but over all this stock seems to be doing well. This company already has 478million in sales and a market cap of 920mil. Debt is a little high (.29) but gross margins are at 92.50% with npm at 7.40%. The stock is out performing it's sector on Price to Cash Flow at 20.30 and inventory controls look good. Other stocks to follow are: KPELY, SEHI, URS, USHS, LR, AWGI, STRL, LAF, ZENX, ASD Business Products (64): 51Jobs, Inc. (JOBS), a nicely shocking find. I like this one! 51 Jobs has everything going for it. Bullish price objective of 31.50, Reward2Risk is low but will be perfect on a pullback. Stock is on the first legs of a breakout above resistance (best time to find stocks). No debt, good gross margins of 54.20%, good net profit margins of 10.90%, good sales at 69.6Million. The company is out performing it's peers at 113.10 vs 20.30 for industry. Current and Quick Ratios are both above 8. And today when the sector discounted, this stock pushed ahead another 3 points. I would like to see a pull back to about 24 or so. Other stocks to look at in this sector are: ECHO, ODP, UFPT, REMX, EDMC, TUC, ICLR, KFRC, JTX, ARCAF, RHI, SNTO, FCGI, WW, CAJ Electronics (56): Camtek Ltd. (CAMT), low debt (.10), gross margins (51%), net profit margin (4.30%), sales (63m), price to cash flow (48.40), current ratio (4.2), and quick ratio (2.4). This stocks passes all test for a low risk samll cap investment. When I find a stock like this I expect great positive things to happen. Bullish Price Objective is 15.75 and Reward to Risk is 2.31. With a pull back to below 5, this could be a great pick with alot of upside potential. Others to follow are: MTLK, MTD, SPSX, SWIR, PGWC, COGO, ORBK, ISNS, MDTL Internet (48): I can't find anything in this sector that I would be willing to risk my money on. Given time and a serious sector correction, with alot of stocks pulling way, way back, I will look at this sector again. But right now the risk is to high. Stocks to follow are: TSCM, IVIL, RNWK, BDC, ECLG, IBAS Oil (40): Canada Southern Petroleum Ltd (CSPLF), in a time with Oil has rocketed to all time highs, finding a company in control of vest oil resources is a blessing. With a recent development coming on line in May of 05, and interest in properties in Alberta, British Columbia, Saskatchewan, and the Northwest Territories, the Yukon and the Artic Islands of Canada, there is alot of potential with this one. No Debt, Gross Margins high (77.10%), Net Profit Margins high (17.70%). Sales low (17.5mil), Price to Cash Flow at 12.70, and Current and Quick Ratios both above 8. The Bullish Price Objective is 14.75. With a pull back to 6.5 or 7.0 should bring the Reward to Risk to above 2.0 (our minimum). Other stocks to follow in this sector are: HRTIF, INT, QRCP, ALJ May 12, 2006: To finish off the week, the market decided to start discounting stocks in a variety of sectors. Insurance, Oil Services, Protection Safety Equipment, and Textiles & Apparel. Now is the time to look at the stocks in these sectors for the best candidates: Insurance (62): China Life Insurance Company ADR (LFC) would be a good buy at around $40. China, with it's growing economy and the worlds largest population, has found their massive new wealth. With Chinese individuals being wealthier and living longer, they want to embrace the western culture of retirement. Key to this is the annuity and life insurance markets. LFC is positions to fit right in here. Also follow: SAFC, ITIC, SAFT, FNF, HIG, PFG Oil Services (50): Dawson Geophysical Co (DWSN) great buy anywhere below $30 a share. This stock has a great Reward to Risk ratio at this time of 3.98 with a price target of $70 a share. Also follow: PGS, GGY, FTI, SELA, TTES, MDR, ESVIF, TLP, HNR, OII, ERF, TTI, BHI, OMNI, CAM, GLBL, WFT, AE, CLB, WOPEY, KEGS, UCO Protection Safety Eq (46): Personally their are not many stocks in this sector that I would be happy to own at this time. Most of these companies have massive debt, which makes me nervous. If you must invest here, check out these stocks: BCO, GGI, CXW, TYC, SWB. Textiles / Apparel (46): Guess Inc. (GES), who would have thunk it!. A national brand with a great chart and a very nice Reward-2-Risk ratio (3.86) with a Bullish Price Objective of 64. This stock is over 20 points above it's support line, so needs to close that gap some (by at least 10 points) so I would wait to see if it pulls back to about 35 or 36 a share. The company has low debt (.14), good gross margins (41.40%) but a low NPM (net profit 6.60%). However, they have their inventories under control so I would look to buy this stock if the market gives a buy signal and it discounts itself down to the mid 30's. Other stocks to follow are: TFR, DLA, VFC, MOSS May 11: Semiconductors, Waste Management Semiconductors (48): Here is a sector that is ahead of itself. There is only one company that is even close to my cutoff (Acacia Research - Acacia Technologies (ACTG)), and even this has a massive red mark against it (net profit margin down 32.10%). After this sectors has a chance to correct itself, I will try to revisit and see who are the survivors. Waste Management (50): Home Solutions of America, Inc. (HOM), is a company that provides a much needed service: Recovery, Restoration and Rebuilding / Remodeling services to flood, hurricane, tornadoes, fires and other disaster prone areas. Here is a company with very very low debt (.02), good gross margins of 48.60%, decent net profit margins (10.60%), nice Price to Cash Flow of 35.40 and strong current ratio of 3.0 and quick ratio of 2.7. Every thing is positive with a bullish price objective of 27.75 and Reward to Risk of 2.49. With a nice pull back to between $7 and $8.5 this could be a strong winner if we have another strong disaster season this year. Others to follow are: ECOL and CLHB Today, May 12th, I decided to add a new section to the main page of Sector Trend Investing. I will be adding a narrative with sector and market status as well as a few featured stocks from sectors that are discounting their members. I hope this helps provide a better list of candidates to pick from when the market gives a buy signal. Any comments are my own personal opinion and you should always do your own due diligence and research. Note: I will be back dating some sectors to expand the selection process for the coming buy cycle when the market gives the correct signal (discount). |
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