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Friday, April 07, 2006

Tower Group (TWGP) Breaks Out

Tower Group Inc. (TWGP) was up over 14% on volume 225% larger than the 50-day moving average as the stock broke out of the cup with high handle base; above the pivot point of $24.56. I have been covering TWGP over the past month and have listed the analysis I provided for TWGP on the MSW Index each week since March 4, 2006. The close above $26 takes the stock half way to the projected target of $30 I gave one month ago at $20.

The MSW Index has been on fire and stock after stock continues to breakout of properly formed bases giving all of us ample opportunity to take profits out of the recent run of individual stock leaders. There is no reason why MSW members should not have caught at least one of the several breakouts this past week as I have been covering them all since their bases were forming and their potential pivot points became apparent. Below is a quick history on the stock over the past month on the MSW Index (weekly screens).

The chart in this blog post also shows you that we started to cover TWGP last October but targeted the stock a bit earlier than I wanted. The stock never violated the pivot point from October but I cut the coverage from the MSW Index. When the recent base became apparent, I immediately placed the stock back onto the MSW Index before it took off with the recent 30% gain in 4 weeks.

  • 4/1/06:
    TWGP – 23.10, the slight drop is welcomed as we may be forming the start to a possible handle formation. The new pivot point is now $24.56 with support lower at the moving averages. Rating: The new buy is above the pivot point – CANSLIM rules
    3/4/06: 20.95

  • 3/25/06:
    TWGP – 23.39, Up another 6.71% this week as the stock managed to make a new all-time high. A handle hasn’t formed but the stock is up over 10% on MSW in three weeks. Rating: I would like to see a handle and exact pivot point to form

  • 3/18/06:
    TWGP – 21.92, up over 7% this week as the right side of the base looks to complete its formation and start a handle pattern. If a handle starts to form, we can target an exact entry area. Rating: look for cup base to build right side properly with handle

  • 3/11/06:
    TWGP – 20.37, the stock was down less than 3% this week as it closed sitting on the 50-d m.a. (gaining support on Friday). We may see a deep 9 week cup shaped base forming which would change the ideal entry point. Rating: look for cup base to build right side properly

  • 3/4/06:
    TWGP – 20.95, A former MSW Index stock for nine weeks from October 2005 to January 2006. When the correction started, we removed the stock from the index but it is back on recent strength and support. It was up this week on the largest volume ever! The buy is now with a target of $30 in the next six months.



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