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Wednesday, November 15, 2006

Tuesday's MSW Daily Screen

Since I posted my first completely positive (longs only) screen last night (in November), I decided to share it with everyone on the blog. I still view the market as extended but it is trending higher and until that trend is snapped, shorting stocks will carry risk (at least shorting them the way I do – following the O’Neil approach from his book on shorting). I will post a list of stocks with charts tomorrow that show similar characteristics to the ones highlighted in O’Neil’s book on shorting.

Many of the market’s leading stocks powered higher Tuesday including several MSW Index members such as:

As explained below, a couple of these MSW Index stocks clearly vaulted past their pivot points which were highlighted on the weekly screen over the weekend. The NASDAQ is now up 1.71% for the week and is far above the former 100% retracement level that was established back in April 2006. If you pull out on the charts and look at a two year weekly view of the NASDAQ, you will see the deep v-shaped pattern with handle and pivot point breakout to new highs (the highest point since 2001). The NASDAQ daily chart clearly shows how the index is climbing along the trend-line I have highlighted in red. Remember, I have been screening shorts over the past several weeks but none of the major indexes have reversed the trend even though they are all extended. Until the trend snaps, we must tread carefully when placing shorts. Due to the extended nature of the market, we must also tread carefully when placing longs or adding shares to current positions.

All major indexes moved higher in above average volume as the recently weak retail sector decided to take some leadership. Looking at my charts through the link below, we can see that small caps are gaining strength versus their larger cap peers. Along with these small caps, many growth stocks are starting to come to the head of the class and flex their muscle just as IBD stresses in tonight’s eIBD edition. IBD mentions how the S&P 600, the small cap index, is within 1% of an all-time high. One of the most impressive numbers of the day was the NH-NL ratio finishing at 613-71 as advancing issues beat declining issues (6,314 to 3,657).

Current Environment: Short term plays (long or short)! The market is extended but trending higher.

Interesting Stocks making New Highs:
  • ICE – 96.55, the MSW Index stock blasted 9.10% higher today on big volume and now has a 31% gain on MSW since 9/23/06. I called for a new buy above $88 this past weekend

  • LVS – 92.00, up another 4.75% today for a 62% gain on the MSW Index since April of this year. The stock is now up almost 30% in the past two weeks. Now in the final stage of the $60-$100 run (lock in all gains above $89 or 75% of the run)

  • TM – 124.82, a six month cup shaped pattern that should form a handle before grabbing new shares. Toyota was screened daily several times near the 200-d m.a. above $100 earlier this year

  • NTY – 33.19, a double top breakout on the P&F chart on above average volume (a 12.32% gain today)

  • EDU – 31.85, an interesting young stock that is trending higher that may be entering extended territory. The support/resistance zone stands at $28

  • CTSH – 79.55, a gap-up to new highs that almost erased during the day before trending higher during the afternoon. The ideal trend buy is still near the 50-d m.a.

  • GROW – 39.64, now up over 8% this week as the stock continues to make new highs. “stocks that make new highs typically continue to make new highs until the major trend is snapped”.

  • NICE – 32.58, the second consecutive gap-up for a total weekly gain of 9.18%. The previous triple top breakout took the stock from $29 to $33 which now acts as the ceiling for the potential double top breakout

  • LRCX – 55.04, up 3.36% today for a total weekly gain of 9.86% on above average volume. The stock blasted past our pivot point of $52.53 and is now up 21.42% on the MSW Index since 9/30/06

  • CTRP – 58.88, the former MSW Index stock is making new highs after becoming a 200-d m.a. play last month. It is up over 20% since mentioned as a 200-d m.a. play in October.

Interesting Stocks within 15% of New Highs:

  • FFIV – 72.07, a very deep seven month base without a handle formation at this point in time. An ideal pivot point will develop after the proper handle formation

  • WCG – 62.20, a trading range between $57 and $64 will determine a buy or sell but note that some heavy distribution weeks cast a dark cloud near new highs

  • ISE – 50.49, the stock has formed the handle to the long term cup shaped base and has a pivot point of $55.23 and support above the 50-d m.a. Up over 4.51% for the week and up almost 17% on the MSW Index

  • TWGP – 33.56, the former MSW Index stock is back above the 50-d m.a. on strong volume. The 200-d m.a. is still the long term support and the up-trend indicator

  • ININ – 18.75, the stock is approaching the $20 level which typically acts as resistance when making new highs so be careful not to chase it into extended territory

  • RVSN – 21.20, a nine month cup shaped base that has completed the right side as it is within cents of the 52-week high (the left side of the base). Look for a handle to form with a pivot point before grabbing shares

  • HWCC – 23.78, a double top breakout has setup on the P&F chart with a short term entry above $25


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