Category Archives: Stocks

Top Breakouts (6.27.05 – 7.8.05)

Breakouts left and right.. 52 over the past 2 weeks to be exact.  The following screenshot was taken of the premium database.  This particular filter displays breakouts for the past 2 weeks and the screenshot below displays the top 13 (with a Total Rank of 50 or above).  For more information on the premium database and how it can help you find the best opportunities please have a look here.

(too much data, too little room – click here to see a larger image you can actually see)

Of the 52 total breakouts in the last 2 weeks, 37 are currently holding a gain, while 9 have a loss and 6 are holding the flat line.  Clearly, breakouts in small to mid cap growth stocks have been performing quite well despite an uncertain market.

Oil, property managers and banks have been leading the way in terms of number of stocks breaking out recently.  Two top rated oil companies, Berry Petroleum (BRY) and RPC Inc (RES) both remain in a buyable range although buy volume could be better in both of those positions.  Property managers/developers remain strong with another top rated breakout in this group from Levitt Corp. (LEV).  The chart looks outstanding, the stock is a bit extended after Friday’s move.  It might return to around 31 offering a better trade.  I’ve been holding two other leaders from this group in the SelfInvestors Model Portfolio for some time – CB Richard Ellis Group (CBG) and St. Joe Company (JOE) which continue to act well.

The top rated breakout in the database in the last 2 weeks has been HDFC Bank (HDB), a leading Indian bank.  The stock broke out on June 30th, but quickly reversesd and closed the day below the pivot point of 47.60.  However, the stock has recovered quickly, making its way to the next level of resistance right at $50/share.  While you could have purchased the stock at the formal pivot point, I’d be more comfortable getting into the stock after it breaks through 50 and then returns to that 50 level on decreasing sell volume, finding support there.  Considering the severe decline in the left side and the quick gains in the right side, it’s probably best to be patient and see how the stock digests recent gains in the coming weeks.

HDFC Bank reports earnings this Thursday, July 14th.

In terms of technicals (fundamentals aren’t too shabby either), the most promising breakout of the past two weeks (which broke out to all time highs on Friday) has to be in Grupo Aeroportuario (ASR) which operates, maintains and develops airports in southeast Mexico.

Masters of Technology & Innovation

Last Friday, released the Wired 40, a list of the top 40 most advanced companies in terms of techonology and innovation.  There aren’t too many surprises with a top 5 of Apple (AAPL), Google (GOOG), *Samsung, Amazon (AMZN) and Yahoo (YHOO), but it’s an interesting read nonetheless.  Two small, emerging companies that made the list are Infosys (INFY) at #9 and (CRM) at #20.  see the article

* Samsung is not traded in US markets yet, so the only way to play this currently is by purchasing the Ishares South Korea ETF (EWY) (Samsung represents 23% of the fund).  The fund is currently carving out a base after running up nearly 50% from October ’04 to March of this year.

Breakout Stock Highlights (5.3.2005)

The following is a screenshot of the Breakout Tracker at and lists all breakouts for the last 2 weeks. (click the image for larger pop up)

At the top of the list, you see the highest ranked breakouts which include Google (GOOG), LaBarge (LB) and MICROS Systems (MCRS) all with a total score of 51 (out of possible 60).  Two strong breakouts occurred in Southwestern Energy (SWN) and LKQ Corp (LKQX) yesterday.

Google held up remarkably well despite heavy insider selling and a tough market, which ultimately resulted in a strong gap up breakout to all time highs with good volume after an outstanding earnings report.  I personally don’t like making a purchase in a stock that is so far above a major support level (especially in this market), but the technicals reveal an opportunity that is difficult to ignore.  May be worth initiating a small position if it clears the high of this consolidation around 225 with heavy volume.

LaBarge has also spent time carving out a nice looking base.  It’s a little bit on the choppy side, but hey.. no base is perfect.   Quiet volume in the bottom of the base and in the handle with a surge in buy volume in the right side and at the breakout is exactly what you want to see.  The breakout continues to hold up well.

MICROS Systems is an outstanding company fundamentally, but technically it could use some work.  Caution should be used when considering a position in a company with a base characterized by jagged edges.  Notice the high volume drop below support in the handle as well, before rebounding on a strong earnings report.  I would not be jumping into a stock like this at the breakout.  I’d want to see the technical action improve over the next couple weeks before considering a position.  That would mean seeing a quiet consolidation period around 40 followed by another high volume surge. 

Apple a Big Gamble

If you’re holding Apple Computer (AAPL) through its earnings report tonight you’re making a big gamble.  Apple has raised the bar for this quarter’s earnings report, so anything short of a blow out quarter could derail this stock in a hurry.  Analyst estimates put earnings this quarter at .24 a share, but Apple will need to handily beat the "whishper number" of .28 and provide positive guidance if it hopes to avoid getting bruised tomorrow.

Also concerning is the deteriorating technical action over the last couple weeks.  High volume selling in early March has been followed by tepid buying.  Add to the mix a difficult market and it becomes clear that holding a stock that has already a had a tremendous run through its earnings report doesn’t make much sense.  Holding out of fear of missing further gains is a decision based on greed and should be avoided.  Should a sell off occur tomorrow, next support areas to keep an eye on are 35 and 30.  Regardless of what happens with the stock, it will be interesting to hear just how fast those Ipods are flying off the shelves after the bell today.

Breakout Highlights

The following is a screenshot of the "Breakouts For Last Week" filter of the Breakout Tracker which is a premium tool of  (click image for larger view)

  • Last week was a fairly light week in terms of the number of breakouts, with just 6 stocks breaking out, although only one finished in the red.
  • Innovative Support & Solutions (ISSC) was the highest ranked company (with a score of 52/60) that broke out this week, but reversed sharply following the breakout and currently sits 2% below its pivot. 
  • The biggest gainer belonged to United PanAm Financial (UPFC) which vaulted 8% after breaking on Monday (albeit from a sloppy looking base).

If you’d like to save yourself hours of research time each week, the Breakout Tracker is the solution.  How much is your time worth? Try a 30 day free trial.

To Buy or Not to Buy: Google

As I write this, Google is breaking above its pivot point of 203.74, but instead of jumping into this one right now, a cautious approach may be a better strategy.  While the stock has carved a mighty impressive base with tight price action (institutions are holding shares tight), buy volume has been lacking throughout (they’re not clamoring for new shares).  In addition, a couple events of events on the horizon will undoubtedly have a major affect on stock price.. earnings in a couple weeks and final phase of the lockup period when millions of additional shares flood the market.  If you’re a regular reader here, you know how I feel about earnings reports.. best to wait for the dust settle.  It will be interesting what Yahoo will report after the bell today, which should provide a glimpse into how well Google will do (at least in the pay per click arena). 

When Insider Selling is a Concern

In a recent post "Forecasting the Future: Chart Reading", I mentioned that the chart of DHB Industries (DHB) may have been forecasting some good news.  High volume gap ups in a chart with no news can often indicate some positive announcements in the near future.  That’s what was seen in the chart of DHB.. later, the big Army contract was announced sending the stock to the moon.. at least for one day.  Almost immediately the stock reversed on heavy volume and currently sits below support of its 50 day moving average.  It’s the kind of chart action that defies logic and something I don’t think I have ever seen.  Much of the damage done in this stock has to be tied to the large insider selling of the CEO, CFO and other insiders.  Imagine you’re the CEO of a company who has just received yet another large $100 million order from the Army bringing your order backlog to over $500 million.  The 4 million shares sold by the CEO on November 29th is one thing.  It’s highly possible that David Brooks was in fact unaware of the contract announcement.  Not to mention that insiders sell for many reasons.  The red flag was the big sale of 5.31 million shares on December 29th after the announcement was made… and he’s not done yet.  Many smaller sales continue to be made by the CEO Brooks as well as other company insiders.  This kind of selling raises eyebrows and should be a signal to you to stay away!  Just as the charts can forecast the future, so can insider transactions.  I would not be surprised to see some negative news announced soon.  Stay tuned!

Big Profits in Flat Bases

The following is a report sent to members of if you’d like to receive reports like this one each week, sign up to become a member today!

This edition of Stock Watch focuses on the most successful chart pattern around (in my opinion).. the flat base (for more on the flat base and other chart patterns, see the tutorial section "Chart Reading").  The flat base can occur in a couple of different situations.  One situation is 10-15% from the pivot point after a successful breakout (IBD has referred to this technical action as "3 weeks tight").  The stock will surge in price, consolidate quietly in a flat formation, then resume its advance.  The flat base can also occur after a significant gain in a stock and will form over a much larger time frame (5 weeks or more).  Keep in mind that flat bases often break out when you least expect it.  Get in the habit of setting real time alerts (most brokerages offer this service for free) so that you don’t miss out!   Let’s take a look at a few of the best flat base opportunities the market currently has to offer.

Mine Safety Appliances (MSA)
Industry: Security & Protection Services

Mine Safety first broke out at 44.10 and has been consolidating quietly in the last few weeks, possibly preparing for the next surge.  Look for a break above 52.60 as a buy opportunity of this top stock.

Mine Safety Appliances Company manufactures and sells products designed to protect the safety and health of people throughout the world. The Company’s principal products include respiratory protective equipment that is air-purifying, air-supplied and self-contained in design; instruments that monitor and analyze workplace environments and control industrial processes; thermal imaging cameras that enable firefighters and rescue workers to see through smoke and darkness, and personal protective products including head, eye, face and hearing protectors and fall protection equipment. Many of these products have applications for workers in industries such as manufacturing, municipal and volunteer fire departments, public utilities, mining, petroleum, construction, transportation, the military and hazardous materials clean-up. Consumer products target the do-it-yourself market and are available through select home center retail outlets under the MSA Safety Works brand

Industry: Technical & System Software

MICROS Systems surged over 40% very quickly in November and has spent the last month digesting those gains in a nice, quiet, flat base consolidation.  The initial surge in price and volume at the end of October shows big demand from the institutions.  Look for a break above 76.67 on heavy volume as a signal that the next wave of the advance is beginning.

MICROS Systems, Inc. is a worldwide designer, manufacturer, marketer and servicer of enterprise information solutions for the global hospitality and specialty retail industries. The information solutions consist of application-specific software and hardware systems, supplemented by a wide range of services. The hospitality industry includes numerous defined market segments, such as lodging (including individual hotel sites, hotel central reservation systems and customer information systems), table service restaurants, quick service restaurants, entertainment venues such as stadiums and arenas, business foodservice operations, casinos, transportation foodservice, government operations and cruise ships. The specialty retail industry consists of retail operations selling to consumers both general and specific products, such as clothing, shoes, supermarkets, hardware, jewelry and other specialty items.

M Systems Flash (FLSH)
Industry: Semiconductor – Memory Chips

The theme of big demand followed by quiet consolidation continues with M Systems and can be seen in the chart above.  Look for a break above 20.54 as a buying opportunity.

M-Systems Flash Disk Pioneers Ltd. designs, develops and markets flash data storage solutions for digital consumer electronics markets. The Company primarily targets two fast-growing digital consumer electronics markets: the universal serial bus (USB) flash drive market with its DiskOnKey product and the multimedia mobile handset market with its Mobile DiskOnChip product. DiskOnKey is a personal, portable, thumb-sized flash disk drive for the storage and transfer of digital data files, including media files, such as pictures and audio files. The DiskOnChip product jointly developed with Toshiba Corporation is a monolithic flash disk product that combines flash memory and a controller on a single die. M-Systems also sells flash data storage products targeted at the embedded systems and industrial applications markets, including its DiskOnChip and Fast Flash Disk products.