By Leo Fasciocco -- TTD
Ticker Tape Digest presents its daily stock market report containing stocks to go long as breakout trades, quick trades, or bargain trades. We also feature stocks under Significant Accumulation that are poised to breakout.
Ticker Tape Digest's Trading Strategies Overview and Performance
Aggressive Investors Bullish - "Breakout Stocks" - ideally suited for bull markets and special situation stocks. Potential for large returns.
Aggressive Investor Bullish- "Quick Trade Stocks" -ideally suited for entry into top performing issues looking for a small quick profit."
Conservative Investors "Bargain Buy Trades" (swing trades). Ideally suited for entry into stocks on pullbacks within overall up trend. Good for trading range markets
Aggressive Bearish Investors - "Breakdown Stocks" to Sell Short. Ideally suited for bear markets or market pull backs. Potential for large returns
Conservative Bearish Investors (swing traders). "Bargain Bearish Plays" to Sell Short. Ideally suited for trading range markets with overall market down trend.
The TTD report also contains stocks to short as breakdown plays and as bargain (swing trade) shorts.
Investors should tend to try to go with a strategy that fits with the stock market's trend, unless there is a special situation play.
TTD's Breakout Stocks - Long are most suitable for aggressive investors seeking ideal entry points into leading stocks, especially during bull markets. They can do extremely well in bull markets with gains of as much as several hundred percent.
These stocks can also do extremely well during strong market rallies, or if they are in a industry group that is performing very well. They tend to have strong earnings outlooks and are near new-52 week, or all-time highs.
TTD Quick Trade Stocks - Long These are leading issues that have pulled back in recent days, but could move higher soon. They are most suitable for Aggressive Investors willing to trade short term. These stocks will do extremely well during market advances. They have about 74% win rate. During market rally sequences the win rate is even higher. The return is small 3% to 8% in just a few days.
TTD's Bargain Buy Trades - Long These are for conservative bullish Investors The strategy is called swing trading. These long buys are ideally suited for entry into stocks on pull backs within overall up trend. They are good for trading range markets. These stocks can give a good return in a week or two. They can also explode into a breakout and a powerful advance.
TTD also presents Stocks To Sell or Sell Short. These issues are suitable for aggressive investors willing to take short positions both as trades or for longer-term plays. These stocks will do very well during bear markets or market pull backs.
TTD's Bearish breakdown stocks to sell short. These issues have potential to fall sharply. They often show a technical breakdown and also some fundamental business problem such as weak earnings.
TTD's Bearish bargain play stocks to sell short. These issues are usually in down trends and are poised to rollover after a minor rally. They often can provide a conservative bear with a good entry point.
TTD's multi-media updates include a slide-show that presents charts and analysis at midsession. Some times TTD presents feature analysis on stocks and the market. TTD uses Windows Media Files. (WMV).
TTD also presents a "Breakout Watch List" that is up dated daily. This list consists of key stocks in position to breakout. A close watch of this list can put you in the stock just as it breaks out. A good idea is to study the list and be ready to move into a stock quickly as it hits its breakpoint.
TTD often suggests using stop buy orders to enter. It is very important to buy a breakout stock as close as possible to the breakpoint. The idea is to get "elbow room" if the stock should follow through to the upside. This is very important in being successful in making big money with breakout stocks.
It is also essential to have a stop loss strategy for all stocks in which positions are taken. Not every stock will work as expected. It is important for investors to "police" their portfolios and avoid getting trapped in any bad positions.
Quality rating of breakout Two key factors: 1 - Stock near all-time in price or near a 52-week high. 2 - earnings growth current year is strong. The ideal play is a stock with an Above Average Quality Rating. The stock is near a new high and will have strong earnings.TTD's other ratings are Average and Below Average.
TTD also has special feature sections on Educational Tips on Investing.
To email Mr. Leo Fasciocco email@example.com.For service, email Beverly Owen firstname.lastname@example.org. TTD’s Tel: 1-480-926-1680.
Stocks Screened - 8,200
Bull side - Stock market falls broadly. Only a few breakout stock today and overall quality is below average. Bulls now be conservative and watchful of all positions.
(Put mouse on Dow chart to see Nasdaq chart)
Long Term Environment for bulls: Favorable
Market (Daily) - NYSE Bearish, Nasdaq Bearish
Market (Weekly) - NYSE Bullish, Nasdaq Bullish
Market (Monthly) NYSE Bullish, Nasdaq Bullish
TTD's Quality Rating of Stock - COV - AVERAGE
COV, based in Hamilton, HM., makes healthcare products for use in clinical and home settings. Annual revenues: $10.7 billion. COV, an Irish firm, breaks out today after reporting an upside earnings surprise. The move came as a gap breakout. Volume so far today is running at 6.9 million shares, triple its average daily volume of 2.1 million shares.
TTD highlighted COV as a breakout at our midsession show on the Web.
COV's 5-minute chart shows the stock breaking out in the morning. It sagged back a little but held the bulk of its early morning gain despite a weak stock market.
The company reported that earnings for the fiscal first quarter ended Dec. 31 were 82 cents a share, up from 76 cents a share a year ago.
The 82 cents topped the consensus Street estimate of 76 cents a share and the highest estimate of 81 cents a share. The stock responded very bullishly to the news. The company said it is benefiting from good growth in its medical device business.
COV's tape action was good. TTD's clip of the block trades from Tuesday and early Wednesday show the price for the blocks climbing from $47.78 to $52.06. A key bull trade was a big block of 249,000 shares that crossed at 52.
The tape action indicated good institutional buying.
COV operates in three areas: medical devices, pharmaceuticals and medical supplies.
The medical devices group sells endomechanical instruments, soft tissue repair products, energy devices, oximetry and monitoring products, airway and ventilation products and products used in vascular therapies.
The pharmaceuticals unit makes specialty pharmaceuticals, active pharmaceutical ingredients, specialty chemicals.
The medical supplies unit sells nursing care products, medical surgical products and SharpSafety products.
COV's 9-month performance chart shows the stock appreciating 50% versus a 33% gain for the S&P 500 index. COV has a low beta of 0.81 versus 1.00 for the S&P. So, COV is less volatile than the S&P
COV came public in 2007. It rallied to a peak of 57 in 2008 (see long-term chart). It was then dragged lower to 27 in 2009. It has since rallied strongly and is within striking distance of a new all-time high.
COV's daily chart shows the stock marching higher the past several months. The current 5-week base is small but does fit with the pattern. The breakout today on a gap move is bullish.
COV's TTD momentum indicator (top of chart) is strongly bullish.
The accumulation - distribution line (bottom of chart) has broken out to a new peak. That confirms the breakout in the price of the stock.
Looking ahead to the fiscal second quarter ending March 30, analysts predict an 18% increase in net to 81 cents a share from 69 cents a year ago.
The highest estimate on the Street is at 88 cents a share. TTD sees chances for another modest upside earnings surprise.
For the fiscal year ending Sept. 30, 2010, COV's profits are expected to increase 16% to $3.29 a share from $2.84 a year ago.
The stock sells with a price-earnings ratio of 15, which is reasonable given the earrings growth rate. Looking out to fiscal 2011, analysts project an 11% gain in net to $3.65 a share.
Strategy Opinion: TTD is targeting COV for a move to 60 within the next few months, or sooner. The stock is a slow mover. So, investors need to be patient. A protective stop can be placed near 47.50 giving it room. TTD rates COV an average intermediate-term play.
Sponsorship: Excellent. The largest fund holder is 5-star rated Fidelity Contrafund with a 1.8% stake. It has held its position steady. The second largest fund holder is 5-star rated Oakmark Equity & Income Fund with a 1.8% stake. It was a recent seller of 107,500 shares. COV has 499 million shares outstanding.
Insider Activity: Neutral. Insiders were buyers using options, but they turned around and sold around $47. Right now, 19 analysts follow the stock, 16 have a buy, the same as three months ago.
Stock Performance Chart for 12 months with Quarterly Earnings Markers.
TTD's Breakout Profile Rating
Covidien Plc. - (COV)
|TTD Check List||Bullish||Bearish||Neutral|
|Near 52-week High||YES|
|Price Trend - Daily||YES|
|Price Trend - Long Term||YES|
|Price Daily Spread||YES|
|Base - A-D||YES|
|Prior Breakout Success||YES|
(The “breakout List” gives all stocks breaking out of a base of five weeks or more. These stocks have a good chance to trend higher. However, a stop should be used to avoid those that do not work. They are ranked according to percentage change and classified as leaders or other. (Trading strategy: One should buy breakout stocks at breakpoint by using market order or stop buy)
Charts of Selected Breakout Stocks
|TTD's Quality Rating of Stock - SHPGY - BELOW AVERAGE|
|TTD's Quality Rating of Stock - PNC - BELOW AVERAGE|
|TTD's Quality Rating of Stock - PFCB - BELOW AVERAGE|
|TTD's Quality Rating of Stock - ACGL - BELOW AVERAGE|
Ticker Tape Digest’s Daily List of “Stocks To Sell Short” ranks stocks well timed to be sold immediately based on daily trading. The list can be used as an alert to reduce current long-term positions.
Shorts from tape action so far today - 8
Stocks Screened - 8,200
Long-Term Environment for bears: Unfavorable.
Bear Side - Number of Breakdown stocks picks up slightly as stock market drops. Bears be alert and selective.
(Trading strategy: These stocks can be sold short, or if held should be sold. If a stock is sold short, a protective stop buy should be placed. Short plays work best when the stock market is in a down trend.)
ELON, based in San Jose, Ca., makes system and network infrastructure products that air conditioners, appliances, electricity meters, light switches, thermostats, and valves to be made better and be inter-connected. Annual revenues: $101 million. ELON, a small cap play, breaks blow key technical support today. The company is expected to report a loss for the fourth quarter.
ELON is trading 184,963 shares so far today. Its average daily volume is 195,000 shares.
The stock fell in the morning. It hit a bottom at 10.31 in the early afternoon. It rallied to trim its loss in the afternoon as the stock market bounced back.
TTD's clip of the tape shows the price for ELON's block trades declining from $10.90 to $10.41. The steady selling pressure took place in the morning.
The company's products are sold to firms in the utility, building automation, industrial automation, street lighting, home control and transportation industries.
Analyst expect ELON to show a loss for 2009 of 86 cents a share compared with a loss of 64 cents a share a year ago. Looking out to 2010, the company is expected to show a deficit of 47 cents a share.
ELON's stock chart shows the stock peaking at 15. It moved lower and then tried to form a bottom. However, the stock is now starting to break to the downside.
Strategy Opinion: TTD is targeting ELON for a drop to 8 within the next few months. We would treat the stock as a trading short. A protective stop buy can be placed near 11.50.
TTD columnist Leo Fasciocco has covered the stock market for over 20 years. His articles appear in many publications. He is also a speaker at the Intershow conferences. He has been on television and radio. He is author of many educational articles about stock investing and the book “Guide To High-Performance Investing.”
For information to subscribe to the Ticker Tape Digest Services call: B. J. Owen at 1-480-926-1680. Distributed by Corona Publishing Enterprises. Ticker Tape Digest Inc. P.O. Box 2044 Chandler, Az. 85244-2044. TTD “Professional Report” is available on the World Wide Web: $100 per month. Password needed. “TTD Professional“ Faxed is $200 per month. The TTD Daily Report is $39.95. Credit cards accepted.
(The information contained has been prepared from data deemed reliable but there is no guarantee of complete accuracy. Ticker Tape Digest Inc. is not affiliated with any broker, dealer or investment advisor. Nothing in this publication constitutes an offer, recommendation or solicitation to buy or sell any securities. Further research is advised. This report is copyrighted and no redistribution is permitted with out permission. Some of the charts are from Telescan, Insight Trading, First Alert and other sources.)