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By Leo Fasciocco -- TTD
Ticker Tape Digest presents its daily breakout and Short Selling report. It contains Breakout Stocks and Stocks under Significant Accumulation.Data is from tape action for the day. These stocks are most suitable for aggressive investors seeking ideal entry points for leading stocks.
These stocks will do very well during bull markets and strong market rallies.
TTD also presents Stocks To Sell or Sell Short.These issues are suitable for aggressive investors willing to take short positionsboth as trades or for longer-term plays. These stocks will do very well during bear markets or market corrections
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Total Buy Breakouts so far today - 6
Stocks Screened- 8,200
Bull side - Very few breakouts today, but a couple of good looking small cap plays. Bulls be alert as rally continues.
Long-Term Environment for bulls: Favorable.
Market Status (Daily) - NYSE Bullish, Nasdaq Bullis
Market Status (Weekly) - NYSE Bullish, Nasdaq Bullish
SONS, based in Chelmsford, Ma., makes hardware and software that public network providers use to provide voice and data communications services to subscribers. Annual revenues: $221 million. SONS breaks out from an 8-week flat base today and hits a 52-week high. The move comes with a big expansion in volume. Trading so far today is running at 13.4 million shares, double its average daily volume of 7.8 million shares.
SONS stock is working higher very nicely. It had a clean breakout from a base at 5.80 late last year and climb to close to 8. So, the issue is in a solid up trend.
TTD's clip of the tape in the afternoon portion of today's session is very good. A big block of 10,000 shares crossed the tape on a modest up tick to $8.739. Then a few trades later a big block of 19,608 shares crossed on an up tick to $8.75 from $8.73.
SONS products include switches and related network software.
The company also provides network installation, support, and training services. SONS sells through resellers, including Nissho Electronics and Samsung, to customers like Qwest Communications, Global Crossing, and Deutsche Telekom.
The company was founded in 1997.
A look at TTD's daily chart of SONS shows the flat basing pattern. with key resistance on the upside around 8. The stock shook out down to about 6.70 a few weeks ago with heavy volume. That looked like a clear "wash out" of the weak holders.
Then SONS rallied across the trading range and out of the base. The good expansion in volume to day is a plus for bulls. The stock's TTD momentum indicator (top of the chart) is extremely bullish.
The accumulation - distribution line has hit a new peak. That is excellent confirmation of the strength of the breakout.
SONS earnings for this year should climb 23% to 19 cents a share from 15 cents a year ago. Last year, the company posted a good improvement in net to 15 cents a share from 5 cents a year before.
The stock sells with a price-earnings ratio of 45.
The first quarter his year will be very strong. Analysts are forecasting a 50% leap in net to 3 cents a share from 2 cents a year ago.
Strategy Opinion: SONS looks very good on this breakout, especially on a day when the stock market looks dull. Technically, the stock is moving into an overhead resistance area (see long-term chart). However, TTD expects the stock to climb to 11 within a few months. A protective stop can be placed near 8, which is tight. SONS is a good intermediate-term play.
Sponsorship: Very Good. The largest fund holder is Fidelity Growth Company Fund, 4-star rated with a giant 10% stake. It has held its position steady. 3-star rated Fidelity OTC Fund was a recent buyer of 2.2 million shares.
Insider Activity: Neutral. Not much activity lately. Ten analysts follow the stock, 3 have a buy, down from 4 three months ago. Some analysts are concerned about the valuation. TTD is not.
| TTD's Breakout Profile
Rating Sonus Networks Inc. (SONS) |
| TTD Check List | Bullish | Bearish | Neutral |
| Near 52-week High | YES | ||
| Volume | YES | ||
| Tick Volume | YES | ||
| Price Trend - Daily | YES | ||
| Price Trend - Long Term | YES | ||
| Price Daily Spread | YES | ||
| Base Structure | YES | ||
| Base - A-D | YES | ||
| Earnings-Quarterly | YES | ||
| Earnings-Long Term | YES | ||
| Earnings Outlook | YES | ||
| Industry Group | YES | ||
| Prior Breakout Success | YES | ||
| Fund Sponsorship | YES | ||
| Total Score | 12 | 0 | 2 |
(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.
(Trading strategy: One should buy breakout stocks at breakpoint by using market order or stop buy)
Ticker Tape Digest’s Daily List of “Stocks To Sell or 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 - 6
Stocks Screened - 8,200
Long-Term Environment for bears: Unfavorable.
Bear Side - Very few break down plays today. However, some interesting special situation plays. TTD's short from Friday, CV Therapeutics Inc. (CVTX) tumbles 1.96 to 6.61 - a great 23% one-day win for bears.
(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.)
TREX, based in Winchester, Va., makes a wood/plastic alternative for building residential and commercial decks. Annual revenues: $348 million. TWP falls today undercutting key support around 24. The decline was triggered by a wider loss for the fourth quarter. Volume is running at 444,200 shares, triple its normal daily volume.
The stock got off to a bearish start as a big block of 1,400 shares crossed the tape on a big down tick to $23.67 from the prior trade at $23.96. That set the bearish tone for the day.
The company reported a loss for the quarter of 93 cents a share compared with a loss of 73 cents a share a year ago. Sales for the quarter slumped to $32 million from $44 million a year ago.
The company's Trex Wood-Polymer composite is made of waste-wood fibers and reclaimed polyethylene. Trex Wood-Polymer looks like wood and has the workability of wood, but requires less long-term maintenance. It is available in traditional lumber sizes.
TWP sells mainly to the contractor-installed market through more than 90 wholesale distribution centers, which sell to nearly 3,300 independent dealers including some 320 Home Depot stores.
The company said the loss was due to the slowdown in the housing market.
Technically, the stock's breakdown comes with heavy volume. Its TTD momentum indicator is bearish (see top of the chart) and the accumulation - distribution line is starting to roll over again. TTD is targeting TWP for a decline to 18 within the next few months.
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.)