______________________________________________________________________________
Issue No. 31 – June20, 2005
Prescott, Arizona Systems@WiserTrader.com
______________________________________________________________________________
1.0
Trading
It is hoped that the watch lists are serving their
purpose and you are getting good use out of them. Below is a brief summary of
their recent performance.
1.1 Watch Lists
It is without a doubt that
information collected for the 2 checklists and 6 watch lists detailed in Section
3 will be of benefit. All have performed reasonably well, as shown in Table 1A.
The two newest lists, Templeton and Zweig, have done exceedingly well in just 3
weeks. The other lists are considerably older but still show a reasonable
profit for the length of time since they were started.
Table 1A
List Performance
|
List
|
Since Started
|
1 month
|
1 wk ago
|
2 wks ago
|
3 wks ago
|
4 wks ago
|
|
Net
Insider Buying
|
10.1%
|
12.5%
|
3.8%
|
1.9%
|
1.9%
|
4.4%
|
|
Cash
Rich Companies
|
10.8%
|
1.4%
|
1.8%
|
1.3%
|
-0.8%
|
-0.9%
|
|
Growth Momentum Stocks
|
9.6%
|
8.7%
|
4.6%
|
0.4%
|
0.5%
|
3.0%
|
|
Lynch
Stocks
|
6.9%
|
5.3%
|
2.9%
|
0.8%
|
0.2%
|
1.3%
|
|
Buffett
Stocks
|
16.9%
|
6.9%
|
3.7%
|
1.0%
|
0.3%
|
1.8%
|
|
Graham
Stocks
|
8.9%
|
5.0%
|
1.1%
|
1.2%
|
1.3%
|
1.3%
|
|
Templeton
Stocks (5/27)
|
5.3%
|
5.6%
|
2.7%
|
1.7%
|
0.1%
|
0.9%
|
|
Zweig
Stocks (5/27)
|
7.2%
|
13.1%
|
4.2%
|
1.9%
|
2.7%
|
3.7%
|
|
Average
|
9.5%
|
7.3%
|
3.1%
|
1.3%
|
0.8%
|
1.9%
|
While any one of these
lists could form a decent portfolio, the challenge is to find a sound basis for
cherry picking each list. Remember that stocks are unlisted when they decline
more than 10% from their initial price or more than 15% from their highest
price. Such a challenge is welcomed since the result promises to be a super
filter of sorts. For example, one might add a requirement for annual sales growth
or the Steven Cooper filter criteria. Will keep you posted.
© 2005 Desert Mountain Systems, LLC. Members of wisertrader.com are neither licensed
brokers nor licensed advisors. Trades discussed represent recommendations
made by the editor for the wisertrader.com portfolio. The newsletter and web
site are for information only and should not be considered as personal advice.
While it is believed that the posted information is factual, mistakes can be
made in transcription. Investors should trade stocks only after verifying all
information and consulting with a licensed broker or adviser. Desert Mountain Systems markets third party trading systems but has no other affiliation with
trading system companies.
2.0
Market Analysis
The NASDAQ and S&P500
were up every day this week. On Tuesday, the May PPI was reported to have
dropped 0.6%. More significantly, the core rate was up just 0.1%.
This was the third month out of four with just a 0.1% increase. The other
month was at 0.3%. That computes to just a 1.8% annual rate of increase
over the past four months.
The CPI data on Wednesday
was also bullish. The total index fell 0.1% due to a decline in energy
prices, and the core rate was up just 0.1%. The core CPI was unchanged
the prior month, and is up at just a 2.2% annual rate over both the past three
months and the past twelve months. While oil prices are up sharply, energy
prices have not raised inflation significantly or slowed the economy. The
excellent news on inflation provided important support to underlying sentiment
in the stock market.
The end of June often sees
a pickup in earnings warnings. Companies that aren't going to meet Wall
Street estimates for second quarter profits often announce such during this
period. That can hurt individual stocks and cause widespread caution.
The S&P 500 index is
now up fractionally for the year and wise commentary looks for a mid-single
digit gain for the entire year.
Industry leaders in Table 2A
rank from highest to lowest. Relative strength is given in Table 2B and VTO
market sentiment in Table 2C.
Major Indices:
Dow Jones +1.1%
NASDAQ +1.3%
S&P500 Index +1.6%
Russell 2000 +2.9%
30 Year Bond 4.365%
10 Year Note 4.078%
Industry Leaders
For the Past Week:
Platinum & Precious Metals
Home Construction
Nonferrous Metals
General Mining
Recreational Services
Steel
Industrial Metals
Forestry
Exploration & Production
Mining
Industry Leaders
For the Past Month:
Platinum & Precious Metals
Oil Equipment & Services
Exploration & Production
Coal
Oil Equipment, Services & Dis
Oil & Gas
Oil & Gas Producers
Home Construction
Integrated Oil & Gas
Mining
Crude Oil $58.47
Gold for the past 30 days:
USD +2.58%
CAD +1.56%
CHF +7.80%
GBP +6.21%
EUR +8.20%
JPY +3.60%
Table 2B
Relative Strength Index
|
|
5
Day RSI
|
5
Week RSI
|
|
DOW
|
Very
Overbought
|
Neutral
|
|
S&P
500
|
Very
Overbought
|
Overbought
|
|
NASDAQ
|
Neutral
|
Overbought
|
Table 2C
VTO Report on Market Sentiment
Indicators
|
Sentiment Indicator
|
Value
|
Last Week
|
2 Weeks Ago
|
Complacent
|
Cautious
|
|
VIX **
|
11.48
|
11.96
|
12.15
|
< 20
|
> 50
|
|
VXN ***
|
14.63
|
15.87
|
15.59
|
< 30
|
> 70
|
|
Put/Call Ratio
|
0.533
|
0.475
|
0.611
|
< 0.6
|
> 0.7
|
|
%Bulls - %Bears
|
32.3%
|
29.7%
|
22.8%
|
> 29%
|
< 20%
|
|
** Below 20 day SMA = Buy signal.
***
Below 20 day SMA = Buy signal.
|
Taking a look from the top
down in Table 2D, the major averages picked up this week while oil prices continued
to rise. Small caps outpaced large caps, looking at the Russell 2000.
Table 2D
Index Tracking Stocks, Key
Industry ETF’s and Sector SPDR’s
|
|
1 month
|
1 wk ago
|
2 wks ago
|
3 wks ago
|
4 wks ago
|
|
SPY (S&P 500)
|
1.9%
|
1.0%
|
0.0%
|
-0.1%
|
0.9%
|
|
DIA (DOW)
|
1.3%
|
0.8%
|
0.4%
|
-0.6%
|
0.7%
|
|
QQQQ (NASDAQ)
|
0.6%
|
0.9%
|
-1.4%
|
-0.3%
|
1.5%
|
|
IWM (Russell 2000)
|
5.6%
|
2.5%
|
1.1%
|
0.5%
|
1.4%
|
|
GLD, GOLD
|
4.8%
|
2.4%
|
1.1%
|
0.7%
|
0.6%
|
|
RKH, Banking
|
-0.5%
|
1.3%
|
-0.6%
|
-0.4%
|
-0.8%
|
|
IYT, Transportation
|
-0.6%
|
1.9%
|
-2.8%
|
0.3%
|
0.1%
|
|
SMH, Semiconductors
|
1.8%
|
-0.5%
|
-0.6%
|
0.8%
|
2.0%
|
|
BBH, Biotechnology
|
3.6%
|
2.0%
|
-0.6%
|
-0.3%
|
2.6%
|
|
IYR, Real Estate
|
4.4%
|
2.7%
|
2.3%
|
1.5%
|
-2.1%
|
|
OIH, Oil
|
18.1%
|
4.7%
|
4.1%
|
2.2%
|
6.1%
|
|
XLE,
Energy
|
15.6%
|
5.0%
|
2.4%
|
1.5%
|
5.9%
|
|
XLB,
Materials
|
3.3%
|
2.4%
|
0.1%
|
0.2%
|
0.5%
|
|
XLU,
Utilities
|
3.3%
|
0.5%
|
0.8%
|
1.5%
|
0.6%
|
|
XLI,
Industrial
|
0.3%
|
0.7%
|
-0.2%
|
-0.4%
|
0.2%
|
|
XLK,
Technology
|
1.3%
|
0.6%
|
-0.4%
|
-0.3%
|
1.4%
|
|
XLV,
Healthcare
|
0.6%
|
1.7%
|
-0.4%
|
-0.4%
|
-0.3%
|
|
XLF,
Financials
|
1.3%
|
1.0%
|
0.2%
|
-0.2%
|
0.3%
|
|
XLP,
Consumer Staples
|
-0.9%
|
-0.3%
|
0.1%
|
-0.2%
|
-0.6%
|
|
XLY,
Consumer Discretionary
|
2.5%
|
1.7%
|
0.3%
|
-0.2%
|
0.7%
|
Figure 1 compares index
tracking stocks for the major averages with Sector SPDR’s. Figure 2 compares
index tracking stocks with key industry ETF’s and the five leading ETF’s for
the week. Key industry ETF’s are Biotech and Semiconductors which confirm the
NASDAQ. Transportation confirms the Dow Jones Industrial Average according to
Dow Theory. Banking and Financials are confirming indicators for the S&P
500. Gold and Real Estate are important indicators of the health of the currency
and the economy in general, respectively.
FIGURE 1
FIGURE 2
3.0 Procedure
The following watch lists contain
stock candidates for consideration. They are not necessarily trades. The “Reference”
is the date that a stock passed the indicated filter and was added to or
returned to the list. The “% Change” is how the price has changed since a
stock first passed the filter. Stocks that are down 10% or more after being
listed are removed. The “% from Max” is the percentage the price has declined
from the maximum price reached after a stock first passed the filter. Stocks
that are down 8% from their highs after being listed are flagged in yellow. Stocks
that are down 15% from their highs after being listed are removed. More
information on filters is available on the web site. Send an email
if you need more details.
Key
Companies that have
experienced net insider buying within the past 6 months of 5% or more of issued
stock are listed in Table 3A. These stocks should also appear in one of the Master
Trader screens or meet additional screening criteria before being given serious
consideration.
Table 3A
Net Insider Buying Check List
|
Stock
|
Reference
|
% Chg
|
Company
|
Sector
|
Industry
|
% from Max
|
|
ACAD
|
04/29/05
|
23.3%
|
ACADIA
Pharmaceuticals Inc.
|
Health
Care
|
Biotechnology
& Drugs
|
-1.3%
|
|
AETH
|
06/17/05
|
0.0%
|
Aether
Systems, Inc.
|
Technology
|
Software
& Programming
|
0.0%
|
|
AFT
|
05/20/05
|
-3.0%
|
Axesstel,
Inc.
|
Technology
|
Communications
Equipment
|
-6.8%
|
|
ASPV
|
05/27/05
|
11.9%
|
Aspreva
Pharmaceuticals Corporation
|
Health
Care
|
Biotechnology
& Drugs
|
-1.3%
|
|
FTD
|
04/08/05
|
-7.5%
|
FTD Group,
Inc.
|
Services
|
Retail
(Catalog & Mail Order)
|
-7.6%
|
|
FVRL
|
04/22/05
|
7.3%
|
Favrille,
Inc.
|
Health
Care
|
Biotechnology
& Drugs
|
-0.2%
|
|
INHX
|
04/08/05
|
8.1%
|
Inhibitex,
Inc.
|
Health
Care
|
Biotechnology
& Drugs
|
0.0%
|
|
IPSU
|
05/20/05
|
3.2%
|
Imperial
Sugar Company
|
Consumer
Non-Cyclical
|
Food
Processing
|
-0.9%
|
|
IPXLE
|
04/29/05
|
4.8%
|
Impax
Laboratories Inc.
|
Health Care
|
Biotechnology
& Drugs
|
-1.0%
|
|
IRN
|
05/20/05
|
-2.7%
|
Rewards
Network Inc.
|
Services
|
Business
Services
|
-4.7%
|
|
ITMN
|
04/08/05
|
16.7%
|
InterMune,
Inc.
|
Health
Care
|
Biotechnology
& Drugs
|
0.0%
|
|
JRCC
|
06/17/05
|
0.0%
|
James
River Coal Company
|
Energy
|
Coal
|
0.0%
|