______________________________________________________________________________
Issue No. 32 – June27, 2005
Prescott, Arizona Systems@WiserTrader.com
______________________________________________________________________________
1.0
Trading
This week, two additional
layers of filtering are applied to all of our filters to come up with a
selection of intermediate term stock selections.
1.1 Advanced Filter
Last week the potential
makings for a super stock filter were pointed out. Such a filter would be
based on adding a second layer of EPS and sales growth requirements plus a
third layer of modified Stephen Cooper filtering criteria to the eight filters
in Section 3 plus other filters we use. The more stringent the filter
criteria, the smaller will be the number of stocks that pass.
Starting with all the
filters we use, requirements were added that the year over year sales growth must
be at least 25% and that sales growth must be greater than 2 times the industry
mean. The added Cooper criteria was relaxed somewhat. The stock must be within
10% of its 52 week high instead of at its 52 week high. It must still have a
relative strength of 90% and an EPS growth of 80%. But in addition, its EPS
growth must be twice the industry mean. The results are shown in Table 1A.
Table 1A
Advanced Filtering for Intermediate
Term Stocks
|
Stock
|
Reference
|
% Chg
|
% of 52 Week High
|
26 Week Relative Strength
|
EPS Growth 12 Months
|
Sales Growth 12 Months
|
EPS Growth to Industry
|
Sales Growth to Industry
|
|
GW
|
05/27/05
|
11.1%
|
91.0%
|
90.0%
|
225.0%
|
67.1%
|
4.15
|
3.05
|
|
KOSP
|
05/27/05
|
10.0%
|
95.0%
|
95.0%
|
81.2%
|
73.8%
|
7.32
|
6.15
|
|
LSS
|
06/10/05
|
-0.8%
|
93.0%
|
91.0%
|
348.6%
|
85.2%
|
9.76
|
4.37
|
|
PCO
|
02/14/05
|
38.9%
|
99.0%
|
95.0%
|
259.0%
|
80.5%
|
5.69
|
2.65
|
|
TOL
|
05/27/05
|
8.0%
|
91.0%
|
94.0%
|
91.3%
|
56.7%
|
3.11
|
4.61
|
|
TS
|
01/10/05
|
67.0%
|
99.0%
|
95.0%
|
363.4%
|
45.6%
|
10.18
|
2.34
|
© 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 game of chicken played
between bulls and oil prices resulted in the bulls backing down with a sell off
on Thursday and Friday. Sustained high oil prices fostered doubt about second
quarter earnings and continued economic growth. A more cautious approach has
developed heading into earnings season. Expectations are for second
quarter operating earnings to be up about 7% from the same quarter last
year. That would be the slowest growth in two years. Profits were up
21% in the fourth quarter of last year, and 13% in the first quarter of this
year. This slowdown understandably raises concerns about the outlook for
the remainder of the 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
For the Past Week:
Dow Jones -3.1%
NASDAQ -1.8%
S&P500 Index -2.1%
Russell 2000 -2.1%
30 Year Bond 4.215%
10 Year Note 3.914%
Industry Leaders
For the Past Week:
Real Estate Holding & Develop
Aerospace & Defense
Internet
Investment Services
Food Retailers & Wholesalers
Electricity
Distillers & Vintners
Utilities
Footwear
Industry Leaders
For the Past Month:
Exploration & Production
Oil Equipment & Services
Platinum & Precious Metals
Oil Equipment, Services & Dis
Coal
Real Estate Holding & Develop
Home Construction
Mining
Gold Mining
Oil & Gas
Crude Oil $59.84
Gold for the past 30 days:
USD +5.19%
CAD +2.58%
CHF +9.40%
GBP +5.69%
EUR +9.75%
JPY +6.50%
Table 2B
Relative Strength Index
|
Index
|
5
Day RSI
|
5
Week RSI
|
|
DOW
|
Oversold
|
Neutral
|
|
S&P
500
|
Oversold
|
Neutral
|
|
NASDAQ
|
Very
Oversold
|
Neutral
|
Table 2C
VTO Report on Market Sentiment
Indicators
|
Sentiment Indicator
|
Value
|
Last Week
|
2 Weeks Ago
|
Complacent
|
Cautious
|
|
VIX **
|
12.18
|
11.48
|
11.96
|
< 20
|
> 50
|
|
VXN ***
|
15.30
|
14.63
|
15.87
|
< 30
|
> 70
|
|
Put/Call Ratio
|
0.578
|
0.533
|
0.475
|
< 0.6
|
> 0.7
|
|
%Bulls - %Bears
|
33.7%
|
32.3%
|
29.7%
|
> 29%
|
< 20%
|
|
** Above 20 day SMA = Sell signal.
***
Above 20 day SMA = Sell signal.
|
Taking a look from the top
down in Table 2D, the major averages sold off. Only gold and utilities held
their ground.
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)
|
-1.1%
|
-2.0%
|
1.0%
|
0.0%
|
-0.1%
|
|
DIA (DOW)
|
-2.4%
|
-3.0%
|
0.8%
|
0.4%
|
-0.6%
|
|
QQQQ (NASDAQ 100)
|
-3.2%
|
-2.4%
|
0.9%
|
-1.4%
|
-0.3%
|
|
IWM (Russell 2000)
|
1.2%
|
-2.8%
|
2.5%
|
1.1%
|
0.5%
|
|
GLD, GOLD
|
4.8%
|
0.6%
|
2.4%
|
1.1%
|
0.7%
|
|
RKH, Banking
|
-1.1%
|
-1.4%
|
1.3%
|
-0.6%
|
-0.4%
|
|
IYT, Transportation
|
-5.9%
|
-5.2%
|
1.9%
|
-2.8%
|
0.3%
|
|
SMH, Semiconductors
|
-1.2%
|
-1.0%
|
-0.5%
|
-0.6%
|
0.8%
|
|
BBH, Biotechnology
|
-1.2%
|
-2.2%
|
2.0%
|
-0.6%
|
-0.3%
|
|
IYR, Real Estate
|
3.0%
|
-3.4%
|
2.7%
|
2.3%
|
1.5%
|
|
OIH, Oil
|
10.2%
|
-1.0%
|
4.7%
|
4.1%
|
2.2%
|
|
XLE,
Energy
|
7.0%
|
-2.0%
|
5.0%
|
2.4%
|
1.5%
|
|
XLB,
Materials
|
-2.5%
|
-5.1%
|
2.4%
|
0.1%
|
0.2%
|
|
XLU,
Utilities
|
3.6%
|
0.8%
|
0.5%
|
0.8%
|
1.5%
|
|
XLI,
Industrial
|
-3.4%
|
-3.5%
|
0.7%
|
-0.2%
|
-0.4%
|
|
XLK,
Technology
|
-1.6%
|
-1.5%
|
0.6%
|
-0.4%
|
-0.3%
|
|
XLV,
Healthcare
|
-0.9%
|
-1.8%
|
1.7%
|
-0.4%
|
-0.4%
|
|
XLF,
Financials
|
-0.1%
|
-1.1%
|
1.0%
|
0.2%
|
-0.2%
|
|
XLP,
Consumer Staples
|
-2.8%
|
-2.4%
|
-0.3%
|
0.1%
|
-0.2%
|
|
XLY,
Consumer Discretionary
|
-0.8%
|
-2.5%
|
1.7%
|
0.3%
|
-0.2%
|
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 respective indicators for health of the currency
and the economy in general.
The strength of the late
week sell off is apparent for all except utilities and treasuries.
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. ONXS, OSHC, TAGS, TRCA and VSTA were removed because they did
not pass the most recent screening.
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
|
-3.3%
|
|
AFT
|
05/20/05
|
-5.8%
|
Axesstel,
Inc.
|
Technology
|
Communications
Equipment
|
-9.5%
|
|
ASPV
|
05/27/05
|
12.3%
|
Aspreva
Pharmaceuticals Corporation
|
Health
Care
|
Biotechnology
& Drugs
|
-2.6%
|
|
FTD
|
04/08/05
|
-5.9%
|
FTD Group,
Inc.
|
Services
|
Retail
(Catalog & Mail Order)
|
-6.1%
|
|
FVRL
|
04/22/05
|
6.6%
|
Favrille,
Inc.
|
Health
Care
|
Biotechnology
& Drugs
|
-1.7%
|
|
ATPL
|
06/24/05
|
0.0%
|
Atlantis
Plastics, Inc.
|
Basic
Materials
|
Fabricated
Plastic & Rubber
|
0.0%
|
|
IPSU
|
05/20/05
|
-0.8%
|
Imperial
Sugar Company
|
Consumer
Non-Cyclical
|
Food
Processing
|
-4.7%
|
|
SSAG
|
05/24/05
|
0.0%
|
SSA Global
Technologies, Inc.
|
Technology
|
Software
& Programming
|
0.0%
|
|
IRN
|
05/20/05
|
-2.5%
|
Rewards
Network Inc.
|
Services
|
Business
Services
|
-4.5%
|
|
ITMN
|
04/08/05
|
19.6%
|
InterMune,
Inc.
|
Health
Care
|
Biotechnology
& Drugs
|
0.0%
|
|
JRCC
|
06/17/05
|
-1.2%
|
James
River Coal Company
|
Energy
|
Coal
|
-1.2%
|
|
KIRK
|
05/27/05
|
-2.1%
|
Kirkland's, Inc.
|
Services
|
Retail
(Specialty Non-Apparel)
|
-6.5%
|
|
MERCS
|