Text Box: Wiser Trader Stocks and Options Newsletter
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Issue No. 40 – August 22, 2005                       Prescott, Arizona                            Systems@WiserTrader.com

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1.0   Trading

 

      Watch list data is presented in a different format that changes how the newsletter data differs from data presented on the website.

 

1.1 Data Format

 

      Last week it was decided that some of the watch lists were growing without bound, making selections difficult. Eventually it becomes less helpful to have too many choices.  It was decided to limit the number of entries to 10 per category.  First we attempted to eliminate stocks that were not optionable if there were at least 10 remaining.  Next, we ranked them according to their past month’s performance and chose the top 10. 

 

      This week stocks are ranked by where their current price falls in the range defined by their 4 week highs and lows.  Stocks at their 4 week highs are ranked 100% while those at their 4 week lows are ranked 0%.  The rationale for this ranking is based on a system provided to a successful group of traders who were taught to go long stocks that were at their monthly highs and short stocks that were at their monthly lows.  This ranking is not intended for finding shorting candidates since the watchlists result from master traders.  Rather the ranking is intended to point out those stocks from the master trader lists that may be most favorable for trading long.  This ranking correlates well with percent rank relative strength.

 

      The newsletter remains more up to date compared to the website.  The newsletter contains new stocks that pass the filters on Sunday.  Information in the newsletter is used to updated the website on the following Saturday where rankings are adjusted to reflect the past week’s price activity.  The bottom line is that while both sets of data reflect up to date rankings for the stocks it contains, the newsletter takes into account possible new stocks from the most recent filtering.

 

      It is believed that the data presented in this way lends itself to easier selections and better trading opportunities.  If you have thoughts on how data can be presented to better serve your needs, send an email to the editor.

 

© 2005 WiserTrader.com, 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.  WiserTrader.commarkets third party trading systems but has no other affiliation with trading system companies.

2.0   Market Analysis

 

      Government price reports provided a negative jolt to the markets on Tuesday sending the DOW down for a triple digit decline.  For 9 days the NASDAQ see sawed up and down on alternate days until Friday when it declined for the second day in a row capping an overall decline for the week.  Refinery fires in Venezuela sparked another surge in oil prices on Friday.  Although production was decreased, the prognosis was for the refiner to be back up to full production in 48 hours. 

 

      Figure 1 compares index tracking stocks for the major averages with Sector SPDR’s.

.

 

 

FIGURE 1

 

      Relative strength is given in Table 2A.

 

Table 2A

Relative Strength

Index

5 Day RSI

DOW

Neutral

S&P 500

Neutral

NASDAQ

Neutral

 

 

 

      Market sentiment is shown in Table 2B.  Volatility continues to increase.

 

 

Table 2B

VTO Market Sentiment Indicators

Sentiment Indicator

Current

Last Week

2 Weeks Ago

Complacent

Cautious

VIX **

13.42

12.74

12.48

< 20

> 50

VXN ***

16.16

15.63

15.40

< 30

> 70

Put/Call Ratio

0.576

0.625

0.551

< 0.6

> 0.7

%Bulls - %Bears

34.8%

39.8%

34.8%

> 29%

< 20%

**   Above 20 day SMA = Sell signal.

*** Above 20 day SMA = Sell signal.

 

 

 

 

 

      Figure 2 compares index tracking stocks with five leading ETF’s for the week.  Not an impressive week.

 

 

 

 

FIGURE 2

 


Table 2C - Market Summary


 

 Major Indices 
 For the Past Week:
 Dow Jones     +0.4%
 NASDAQ        -1.0%
 S&P500 Index  +0.3%
 Russell 2000  -0.4%
 
 30 Year Bond 4.441%
 10 Year Note 4.238%
 
 Industry Leaders
 For the Past Week:
 Water 
 Aluminum 
 Gold Mining 
 General Mining 
 Mining 
 Industrial Metals 
 Coal 
 Integrated Oil & Gas 
 Oil & Gas Producers 
 Steel 
 
 Industry Leaders
 For the Past Month:
 Coal 
 Water 
 Steel 
 Mining 
 Industrial Metals 
 Oil Equipment & Services 
 Railroads 
 Oil Equipment, Services & Dis 
 General Mining 
 Basic Resources   
 
 Crude Oil $66.86
 
 Gold for the past 30 days:
 USD    +5.17%
 CAD    +4.09%
 CHF    +1.70%
 GBP    +1.63%
 EUR    +2.27%
 JPY    +2.72


      In Table 2D, the broader market moved sideways for the week.

 

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)

-0.9%

-0.5%

0.1%

-0.7%

0.2%

DIA (DOW)

-0.7%

-0.3%

0.3%

-0.9%

0.1%

QQQQ (NASDAQ 100)

-1.5%

-1.0%

-0.7%

-0.3%

0.4%

IWM (Russell 2000)

-3.3%

-0.6%

-0.7%

-2.8%

0.8%

GLD, GOLD

2.7%

-2.0%

2.0%

1.8%

0.9%

RKH, Banking

-1.4%

0.6%

0.2%

-1.3%

-0.9%

IYT, Transportation

-1.7%

-0.9%

0.5%

-1.8%

0.5%

SMH, Semiconductors

-2.6%

-0.3%

-1.5%

-1.2%

0.4%

BBH, Biotechnology

0.2%

-0.3%

-0.3%

-0.3%

1.1%

IYR, Real Estate

-4.0%

-0.8%

-0.9%

-4.7%

2.4%

OIH, Oil

1.4%

-3.5%

1.2%

2.3%

1.5%

XLE, Energy

1.7%

-4.0%

3.7%

1.7%

0.4%

XLU, Utilities

-0.5%

-0.3%

-0.5%

-1.1%

1.5%

XLB, Materials

-2.3%

-2.7%

1.0%

-0.2%

-0.5%

XLI, Industrial

-1.5%

-0.7%

0.8%

-1.6%

0.0%

XLK, Technology

-1.0%

-0.1%

-1.7%

0.5%

0.4%

XLV, Healthcare

0.0%

-1.1%

0.6%

-0.6%

1.1%

XLF, Financials

-1.3%

0.1%

0.2%

-1.0%

-0.7%

XLP, Consumer Staples

-0.4%

0.4%

-0.3%

-1.4%

0.9%

XLY, Consumer Discretionary

-2.0%

-1.7%

1.0%

-1.5%

0.2%

 

      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 the inverse health of the currency and the economy in general. 

 

3.0 Procedure

 

      The following watch lists contain stock candidates for consideration.  They are not necessarily trades.  Categories include check lists for insider buying and cash rich companies, as well as, those that employ stock picking methods of six important master traders.  Stocks are ranked by where their current price falls in the range defined by their 4 week highs and lows.  Stocks at their 4 week highs are ranked 100% while those at their 4 week lows are ranked 0%.

 

      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 the reference date.  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 since the reference date.  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.

 

      A performance summary of filtering techniques for check lists and master trader selection methods is given in Table 3A.

 

 

 

Table 3A

Stock Filter Summary

Filter

Avg. % Change Since Listed

Avg. % Change Friday

1 Month

1 Week Ago

2 weeks Ago

3 Weeks Ago

4 Weeks Ago

Net Insider Buying

3.3%

0.8%

5.5%

1.9%

-1.4%

3.5%

3.6%

Cash Rich Companies

-18.5%

5.2%

3.4%

3.8%

0.9%

-0.3%

-1.1%

Growth Momentum Stocks

9.0%

0.8%

0.3%

-2.0%

0.5%

0.6%

1.3%

Lynch Stocks

7.8%

0.2%

1.8%

-2.5%

1.8%

1.7%

0.9%

Buffett Stocks

-6.1%

0.3%

1.0%

-0.9%

1.9%

-0.3%

0.4%

Graham Stocks

7.7%

0.3%

-1.0%

-0.6%

-0.6%

-1.0%

1.2%

Templeton Stocks

5.0%

0.2%

-1.0%

0.5%

0.2%

-1.7%

0.1%

Zweig Stocks

6.5%

0.9%

8.7%

-1.4%

2.1%

1.6%

6.2%

Average

1.8%

1.1%

2.3%

-0.2%

0.7%

0.5%

1.6%

 

 

 

Key

Passed Recent Filter

 

 

 

 

 

 

      Companies that have experienced net insider buying within the past 6 months of 5% or more of issued stock are listed in Table 3B.  These stocks should also appear in one of the master trader screens or meet additional screening criteria before being given serious consideration.  This list is a mixture of stocks that are optionable and those that are not.

 

 

 

Table 3B

Net Insider Buying Check List

Ranked by Closing Price Relative to 4 Week Range

Stock

Reference

% Chg

Company

Sector

Industry

% from Max

% 4wk Range

ITMN

08/05/05

10.0%

InterMune, Inc.

Health Care

Biotechnology & Drugs

0.0%

100.0%

IRN

08/05/05

-1.1%

Rewards Network Inc.

Services

Business Services

-1.4%

83.9%

MNKD

08/12/05

0.3%

MannKind Corporation

Health Care

Biotechnology & Drugs

-5.9%

77.5%

STLW

07/08/05

-0.2%

Stratos International, Inc.

Technology

Semiconductors

-2.5%

64.1%

XGEN

08/19/05

0.0%

Xenogen Corporation

Technology

Scientific & Technical Instruments

0.0%

52.7%

KIRK

05/27/05

-4.7%

Kirkland's, Inc.

Services

Retail (Specialty Non-Apparel)

-9.0%

48.2%

RNAI

08/19/05

0.0%

Sirna Therapeutics, Inc.

Health Care

Biotechnology & Drugs

0.0%

44.3%

RGN

07/01/05

11.0%

RegeneRx Biopharmaceut.

Health Care

Biotechnology & Drugs

-8.8%

43.1%

ASPV

05/27/05

14.9%

Aspreva Pharmaceuticals Corporation

Health Care

Biotechnology & Drugs

-6.6%

41.8%

PCTY

07/08/05

2.5%

Party City Corporation

Services

Retail (Specialty Non-Apparel)

-6.2%

33.1%

 

 

 

      Companies with net cash positions that comprise at least 40% of their share price are listed in Table 3C.   These stocks should also appear in one of the master trader screens or meet additional screening criteria before being given serious consideration.  Again this list is a mixture of stocks that are optionable and those that are not.

 

 

Table 3C

Capital Rich Companies Check List

Ranked by Closing Price Relative to 4 Week Range

Stock

Reference

% Chg

Company

Sector

Industry

% from Max

% 4wk Range

BCICF

08/19/05

0.0%

Bell Canada International Inc.( USA )

Services

Communications Services

0.0%

100.0%

CDCO

08/12/05

0.6%

COMDISCO HLDG CO INC

Services

Rental & Leasing

-0.2%

98.3%

TIWI

07/29/05

0.6%

Telesystem International Wireless (USA)

Services

Communications Services

-0.7%

67.6%

WSC

07/01/05

-2.4%

Wesco Financial Corporation

Conglomerates

Conglomerates

-2.4%

25.8%

CLCT

05/20/05

-8.0%

Collectors Universe, Inc.

Services

Business Services

-13.8%

18.8%

HRAY

08/12/05

-4.1%

Hurray! Holding Co., Ltd. (ADR)

Services

Communications Services

-5.2%

7.3%

 

 

 

 

      For the screen in Table 3D, the number of selections is reduced by selecting only optionable stocks having P/E’s less than 30.  

 

 

 

Table 3D

Growth Momentum Watch List

Ranked by Closing Price Relative to 4 Week Range

Stock

Reference

% Chg

Company

Sector

Industry

% from Max

% 4wk Range

EXP

07/29/05

2.5%

Eagle Materials, Inc.

Capital Goods

Construction - Raw Materials

-2.7%

70.8%

SYT

04/08/05

-0.2%

Syngenta AG (ADR)

Basic Materials

Chemical Manufacturing

-4.7%

65.8%

SFY

04/22/05

56.4%

Swift Energy Company

Energy

Oil & Gas Operations

-6.7%

53.9%

LM

08/12/05

-1.7%

Legg Mason, Inc.

Financial

Investment Services

-1.7%

51.6%

TDY

04/29/05

20.0%

Teledyne Technologies Incorporated

Services

Business Services

-6.4%

46.8%

OSK

03/12/05

4.9%

Oshkosh Truck Corporation

Consumer Cyclical

Auto & Truck Manufacturers

-3.5%

25.9%

CHE

05/06/05

6.9%

Chemed Corporation

Services

Business Services

-7.6%

22.7%

UNH

04/15/05

9.7%

UnitedHealth Group Inc.

Financial

Insurance (Accident & Health)

-4.3%

16.1%

BDK

04/29/05

3.1%

The Black & Decker Corporation

Consumer Cyclical

Appliances & Tools

-7.2%

13.1%

RYL

07/22/05

-12.1%

The Ryland Group, Inc.

Capital Goods

Construction Services

-12.5%

4.5%

 

 

 

      For the Peter Lynch screen in Table 3E, the number of selections is reduced by selecting only optionable stocks having P/E’s less than 30.  

 

 

Table 3E

Peter Lynch Value Watch List

Ranked by Closing Price Relative to 4 Week Range

Stock

Reference

% Chg

Company

Sector

Industry

% from Max

% 4wk Range

TM

12/13/04

5.6%

Toyota Motor Corporation (ADR)

Consumer Cyclical

Auto & Truck Manufacturers

-3.3%

85.7%

BTI

08/12/05

-1.4%

British American Tobacco (ADR)

Consumer Non-Cyclical

Tobacco

-1.4%

73.3%

CHL

03/18/05

29.6%

China Mobile (Hong Kong) Limited (ADR)

Services

Communications Services

-4.5%

66.2%

RD

04/29/05

8.7%

Royal Dutch Petroleum Co.

Services

Printing & Publishing

-5.6%

61.3%

SKM

02/07/05

4.8%

SK Telecom Co., Ltd. (ADR)

Services

Communications Services

-3.7%

40.6%

PKX

04/29/05

12.5%

POSCO (ADR)

Basic Materials

Iron & Steel

-5.7%

39.4%

VLCCF

06/03/05

6.0%

Knightsbridge Tankers Limited

Transportation

Water Transportation

-7.6%

37.6%

TMX

06/03/05

4.6%

Telefonos de Mexico, S.A. (ADR)

Services

Communications Services

-3.3%

31.9%

ASH

07/29/05

-1.7%

Ashland Inc.

Capital Goods

Construction Services

-3.4%

13.8%

NTE

05/06/05

9.2%

Nam Tai Electronics, Inc.

Technology

Electronic Instruments & Controls

-12.3%

2.4%

 

 

 

 

 

      The filter for Warren Buffet style stock picking in Table 3F is for the intermediate to long term.  Two requirements were added.  One was to include only optionable stocks in order to find LEAPS opportunities.  The other requirement was to include only those stocks having a PE of 17 or less.

 

Table 3F

Warren Buffett Value Watch List

Ranked by Closing Price Relative to 4 Week Range

Stock

Reference

% Chg

Company

Sector

Industry

% from Max

% 4wk Range

LNCR

12/27/04

4.2%

Lincare Holdings Inc.

Health Care

Healthcare Facilities

-4.5%

95.8%

ACS

04/29/05

7.4%

Affiliated Computer Services

Technology

Computer Services

-3.1%

95.3%

DSPG

02/07/05

4.0%

DSP Group, Inc.

Technology

Communications Equipment

-2.1%

91.9%

ELBO

01/31/05

81.4%

Electronics Boutique Holdings Corp.

Services

Retail (Technology)

-3.1%

63.3%

FNF

07/29/05

-1.4%

Fidelity National Financial

Financial

Insurance (Property & Casualty)

-1.7%

63.2%

PGR

12/27/04

15.5%

The Progressive Corp.

Financial

Insurance (Property & Casualty)

-3.4%

50.4%

RS

04/15/05

23.1%

Reliance Steel & Aluminum

Basic Materials

Misc. Fabricated Products

-4.3%

44.9%

RI

07/15/05

-5.0%

Ruby Tuesday, Inc.

Services

Restaurants

-5.1%

30.4%

STLD

05/20/05

15.3%

Steel Dynamics, Inc.

Basic Materials

Iron & Steel

-7.5%

18.4%

NUE

04/15/05

12.8%

Nucor Corporation

Basic Materials

Iron & Steel

-6.0%

16.9%

 

 

      Stocks from Benjamin Graham’s style of utility investing are listed in Table 3G.  A requirement was added to include only those stocks having a PE of 17 or less.  

 

 

Table 3G

Benjamin Graham Utility Watch List

Ranked by Closing Price Relative to 4 Week Range

Stock

Reference

% Chg

Company

Sector

Industry

% from Max

% 4wk Range

SRE

01/10/05

20.3%

Sempra Energy

Utilities

Natural Gas Utilities

0.0%

100.0%

UU

06/10/05

-4.8%

United Utilities PLC (ADR)

Utilities

Electric Utilities

-5.6%

63.9%

CPK

05/06/05

17.7%

Chesapeake Utilities

Utilities

Natural Gas Utilities

-2.9%

45.8%

PNW

01/10/05

3.2%

Pinnacle West Capital

Utilities

Electric Utilities

-4.1%

29.1%

ATO

04/01/05

6.5%

Atmos Energy Corporation

Utilities

Natural Gas Utilities

-3.7%

27.3%

SJI

07/01/05

-7.3%

South Jersey Industries

Utilities

Natural Gas Utilities

-10.8%

25.5%

OKE

04/15/05

15.6%

ONEOK, Inc.

Utilities

Natural Gas Utilities

-7.2%

20.4%

WPS

02/07/05

11.3%

WPS Resources Corp

Utilities

Electric Utilities

-3.4%

19.7%

CEG

04/29/05

10.1%

Constellation Energy Group

Utilities

Electric Utilities

-5.8%

18.3%

ATG

04/29/05

4.1%

AGL Resources Inc.

Utilities

Natural Gas Utilities

-7.9%

11.3%

 

 

 

      Optionable stocks from John Templeton’s style of investing are listed in Table 3H.  

 

 

Table 3H

John Templeton Watch List

Ranked by Closing Price Relative to 4 Week Range

Stock

Reference

% Chg

Company

Sector

Industry

% from Max

% 4wk Range

EDMC

06/03/05

7.7%

Education Management Corp

Services

Schools

-1.9%

79.0%

MBT

06/17/05

14.3%

Mobile TeleSystems OJSC (ADR)

Services

Communications Services

-1.6%

78.1%

EASI

06/03/05

5.8%

Engineered Support System

Capital Goods

Misc. Capital Goods

-2.3%

60.4%

DGX

08/19/05

0.0%

Quest Diagnostics Incorporated

Health Care

Healthcare Facilities

0.0%

53.1%

JNJ

05/27/05

-5.7%

Johnson & Johnson

Health Care

Major Drugs

-5.7%

40.9%

NFB

07/29/05

0.2%

North Fork Bancorporation, Inc.

Financial

Regional Banks

-2.1%

36.8%

SNV

05/27/05

-0.2%

Synovus Financial Corp.

Financial

Regional Banks

-2.5%

34.8%

MTB

05/27/05

5.2%

M&T Bank Corporation

Financial

Regional Banks

-3.5%

34.2%

SFG

05/27/05

8.1%

StanCorp Financial Group, Inc.

Financial

Insurance (Life)

-8.9%

20.4%

WMAR

05/27/05

14.1%

West Marine, Inc.

Services

Retail (Specialty Non-Apparel)

-10.3%

16.6%

 

 

 

      Optionable stocks from Martin Zweig’s style of investing are listed in Table 3I.  

 

 

Table 3I

Martin Zweig Watch List

Ranked by Closing Price Relative to 4 Week Range

Stock

Reference

% Chg

Company

Sector

Industry

% from Max

% 4wk Range

CERS

08/05/05

6.2%

Cerus Corporation

Health Care

Biotechnology & Drugs

-1.6%

95.2%

PKZ

07/01/05

19.5%

PetroKazakhstan Inc. (USA)

Energy

Oil Well Services & Equipment

-0.9%

93.0%

EXP

05/27/05

16.2%

Eagle Materials, Inc.

Capital Goods

Construction - Raw Materials

-2.7%

70.8%

CRDN

08/19/05

0.0%

Ceradyne, Inc.

Capital Goods

Aerospace and Defense

0.0%

58.4%

SFY

08/12/05

-6.2%

Swift Energy Company

Energy

Oil & Gas Operations

-6.2%

53.9%

BR

07/29/05

1.5%

Burlington Resources Inc.

Energy

Oil & Gas Operations

-4.3%

47.8%

RESP

06/03/05

8.6%

Respironics, Inc.

Health Care

Medical Equipment & Supplies

-3.8%

37.8%

MCO

07/29/05

0.4%

Moody's Corporation

Services

Business Services

-0.3%

37.2%

APA

05/27/05

16.4%

Apache Corporation

Energy

Oil & Gas Operations

-4.9%

28.4%

SFCC

07/08/05

2.5%

SFBC International, Inc.

Health Care

Biotechnology & Drugs

-5.8%

27.5%

 

 

 

 

4.0           Trading Results

 

      This section highlights performance of stocks and options trades.  Only a summary is provided here to save space.  Detailed lists of closed trades can be found on the portfolio page of the website.

 

Options Trading

 

Options Trading Model

Number of trades in 2005 =

54

(1.6 Trades per Week)

Number of contracts per trade  =

2

 

Avg. Premium Cost per trade =

$1,409.56

 

Total Premium costs =

$76,116.00

 

Gross Profit =

$8,785.07

(11.5%)

Broker Commission (Etrade) =

-$1,348.92

 

Subscription Cost to date =

-$480.00

(at $60.00/month)

Net Profit After Expenses =

$6,956.15

(Avg. holding period 8.1 days)

 

 

Stock Trading

 

Stock Trading Model ($10,000 Initial Capital)

No. of Closed trades in 2005 =

43

(1.3 Trades per Week)

Average Trade Size =

$1,000.00

 

Total Share costs =

$43,000.00

 

Gross Profit on Closed Positions =

$1,646.96

 

Profit on Open Positions =

$164.83

 

Broker Commission (Etrade) =

-$939.06

 

Subscription Cost to date =

-$80.00

 

Net Profit After Expenses =

$792.73

(7.9%)

 

 

5.0 Conclusion

 

      Performance since the beginning of 2005 based on approximately 10% of capital per trade:

 

Growth in Total Capital

Stock Advisory

+7.9%

Options Advisory

+61.0%

 

Major Indices Year to Date 8/20/05

DOW

-2.1%

NASDAQ

-1.9%

S&P500

+0.7%

Russell 2000

+0.3%

 

 

Appendix

Investment Conference Schedule

      Below are links to conference registration sites where you can sign up.  

Conference Search