______________________________________________________________________________
Issue No. 49 – October 24, 2005
Prescott, Arizona Systems@WiserTrader.com
______________________________________________________________________________
1.0
Trading
Recent discussions on the
relationship between value indicators and subsequent 52 week price gains have
assumed a buy and hold strategy. This assumption is not unreasonable for value
stocks. However, it is interesting to compare the buy and hold approach with
stock gains based on the use of a stop loss. The first value indicator used
for this comparison is price to free cash flow per share (P-FCF).
1.1 Price to Free Cash Flow
The amount of free cash
flow measures the ability of a company to increase dividends, develop new
products, enter new markets, pay off liabilities, buy back shares, and even
become an acquisition target. P-FCF values of less than about 10 indicate that
a company generates sufficient cash to finance buying back all of its shares
based on prevailing interest rates.
The analysis involved NYSE, NASDAQ and
AMEX stocks priced above $4 that had easily accessible data on earnings, book
value, sales and return on equity. Advanced Depository Receipts, Over the
Counter Stocks and Exchange Traded Funds were excluded. Information was
available for the group of about 2,000 stocks shown in Figure 1.
As expected, Figure 1 shows that the risk of negative
gains was lowest for stocks having P-FCF of 5 or less. The trend of increasing
gains with increasing values of P-FCF can be attributed to stocks being bid to
higher prices over time with some being growth and momentum stocks. After all,
the chart represents a general universe of stocks for which no stop loss
settings were used. A question about the effect of year ago
valuations on current prices is the path that prices have taken to reach their
present values. In some cases prices dip below levels of prudent risk before
rising well above their starting values. In such cases the use of a stop loss
actually curtails profits in the process of reducing risk. In other cases the
use of a stop loss is well worth the capital preservation when prices decline
continuously and fail to recover.
© 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.
FIGURE 1
Since a large percentage of
price movement can be attributed to behavior of the major averages, the NASDAQ,
along with the DOW and S&P 500 for the past year, are plotted in Figure 2.
The developing double top formation implies that many stocks that were stopped
out by May of this year have since recovered and gone on to rise higher by
August.
FIGURE 2
For this historical market environment, the effects
of using 10% and 25% stop loss settings are shown in Figures 3 and 4. A 10%
stop loss actually increased the risk of loss for P-FCF values of 5 or less
while a 25% stop loss reduced the risk of loss.
FIGURE 3
FIGURE 4
This is counter intuitive until one takes the past
year market behavior of Figure 2 into account. The average percentage gain
after one year is shown in Table 1. Stocks are broken out into those having
P-FCF above 10 and below 5 to compare the effects of using stop loss settings
of 10, 25 and 40%.
Table 1
Average Percent Gains for Stocks Having P-FCF Values Above 10
and Below 5
|
Month
|
% Gain at Month’s End Using no stops
|
% Gain at Year’s End Using 10% stop loss
|
% Gain at Year’s End Using 25% stop loss
|
% Gain at Year’s End Using 40% stop loss
|
|
P-FCF >10
|
P-FCF <5
|
P-FCF >10
|
P-FCF <5
|
P-FCF >10
|
P-FCF <5
|
P-FCF >10
|
P-FCF <5
|
|
1
|
7.93
|
10.58
|
10.80
|
15.34
|
13.95
|
17.99
|
15.9
|
20.65
|
|
2
|
12.17
|
15.44
|
|
3
|
9.16
|
12.33
|
|
4
|
11.36
|
14.53
|
|
5
|
9.66
|
11.82
|
|
6
|
4.53
|
9.14
|
|
7
|
11.14
|
14.30
|
|
8
|
13.65
|
17.81
|
|
9
|
20.11
|
22.38
|
|
10
|
17.88
|
21.27
|
|
11
|
18.28
|
22.60
|
|
12
|
16.86
|
20.21
|
|
Avg. Month stop was
triggered
|
5th month
|
7th month
|
8th month
|
|
Stocks stopped out by year
end
|
85%
|
38%
|
14%
|
For the double top
formation being formed by the major averages over the past year, the benefit of
using stop losses was marginal at best and detrimental when the stop loss was
defined too narrowly. The technical formation being formed by the major
averages is a special case. But this is just the kind of relationship I needed
to explain how too narrow a stop loss setting has been detrimental, causing
excessive trading where profits were consumed by excessive broker fees. A
similar result can be expected for each of the value metrics that have been
recently discussed. Growth and momentum metrics will probably behave
differently because higher profits per trade are expected over a short span of
time.
Price to free cash flow is
an important valuation metric. The percentages of stocks in Figures 1, 3 and 4
can be treated as probabilities of price gains for P-FCF ranges over the past
year only. How investors evaluate stocks changes from year to year and accounts
for a large portion of annual changes in the character of the market. The
technical character of the major averages is another strong factor.
Once again it is good to
keep in mind that long term fundamentals are inappropriate for short term
trading. Next week will begin to look at trial formulations of stock filters
that combine various metrics that were recently discussed.
2.0 Market Analysis
Choppiness continues as
investors switch between concerns over inflation, relatively good earnings
reports and the occasional earnings warnings that appear to be consistent with
historical norms. At least one more week of choppiness can be expected.
Key industry ETF’s in Table
2A 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
capacity for consumer spending.
Table 2A
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
|
|
DIA (DOW)
|
-1.9%
|
-0.7%
|
-0.1%
|
-2.6%
|
1.6%
|
|
QQQQ (NASDAQ 100)
|
-0.5%
|
1.3%
|
-0.7%
|
-2.8%
|
1.8%
|
|
SPY (S&P 500)
|
-2.7%
|
-0.5%
|
-0.8%
|
-2.8%
|
1.3%
|
|
IWM (Russell 2000)
|
-3.3%
|
0.2%
|
-1.9%
|
-3.4%
|
1.9%
|
|
GLD, GOLD
|
0.5%
|
-0.6%
|
-1.2%
|
1.4%
|
0.9%
|
|
RKH, Banking
|
0.6%
|
2.0%
|
0.4%
|
-0.9%
|
-0.9%
|
|
IYT, Transportation
|
0.5%
|
-0.4%
|
-0.8%
|
-1.5%
|
3.1%
|
|
SMH, Semiconductors
|
-4.1%
|
0.8%
|
-2.8%
|
-4.0%
|
2.0%
|
|
BBH, Biotechnology
|
-3.9%
|
-0.8%
|
1.2%
|
-3.5%
|
-0.9%
|
|
IYR, Real Estate
|
-3.3%
|
0.0%
|
-1.3%
|
-4.4%
|
2.5%
|
|
OIH, Oil
|
-9.0%
|
-2.5%
|
-1.8%
|
-8.0%
|
3.3%
|
|
XLE,
Energy
|
-12.4%
|
-4.8%
|
-2.4%
|
-7.7%
|
2.1%
|
|
XLU,
Utilities
|
-7.1%
|
-1.7%
|
-4.4%
|
-4.0%
|
2.8%
|
|
XLB,
Materials
|
-2.1%
|
0.8%
|
-1.0%
|
-3.3%
|
1.6%
|
|
XLI,
Industrial
|
-1.5%
|
-1.1%
|
-0.6%
|
-1.2%
|
1.4%
|
|
XLK,
Technology
|
-1.9%
|
0.8%
|
-1.0%
|
-3.3%
|
1.6%
|
|
XLV,
Healthcare
|
-3.9%
|
-1.9%
|
0.2%
|
-1.9%
|
-0.4%
|
|
XLF,
Financials
|
0.0%
|
1.0%
|
-0.2%
|
-1.3%
|
0.6%
|
|
XLP,
Consumer Staples
|
0.6%
|
0.5%
|
-0.4%
|
-1.9%
|
2.4%
|
|
XLY,
Consumer Discretionary
|
-3.1%
|
-0.4%
|
-1.0%
|
-2.4%
|
0.6%
|
Market sentiment is
shown in Table 2B.
Table 2B
VTO Market Sentiment Indicators
|
Sentiment Indicator
|
Current
|
Last Week
|
2 Weeks Ago
|
Complacent
|
Cautious
|
|
VIX **
|
16.13
|
14.87
|
14.59
|
< 20
|
> 50
|
|
VXN ***
|
15.82
|
16.23
|
16.62
|
< 30
|
> 70
|
|
Put/Call Ratio
|
0.664
|
0.702
|
0.609
|
< 0.6
|
> 0.7
|
|
%Bulls - %Bears
|
15.8%
|
16.6%
|
21.7%
|
> 29%
|
< 20%
|
|
** Above 20 day SMA = Sell signal.
*** At 20
day SMA = Neutral.
|
Figure 5 compares index tracking stocks for the major
averages with key ETF’s and Sector SPDR’s.
FIGURE 5
Table 2C
Market Summary
Major Indices
For the Past Week:
Dow Jones -0.7%
NASDAQ +0.8%
S&P500 Index -0.6%
Russell 2000 -0.1%
30 Year Bond 4.609%
10 Year Note 4.390%
Leading Industries
For the Past Week:
Internet
Asset Managers
Business Training & Employment
Tobacco
Consumer Electronics
Investment Services
Health Care Providers
Specialty Finance
Aerospace & Defense
General Financial
Lagging Industries
For the Past Week:
Commercial Vehicles & Trucks
Exploration & Production
Oil & Gas Producers
Integrated Oil & Gas
Oil & Gas
Water
Pharmaceuticals
Industrial Engineering
Marine Transportation
Pharmaceuticals & Biotech
Leading Industries
For the Past Month:
Airlines
Internet
Broadline Retailers
Restaurants & Bars
Industrial Suppliers
Asset Managers
Delivery Services
Computer Services
Full Line Insurance
Consumer Electronics
Lagging Industries
For the Past Month:
Exploration & Production
Oil & Gas Producers
Integrated Oil & Gas
Oil & Gas
Water
Marine Transportation
Tires
Oil Equipment & Services
Oil Equipment, Services & Dis
Aluminum
Crude Oil $60.63
Gold for the past 30 days:
USD + 0.13%
CAD + 1.57%
CHF + 1.34%
GBP + 1.47%
EUR + 1.84%
JPY + 3.94%
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, filters that employ stock picking methods used by master traders.
Current stock rankings are
based on the degree to which stocks are overbought or over sold based on the
Williams %R for the past two trading days. Two columns are labeled “%R1”
and “%R2” with “%R2” indicating the Williams %R for the most recent trading
day. Of course, values more negative than -80 are oversold and those less
negative than -20 are overbought.
A column labeled “Weekly %
Gain” was added to show the inverse relationship between price action over the
past week and the Williams %R. With this systematic way of ranking stocks, the
complete list of stocks for each filter is presented.
One should keep in mind
that oversold stocks are not necessarily ready to move upward. They could very
well be in a condition of continuous decline. The lists are meant to serve as
a starting point for further due diligence.
The “Reference” is the date
that a stock passed the indicated filter and was first 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
|
Past Month
|
Past Week
|
2 weeks Ago
|
3 Weeks Ago
|
4 Weeks Ago
|
|
Net Insider Buying
|
7.8%
|
0.6%
|
11.2%
|
1.5%
|
-2.0%
|
1.0%
|
11.4%
|
|
Cash Rich Companies
|
7.5%
|
1.1%
|
9.1%
|
4.2%
|
4.0%
|
1.7%
|
-0.9%
|
|
Growth Momentum Stocks
|
4.9%
|
1.3%
|
0.8%
|
0.8%
|
-1.7%
|
-2.3%
|
4.1%
|
|
Lynch Stocks
|
13.5%
|
1.6%
|
-2.4%
|
0.4%
|
-2.8%
|
-2.6%
|
2.8%
|
|
Buffett Stocks
|
8.7%
|
2.3%
|
-2.7%
|
0.7%
|
-0.8%
|
-3.4%
|
0.9%
|
|
Graham Stocks
|
4.6%
|
0.7%
|
-7.6%
|
-1.4%
|
-4.8%
|
-3.2%
|
1.6%
|
|
Templeton Stocks
|
1.2%
|
-0.2%
|
-1.7%
|
0.0%
|
0.6%
|
-2.9%
|
0.7%
|
|
Zweig Stocks
|
12.8%
|
1.1%
|
-0.6%
|
0.4%
|
-2.0%
|
-3.1%
|
4.3%
|
|
Average
|
7.6%
|
1.1%
|
0.8%
|
0.8%
|
-1.2%
|
-1.9%
|
3.1%
|
Key
|
Passed
Recent Filter
|
|
Price
declined by half of stop loss setting
|
|
Oversold
based on Williams %R (%R2 is most recent)
|
|
Overbought
based on Williams %R
(%R2 is most recent)
|
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
|
Stock
|
Reference
|
% Chg
|
Company
|
Sector
|
Industry
|
% from Max
|
Weekly % Gain
|
%R1
|
%R2
|
|
REDE
|
09/02/05
|
-2.2%
|
RedEnvelope,
Inc.
|
Services
|
Retail
(Catalog & Mail Order)
|
-12.3%
|
-2.4%
|
-88
|
-88
|
|
MEMY
|
10/21/05
|
0.0%
|
Memory
Pharmaceuticals Corp.
|
Health
Care
|
Biotechnology
& Drugs
|
0.0%
|
-10.3%
|
-78
|
-76
|
|
VSTA
|
10/21/05
|
0.0%
|
VistaCare,
Inc.
|
Health
Care
|
Healthcare
Facilities
|
0.0%
|
-1.1%
|
-74
|
-73
|
|
AMIC
|
10/21/05
|
0.0%
|
American
Independence Corp.
|
Financial
|
Insurance
(Miscellaneous)
|
0.0%
|
-3.5%
|
-69
|
-68
|
|
KIRK
|
09/30/05
|
-1.3%
|
Kirkland's, Inc.
|
Services
|
Retail
(Specialty Non-Apparel)
|
-4.2%
|
-0.3%
|
-68
|
-68
|
|
MNKD
|
10/07/05
|
-2.4%
|
MannKind
Corporation
|
Health
Care
|
Biotechnology
& Drugs
|
-6.0%
|
-6.0%
|
-70
|
-64
|
|
MEAD
|
09/30/05
|
1.9%
|
Meade
Instruments Corp.
|
Technology
|
Scientific
& Technical Instruments
|
-2.5%
|
2.3%
|
-56
|
-56
|
|
IRN
|
08/05/05
|
15.5%
|
Rewards
Network Inc.
|
Services
|
Business
Services
|
-4.8%
|
0.8%
|
-56
|
-56
|
|
ZHNE
|
10/07/05
|
-5.9%
|
Zhone Technologies,
Inc.
|
Technology
|
Communications
Equipment
|
-5.9%
|
2.6%
|
-58
|
-55
|
|
MBRX
|
10/14/05
|
2.9%
|
Metabasis
Therapeutics, Inc.
|
Health
Care
|
Biotechnology
& Drugs
|
-0.7%
|
2.9%
|
-53
|
-53
|
|
PCTY
|
09/16/05
|
23.7%
|
Party City
Corporation
|
Services
|
Retail
(Specialty Non-Apparel)
|
-3.4%
|
-0.4%
|
-43
|
-40
|
|
MTRX
|
10/14/05
|
1.5%
|
Matrix
Service Company
|
Capital
Goods
|
Construction
Services
|
-5.1%
|
1.5%
|
-34
|
-38
|
|
ISO
|
10/07/05
|
25.0%
|
ISCO
International, Inc.
|
Technology
|
Semiconductors
|
0.0%
|
12.9%
|
-25
|
-27
|
|
CRTX
|
08/12/05
|
58.9%
|
Critical
Therapeutics, Inc.
|
Health
Care
|
Biotechnology
& Drugs
|
-3.5%
|
5.0%
|
-17
|
-17
|
|
BABY
|
10/21/05
|
0.0%
|
Natus
Medical, Inc.
|
Health
Care
|
Medical
Equipment & Supplies
|
0.0%
|
19.4%
|
-4
|
-4
|
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
|
Stock
|
Reference
|
% Chg
|
Company
|
Sector
|
Industry
|
% from Max
|
Weekly % Gain
|
%R1
|
%R2
|
|
WZEN
|
10/07/05
|
17.1%
|
Webzen
Inc. (ADR)
|
Technology
|
Computer
Services
|
0.0%
|
4.9%
|
-11
|
-11
|
|
CLCT
|
10/07/05
|
6.7%
|
Collectors
Universe, Inc.
|
Services
|
Business
Services
|
0.0%
|
6.9%
|
-10
|
-10
|
|
WSC
|
07/01/05
|
-1.3%
|
Wesco
Financial Corporation
|
Conglomerates
|
Conglomerates
|
-1.3%
|
0.9%
|
0
|
0
|
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
|
Stock
|
Reference
|
% Chg
|
Company
|
Sector
|
Industry
|
% from Max
|
Weekly % Gain
|
%R1
|
%R2
|
|
HCC
|
10/21/05
|
0.0%
|
HCC
Insurance Holdings, Inc.
|
Financial
|
Insurance
(Property & Casualty)
|
0.0%
|
-0.7%
|
-82
|
-82
|
|
BHP
|
09/09/05
|
-4.8%
|
BHP
Billiton Limited (ADR)
|
Basic
Materials
|
Metal
Mining
|
-12.3%
|
-1.7%
|
-83
|
-75
|
|
EXP
|
07/29/05
|
3.9%
|
Eagle
Materials, Inc.
|
Capital
Goods
|
Construction
- Raw Materials
|
-14.1%
|
0.5%
|
-74
|
-69
|
|
CHE
|
05/06/05
|
6.5%
|
Chemed
Corporation
|
Services
|
Business
Services
|
-8.0%
|
0.8%
|
-63
|
-58
|
|
TDY
|
04/29/05
|
17.3%
|
Teledyne
Technologies Incorporated
|
Services
|
Business
Services
|
-8.5%
|
-0.4%
|
-55
|
-55
|
|
OSK
|
03/12/05
|
8.7%
|
Oshkosh
Truck Corporation
|
Consumer
Cyclical
|
Auto &
Truck Manufacturers
|
-1.4%
|
-1.4%
|
-50
|
-50
|
|
SYT
|
04/08/05
|
-1.5%
|
Syngenta
AG (ADR)
|
Basic
Materials
|
Chemical
Manufacturing
|
-5.9%
|
-0.8%
|
-39
|
-39
|
|
LM
|
08/12/05
|
-3.2%
|
Legg
Mason, Inc.
|
Financial
|
Investment
Services
|
-3.7%
|
0.8%
|
-45
|
-39
|
|
UNH
|
04/15/05
|
22.5%
|
UnitedHealth
Group Inc.
|
Financial
|
Insurance
(Accident & Health)
|
-1.8%
|
1.3%
|
-29
|
-29
|
|
ET
|
10/21/05
|
0.0%
|
E*TRADE
FINANCIAL Corporation
|
Financial
|
Investment
Services
|
0.0%
|
9.8%
|
-3
|
-3
|
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
|
Stock
|
Reference
|
% Chg
|
Company
|
Sector
|
Industry
|
% from Max
|
Weekly % Gain
|
%R1
|
%R2
|
|
SKM
|
02/07/05
|
2.4%
|
SK Telecom
Co., Ltd. (ADR)
|
Services
|
Communications
Services
|
-10.8%
|
-3.6%
|
-83
|
-83
|
|
TM
|
12/13/04
|
16.4%
|
Toyota
Motor Corporation (ADR)
|
Consumer
Cyclical
|
Auto &
Truck Manufacturers
|
-7.1%
|
-5.2%
|
-83
|
-81
|
|
TMX
|
06/03/05
|
6.7%
|
Telefonos
de Mexico, S.A. (ADR)
|
Services
|
Communications
Services
|
-8.1%
|
-1.9%
|
-80
|
-77
|
|
BTI
|
08/12/05
|
3.4%
|
British
American Tobacco (ADR)
|
Consumer
Non-Cyclical
|
Tobacco
|
-4.4%
|
1.3%
|
-60
|
-60
|
|
CHL
|
03/18/05
|
33.1%
|
China Mobile (Hong Kong) Limited (ADR)
|
Services
|
Communications
Services
|
-9.5%
|
2.0%
|
-66
|
-52
|
|
PKX
|
04/29/05
|
10.7%
|
POSCO
(ADR)
|
Basic
Materials
|
Iron &
Steel
|
-11.7%
|
1.6%
|
-66
|
-51
|
|
NTE
|
05/06/05
|
15.1%
|
Nam Tai
Electronics, Inc.
|
Technology
|
Electronic
Instruments & Controls
|
-7.5%
|
4.0%
|
-35
|
-14
|
|
KOF
|
04/29/05
|
20.0%
|
Coca-Cola
FEMSA, S.A. (ADR)
|
Consumer
Non-Cyclical
|
Beverages
(Non-Alcoholic)
|
-4.4%
|
4.8%
|
-9
|
-9
|
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 According to the Most
Oversold Using the Williams %R
|
Stock
|
Reference
|
% Chg
|
Company
|
Sector
|
Industry
|
% from Max
|
Weekly % Gain
|
%R1
|
%R2
|
|
FNF
|
10/21/05
|
0.0%
|
Fidelity
National Financial
|
Financial
|
Insurance
(Property & Casualty)
|
0.0%
|
-9.7%
|
-93
|
-92
|
|
DHI
|
10/21/05
|
0.0%
|
D.R.
Horton Inc.
|
Capital
Goods
|
Construction
Services
|
0.0%
|
-1.2%
|
-79
|
-73
|
|
RCII
|
10/21/05
|
0.0%
|
Rent-A-Center,
Inc
|
Services
|
Rental
& Leasing
|
0.0%
|
-7.8%
|
-72
|
-71
|
|
THO
|
04/15/05
|
18.9%
|
Thor
Industries, Inc.
|
Capital
Goods
|
Mobile
Homes & RVs
|
-11.4%
|
-3.4%
|
-70
|
-64
|
|
EASI
|
09/09/05
|
21.0%
|
Engineered
Support System
|
Capital
Goods
|
Misc.
Capital Goods
|
-1.2%
|
-0.6%
|
-61
|
-59
|
|
ABFS
|
04/29/05
|
6.5%
|
Arkansas
Best Corporation
|
Transportation
|
Trucking
|
-7.5%
|
0.2%
|
-49
|
-41
|
|
PGR
|
12/27/04
|
31.4%
|
The
Progressive Corp.
|
Financial
|
Insurance
(Property & Casualty)
|
-2.7%
|
-2.7%
|
-35
|
-35
|
|
DSPG
|
02/07/05
|
1.0%
|
DSP Group,
Inc.
|
Technology
|
Communications
Equipment
|
-5.0%
|
0.0%
|
-37
|
-27
|
|
CECO
|
09/30/05
|
-1.4%
|
Career
Education Corp.
|
Services
|
Schools
|
-2.3%
|
3.2%
|
-34
|
-25
|
|
RS
|
04/15/05
|
36.2%
|
Reliance
Steel & Aluminum
|
Basic
Materials
|
Misc.
Fabricated Products
|
-1.7%
|
4.7%
|
-24
|
-24
|
|
RI
|
09/02/05
|
1.7%
|
Ruby
Tuesday, Inc.
|
Services
|
Restaurants
|
-7.1%
|
4.3%
|
-22
|
-22
|
|
MIK
|
10/14/05
|
5.2%
|
Michaels
Stores, Inc.
|
Services
|
Retail
(Specialty Non-Apparel)
|
-0.8%
|
5.2%
|
-31
|
-21
|
|
NUE
|
04/15/05
|
16.5%
|
Nucor
Corporation
|
Basic
Materials
|
Iron &
Steel
|
-5.7%
|
4.5%
|
-30
|
-19
|
|
NKE
|
09/23/05
|
2.7%
|
NIKE, Inc.
|
Consumer
Cyclical
|
Footwear
|
0.0%
|
2.2%
|
-18
|
-18
|
|
LNCR
|
12/27/04
|
-3.8%
|
Lincare
Holdings Inc.
|
Health
Care
|
Healthcare
Facilities
|
-11.9%
|
1.5%
|
-40
|
-17
|
|
HDI
|
10/14/05
|
0.6%
|
Harley-Davidson,
Inc.
|
Consumer
Cyclical
|
Recreational
Products
|
-0.3%
|
0.6%
|
-11
|
-11
|
|
ACS
|
04/29/05
|
11.5%
|
Affiliated
Computer Services
|
Technology
|
Computer
Services
|
-2.7%
|
10.9%
|
-8
|
-8
|
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 According to the Most
Oversold Using the Williams %R
|
Stock
|
Reference
|
% Chg
|
Company
|
Sector
|
Industry
|
% from Max
|
Weekly % Gain
|
%R1
|
%R2
|
|
SRE
|
01/10/05
|
14.7%
|
Sempra
Energy
|
Utilities
|
Natural
Gas Utilities
|
-12.7%
|
-3.4%
|
-95
|
-93
|
|
NFG
|
04/08/05
|
5.5%
|
National
Fuel Gas Co.
|
Utilities
|
Natural
Gas Utilities
|
-13.4%
|
-3.1%
|
-93
|
-92
|
|
UU
|
06/10/05
|
-9.1%
|
United
Utilities PLC (ADR)
|
Utilities
|
Electric
Utilities
|
-11.2%
|
-2.6%
|
-92
|
-92
|
|
ATO
|
04/01/05
|
-4.2%
|
Atmos
Energy Corporation
|
Utilities
|
Natural
Gas Utilities
|
-13.3%
|
-1.6%
|
-91
|
-90
|
|
PNW
|
01/10/05
|
-6.5%
|
Pinnacle
West Capital
|
Utilities
|
Electric
Utilities
|
-13.1%
|
-1.0%
|
-91
|
-90
|
|
ATG
|
10/21/05
|
0.0%
|
AGL
Resources Inc.
|
Utilities
|
Natural
Gas Utilities
|
0.0%
|
-3.5%
|
-84
|
-81
|
|
CPK
|
05/06/05
|
20.3%
|
Chesapeake Utilities
|
Utilities
|
Natural
Gas Utilities
|
-11.1%
|
-0.1%
|
-80
|
-80
|
|
WPS
|
02/07/05
|
2.9%
|
WPS
Resources Corp
|
Utilities
|
Electric
Utilities
|
-11.0%
|
-0.4%
|
-81
|
-79
|
|
CV
|
10/14/05
|
0.6%
|
Central
Vermont Public Services Corp.
|
Utilities
|
Electric
Utilities
|
0.0%
|
0.6%
|
-80
|
-78
|
|
KEP
|
01/10/05
|
31.6%
|
Korea
Electric Power Corporation (ADR)
|
Utilities
|
Electric
Utilities
|
-11.3%
|
-0.4%
|
-73
|
-69
|
|
PGN
|
01/10/05
|
-5.1%
|
Progress
Energy, Inc.
|
Utilities
|
Electric
Utilities
|
-8.5%
|
0.6%
|
-76
|
-69
|
Optionable stocks from John Templeton’s style of
investing are listed in Table 3H.
Table 3H
John Templeton Watch List
Ranked According to the Most
Oversold Using the Williams %R
|
Stock
|
Reference
|
% Chg
|
Company
|
Sector
|
Industry
|
% from Max
|
Weekly % Gain
|
%R1
|
%R2
|
|
DGX
|
08/19/05
|
-5.1%
|
Quest
Diagnostics Incorporated
|
Health
Care
|
Healthcare
Facilities
|
-7.9%
|
-3.4%
|
-99
|
-98
|
|
CPS
|
05/27/05
|
3.1%
|
ChoicePoint
Inc.
|
Services
|
Business
Services
|
-5.5%
|
-3.1%
|
-90
|
-90
|
|
SNV
|
05/27/05
|
-9.4%
|
Synovus
Financial Corp.
|
Financial
|
Regional
Banks
|
-11.6%
|
-3.5%
|
-91
|
-86
|
|
EASI
|
06/03/05
|
16.0%
|
Engineered
Support System
|
Capital
Goods
|
Misc.
Capital Goods
|
-1.2%
|
-0.6%
|
-61
|
-59
|
|
SFG
|
05/27/05
|
10.9%
|
StanCorp
Financial Group, Inc.
|
Financial
|
Insurance
(Life)
|
-6.5%
|
-0.2%
|
-43
|
-37
|
|
WSM
|
09/02/05
|
-0.9%
|
Williams-Sonoma,
Inc.
|
Services
|
Retail
(Specialty Non-Apparel)
|
-4.5%
|
1.5%
|
-37
|
-37
|
|
MTB
|
05/27/05
|
0.5%
|
M&T
Bank Corporation
|
Financial
|
Regional
Banks
|
-7.8%
|
-0.4%
|
-58
|
-36
|
|
CAKE
|
10/21/05
|
0.0%
|
The
Cheesecake Factory Incorporated
|
Services
|
Restaurants
|
0.0%
|
7.1%
|
-21
|
-21
|
|
AMSG
|
10/14/05
|
2.1%
|
AmSurg
Corp.
|
Health
Care
|
Healthcare
Facilities
|
-1.0%
|
2.1%
|
-28
|
-19
|
|
JNJ
|
05/27/05
|
-5.0%
|
Johnson
& Johnson
|
Health
Care
|
Major
Drugs
|
-5.0%
|
0.6%
|
-13
|
-13
|
Optionable stocks from
Martin Zweig’s style of investing are listed in Table 3I.
Table 3I
Martin Zweig Watch List
Ranked According to the Most
Oversold Using the Williams %R
|
Stock
|
Reference
|
% Chg
|
Company
|
Sector
|
Industry
|
% from Max
|
Weekly % Gain
|
%R1
|
%R2
|
|
RESP
|
06/03/05
|
9.0%
|
Respironics,
Inc.
|
Health
Care
|
Medical
Equipment & Supplies
|
-12.2%
|
-6.2%
|
-94
|
-94
|
|
SM
|
10/21/05
|
0.0%
|
St. Mary
Land & Exploration Co.
|
Energy
|
Oil &
Gas Operations
|
0.0%
|
-5.4%
|
-84
|
-83
|
|
EXP
|
05/27/05
|
17.7%
|
Eagle
Materials, Inc.
|
Capital
Goods
|
Construction
- Raw Materials
|
-14.1%
|
0.5%
|
-74
|
-69
|
|
CRDN
|
08/19/05
|
22.8%
|
Ceradyne,
Inc.
|
Capital
Goods
|
Aerospace
and Defense
|
-2.8%
|
-0.5%
|
-46
|
-46
|
|
SFY
|
10/14/05
|
-1.9%
|
Swift
Energy Company
|
Energy
|
Oil &
Gas Operations
|
-3.5%
|
-1.9%
|
-56
|
-42
|
|
SFCC
|
07/08/05
|
10.1%
|
SFBC
International, Inc.
|
Health
Care
|
Biotechnology
& Drugs
|
-6.3%
|
5.1%
|
-39
|
-33
|
|
JUPM
|
08/19/05
|
6.6%
|
Jupitermedia
Corporation
|
Services
|
Advertising
|
-5.8%
|
0.1%
|
-45
|
-32
|
|
CMTL
|
07/01/05
|
24.6%
|
Comtech
Telecomm. Corp.
|
Technology
|
Communications
Equipment
|
-3.7%
|
3.3%
|
-37
|
-32
|
|
CAE
|
06/10/05
|
14.3%
|
Cascade
Corporation
|
Capital
Goods
|
Misc.
Capital Goods
|
-2.8%
|
0.3%
|
-39
|
-28
|
|
MCO
|
07/29/05
|
8.2%
|
Moody's
Corporation
|
Services
|
Business
Services
|
-0.9%
|
2.4%
|
-27
|
-27
|
|
POOL
|
06/10/05
|
0.6%
|
SCP Pool
Corporation
|
Consumer
Cyclical
|
Recreational
Products
|
-6.7%
|
5.9%
|
-27
|
-17
|
|
PKZ
|
07/01/05
|
41.3%
|
HURRICANE
HYDROCARBONS LTD
|
Energy
|
Oil Well
Services & Equipment
|
-3.3%
|
1.1%
|
-13
|
-13
|
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 Estimation Model -
Minimum Suggested Initial Capital is $3,000
|
|
Number of trades in 2005 =
|
63
|
63
|
63
|
(1.5 trades per week)
|
|
Number of contracts per trade =
|
1
|
2
|
3
|
|
|
Avg. Premium Cost per trade =
|
$605.21
|
$1,210.41
|
$1,815.62
|
|
|
Total Premiums =
|
$38,128.00
|
$76,256.00
|
$114,384.00
|
|
|
Gross Profit =
|
$4,072.01
|
$8,144.02
|
$12,216.02
|
(11.1%)
|
|
Broker Commission (Etrade) =
|
-$1,416.24
|
-$1,573.74
|
-$1,731.24
|
|
|
Subscription Cost to date =
|
-$600.00
|
-$600.00
|
-$600.00
|
|
|
Net Profit After Expenses =
|
$2,055.77
|
$5,970.28
|
$9,884.78
|
(Avg.
holding period 8.3 days)
|
5.0 Conclusion
Net Growth of Total Capital in
2005
|
Options
Advisory (trading 2 contracts)
Aggressive, 20% of risk capital per trade
Moderate, 15% of risk capital per trade
Conservative, 10% of risk capital per trade
|
+110.0%
+ 82.5%
+ 55.0%
|
|
Major Indices Year to Date 10/22/05
|
|
DOW
|
-5.3%
|
|
NASDAQ
|
-4.3%
|
|
S&P500
|
-2.7%
|
|
Russell
2000
|
-2.9%
|
Appendix - Investment Conference
Schedule
Below are links to
conference registration sites where you can sign up.
- 10-30-05 New Orleans, LA "New Orleans Investment Conference"
- 11-10-05 Millbrae, CA "Biotech Investing
Conference" Continuing advances in genomics, proteomics and enabling
technologies makes the Biotech sector a favorite among private equity
investors and venture capitalists. The Biotech Investing Conference is an
industry gathering of the leading private equity investors, venture
capitalists, biotech companies, pharmaceutical companies, corporate
investors and institutional investors.
- 11-27-05 San Francisco, CA "Gold and Precious Metals Conference"
Both
professional and sophisticated private investors meet with the world's
leaders in gold, silver, precious metals, copper and oil and gas
exploration and production. The Natural Resource industry's newest
opportunities are presented, together with educational seminars, executive
panels and investment workshops led by top finance specialists, economic
analysts and newsletter editors. Admission is complimentary with
pre-registration.
- 01-30-06 Miami, Florida "IIR’s 19th Annual
Private Placements Industry Forum" is the pre-eminent gathering for the latest developments in
originating, buying and structuring private debt placements. Join us in
sunny Miami, Florida in January as the industry’s leading decision makers
discuss new market trends, including: project finance, cross border deals
and the impact of pre-designated investor counsel. Plus, enjoy over 6 hours of networking opportunities including our two hour Rooftop Dessert and Cordial Suite. Don’t delay, register for
the Institute for International
Research's 19th Annual Private Placements Industry Forum today!.
- 02-07-06 Cape Town, South Africa "Investing in African
Mining Conference" Africa's most important
mining event and the world's leading gathering of global policy makers and
international finance, the Mining INDABA has raised billions of dollars
and introduced the international investment community to mining interests
throughout Africa. The Mining Indaba has become an institution
throughout Africa, attracting over 2,000 delegates from fifty countries
and hosting over 100 exhibitors.
Conference Search