May 22nd, 2008

S&P 500 Since 2000; NYB, DR, HGIC and TTEK

I promised myself I won’t talk about Oil & Gas stocks that are moving to new highs, that are making new breakouts, that are motoring higher. Why should I? All these scan lists are filled with these stocks. It doesn’t take a genius to tell you to buy this or that energy related stock because they’re all doing just swell, thank you.

But there were a couple of stocks in the remaining 70% of this market that took on the appearance of being promising even in the face of this retrenching market. These moved on to the New High list for the first time, often a signal that momentum in the stock will be stoked and the stock will continue moving higher (click on symbol for chart):

  • NYB (New York Community Bank): Not a big mover but one that looks like it’s coming out of a 3-year saucer pattern. The stock did hit 36 at its peak early in 2004, so that’s what I would consider an initial target. Did someone read my article yesterday about regional banks?
  • DR (Darwin Professional Underwriters): According to Google Finance, the company “is the underwriting and administration of liability insurance policies within three professional liability lines, which include Directors and Officers Liability (D&O), Errors and Omissions Liability (E&O) and Medical Malpractice Liability. In addition, it introduced a program of general liability (GL) business.” It falls within my “New IPO” momentum category having its IPO in Summer, 2006 and a stock that’s again moving to new highs
  • HGIC (Harleysville Group): Also an insurance holding company engaged in the property and casualty insurance business. Is there a pattern developing here? The Insurance Industry Groups are ranked among the lower have of all the groups and don’t seem to be moving up. These stocks may have unique causes and therefore carry a higher degree of risk.
  • TTEK (Tetra Tech): First mentioned here on May 26, 2007 in an article about the Pollution Svces Industry Group. It’s advanced since then in fits and starts; the current move may be another of those starts which could soon stall although the volume support action is significant.

Stocks mentioned previously (May 17) and continuing to do well include:

  • UHS
  • HMX
  • JOBS

I’ll close with a very long-term (10-year/weekly bar) chart of the S&P 500. Why? For the following reasons that I always think about:

  • So we don’t lose sight of how far that market’s come since 2003
  • That the recent peak looks eerily similar to the peak in 2000
  • So we don’t lose sight of the forest for all the trees of Fed interest rate actions, gold prices, oil prices, unemployment numbers, housing numbers, etc.
  • We’re nowhere near out of the woods of this market correction – at this point it can still go either way, up or down.

We won’t really know for sure until the market actually crosses back over the 300-day moving average and marches on to new high territory of 1550.

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