December 10th, 2008

Birds of a Feather: ISYS and TSYS

Today’s market gave me nothing new to add to what I wrote yesterday. Today’s decline matched yesterday’s increase but on slightly less volume. I would guess these two days of trading are given some sort of name in Japanese Candlestick charting (like Evening Doji Star or something else equally obtuse … you can tell I’m not a big Candlestick fan) other than they were mirror images of one another: equal range, open at one end and wind up at the other.

So what does one do one days like today (other than feel stupid for having made some purchases yesterday and hoping I won’t regret that some more tomorrow), I go trolling for interesting stocks. Today, my filter was: 1) “Golden Cross” stock, 2) move favorably relative to S&P 500 since the October 10, 2007 high. I came across two that like like cousins if not brothers.

  • ISYS (Integral Systems): has increased 105.7% since October 7, 2007 (remember the S&P 500 is down 43.12% over the same period). ISYS is ranked #6 on the IBD 100 list. But what I find most interesting about ISYS is that it’s now stuggling to break into new all-time high territory, a strong momentum indicator and one of my primary stock selection criteria during the Mark-up Stage of the market’s life cycle. While the market is at the bottom of its range since the 2000 Tech Bubble Crash, ISYS is at the top. Note the favorable volume action this year as represented in the OBV (click on chart to enlarge):

  • TSYS (Telecommunications Systems): hasn’t had as dramatic a Credit Crises increase – only 67.56% – but its chart is still compelling. TSYS isn’t on the IBD 100 list – yet. It’s accomplishment this year has been to break out of a multi-year symmetrical triangle. Its struggle now is to break through a resistance trendline at its “surrogate” all-time high. I say, “surrogate” because other than the first few months after its 2000 IPO, when it was caught in the downdraft of the Tech Bubble Crash, this trendline represents its all-time high. TSYS has had a favorable OBV since the 2003 Crash bottom(click on chart to enlarge):

I’m not saying these stocks are ripe to buy now; I would put them on my watch list. If we in fact are in the bottom building process, these stocks will probably be among the leaders and movers (stocks with outstanding upside momentum) when the market complete the transition and begins an unequivocal leg up.

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