July 6th, 2012
Hope everyone is having a nice day off celebrating the birth of the nation on this Fourth of July. It also seems to be a fitting time to celebrate what perhaps might turn out to be the beginning of a strong second half for the stock market. Each day since the beginning of June, the market has successfully knocked over one obstacle after another and could be free to ascend all the way to the market’s previous all-time high close of 1565.15 set on October 9, 2007. The last remaining hurdle is the previous interim high close of 1419.04 set this past April 2. It would be fitting indeed if that high-water mark were reached on its fifth anniversary this coming October, a 13.9% increase above Friday’s close.
Since I’m in a celebratory mood, I thought I’d share with you some of the more successful stock picks that Members and I have enjoyed over the past six months. I offer them more as a tribute to the truth of market timing and chart analysis than my own foresight. The stocks were purchased at different times over the past six months but they all have one thing in common; they were all purchased when they crossed above significant resistance levels.
The comments below on each stock were excerpted from the Instant Alerts emailed to Members at the time of the purchase; each was also accompanied by a chart as of that date. The symbols are links to charts as of Wednesday’s close:
- IPHS (June 14 at 52.77; last 58.01): “The stock has steadily moved significantly higher since the 2009 Financial Crisis Crash bottom; it had its IPO in 2006. The stock appears to have completed what IBD calls a cup-and-handle formation and by crossing above the resistance area is now entering new all-time highs.”
- CRUS (February 29 at 23.74; last 29.11): “Another stock that’s been trapped by several recent “Stocks on the Move” scans. The stock has an extremely interesting pattern which, like many others now, could be interpreted as either a reversal top or a consolidation depending on your outlook (bull or bear) and the market’s future direction. One can see in the chart either a partially-completed “double head-and-shoulders” reversal top or a horizontal consolidation channel with a possible near-term cross above the upper boundary. Since my current view of the market is bullish (and the fact that I’ve seen many other stocks break on the upside), I’m taking a chance that the pattern will eventually turn out to have been a consolidation channel.”
- MED (March 14 at 16.58; last 20.46): “The stock is a product of yesterday’s Stocks on the Move scan. It has formed an inverted head-and-shoulders reversal pattern at what I hope will be the bottom of a multi-year descending wedge pattern.”
- CYMI (May 3 at 52.51; last 60.00): “The stock was on the recent Watchlist. It is primed and with a supportive push from a strong market is hopefully ready to cross above a multi-year resistance level into all-time new high territory.”
- VTR (June 26 at 61.07; last 63.85): “Technically, it looks as if VTR completed an 18 month “cup-and-handle” consolidation formation and may resume its upward advance.”
- DDD (May 2 at 31.07; last 35.57): “I’ve had my eye on DDD ever since I noticed it crossing into all-time new high territory and beginning what appeared to be a “buyers’ remorse correction”. Just recently it crossed above what could be considered the upper resistance boundary of that correction and ready to be one of the leading stocks that continues moving further into all-time new high territory when the market resumes its ascent.”
- EQIX (February 2 at 122.65; last 177.38): “Stock has crossed into all-time new-high territory set at its IPO at the peak of the Tech Bubble in 2000. This stock is also a momentum scan favorite.”
- EBAY (March 2 at 36.01; last 41.02): “The stock is another Stocks on the Move scan result. The chart has formed and is now crossing out of a buyers’ remorse pattern that might be interpreted as a channel, complex inverted head-and-shoulder or complex cup-and-handle. This congestion follows EBAY successfully moving out of a long-term descending wedge and crossing above the neckline of a multi-year reversal base after the Tech Bubble Burst.”
The Model Portfolio currently includes 55 stocks; these are among the best performers of the lot. Several poor performers have been sold and a couple were sold when they were the subject of an acquisition or merger. I still have confidence in these and the rest of the stocks in the Portfolio and believe they will continue advancing in the wake of a strong market. As far as whether I will continue to hold them even with substantial profits, I refer you to my “Sell Rules” discipline.