May 8th, 2013

Auto and Truck Parts Suppliers

I believe I’ve finally made some sense of how to differentiate between the Weekly Recap Reports offered to Members, the Stock Chartist blog and the articles I begun to write for SeekingAlpha.com. I believe the answer was provided by Seeking Alpha when they made clear that their preference is for fundamental as contrasted with technical analysis.

Every investment decision begins with a clear vision of the market’s near-term direction, or what Seeking Alpha calls “Market Orientation”. My last two articles met the prerequisites of that category and were well accepted by the Seeking Alpha readers. Once you have a market point-of-view, the next step is stock selection.

If market timing indicates that the time is opportunity for new investments then the next challenge is choosing from among the 7000 stocks and ETFs. One can do attempt to narrow the search down to a few of the best stocks by, what Cramer calls, “doing your homework”. Or you can use my approach of finding stocks that appear to be ready to cross out of consolidation or reversal areas (i.e., patterns) by crossing above resistance zones (i.e., trendlines) focusing first among the Industry Groups that seem to be most desirable at the time to the “herd”, or Wall Street’s institutional investors. The approach I use for this final step is, of course, my various scans and a continual search through literally hundreds of charts.

Instant Alerts members have the benefit of both market and stock selection plus an inside view of how I manage my Portfolio.

Bottom line, the blog will now focus on individual stocks based on my own Industry Group and stock chart analysis. Some blog posts will focus on an individual stock while other posts might include several stocks. The following is the first:

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imageThe stocks of several truck and auto original and replacement parts suppliers have advanced smartly since the beginning of the year, like AXL, DORM, SMP, LKQ and DLPH. Even though these have significant momentum, I avoid them because these are now far above what I consider breakout entry points where initial positions can be safely established.

However, a few have recently or are about to break out of consolidation areas.  I consider them consolidations since there’s nothing to indicate that the market is anywhere near making a significant reversal.  Those stocks include:

  • BWABWA - 20130508
  • LEARLEA - 20130508
  • DANDAN - 20130508
  • WBCWBC - 20130508
  • THRMTHRM - 20130508

It goes without saying that these stocks and their charts were selected exclusively on the basis on a technical analysis of price action and timeliness of an investment. There’s no attempt to rank them as to prospective appreciation of each nor the time needed to achieve those gains. Investors should assess their own tolerance for risk and perform their own assessment of their suitability to be included in a portfolio.

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June 1st, 2009

Coppock Curve:Truck Original Equip, Parts and Tires Under Green Light

CNBC’s Fast Money finally caught up to with the Stock Chartist blog. They had a segment called “New Bull? Rare Pattern Could Signal Market’s Next Move!” this evening about the Coppock Curve (click here to read more about it on the CNBC site).

I say “caught up” because I first wrote about the Coppock Curve in January and followed up on March 25 when I wrote:

“I’ve also extrapolated what the [Coppock] Curve values might be if the S&P 500 Index is able to hold at approximately 900 through the end of May. Interestingly, the Curve hits a low in April and begins to turn up in May.

So long as there’s no further deterioration in the market, and the S&P 500 Index can hold current levels for the next 60 days, there’s a convergence of indicators that will point to a positive signal at that time that it will be “all right to get back into the pool”. Among those indicators are the Coppock Curve, the 200-day Moving Average crossover, my MTI, and the long-term reversion to the mean chart.”

We foresaw it and it just happened. The Coppock Curve actually turned up based on Friday’s close and today the Index crossed above the 200-day moving average (it closed above my 180-day moving average indicator last week). Note the similarity between today’s Coppock Curve chart and the projection from March:

The Reversion to the Mean chart also crossed above the bottom range boundary in April.

To round out the picture, the Index crossed above the neckline. All indicators now confirm a “green light” signal (you can’t appreciate how long I’ve waited to include that image at the top). I don’t know about you but I’m ecstatic. I can’t explain why the market has turned positive at just this time but do we really care? We have to go with the flow; I’m sure there will be explanations galore later giving all the reasons momentum turned from bear to bull just at this time.

So where to go from here? I’ve already written about foreign stocks metal ores (March 22), (April 17), steels (April 26), alternative energy including solar and coal (May 7) and gold miners (May 11). Each of these groups have contributed stocks to today’s leaders. Here’s another group that seems to be advancing for some unknown reason: truck parts suppliers. For example, Auto/Truck-Original Equipment suppliers has climbed dramatically to the top of the IBD Industry Group rankings:

The group has skyrocketed in ranking from near the bottom to near the top, a position it hadn’t seen since early 2007. Many of the major stocks in the group are on the verge of completing reversal patterns (like inverse head-and-shoulders, ascending triangles) or have already done so; these stocks are also close to or have already crossed above 90-, 180- or even 300-day moving averages. Key stocks in the group with great stock charts include:

  • MOD (Modine Mfg.)
  • LEA (Lear)
  • XIDE (Exide)
  • BWA (Borg Warner)
  • JCI (Johnson Controls)
  • ALV (Autoliv)
  • WBC (Wabco)
  • MGA (Magna)
  • GETI (Gentek)

The herd may again stampede the stocks in this group (along with the Tire and the Replacement Parts Groups) now that there appears to be some resolution to the auto industry bankruptcies.