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Saturday, August 2, 2008

IBD 100

GHM was last week's big gainer on the IBD 100. Usually I don't post the same chart two days in a row, but there are a few observations I have one this one, so this week I will have a bonus chart. This broke out of a base back in early July, and pulled back to the 50dma, giving a perfect entry point last Friday. This has had consistently growing earnings for quite a while, and in January had a big drop despite good numbers (from what I have heard, something was said in the conference call that spooked investors). If you had bought after that drop (I did) and held until now (I didn't), you just about a triple. This is getting close to double the 200dma, which means it might be due for another consolidation. This is on the earnings sheet and is probably the one that has the most potential.

CNQR was the second biggest gainer, due to an earnings gap up. Last Friday the chart looked pretty good, but since I don't buy right before earnings, I wouldn't have bought it there. It did give a nice opportunity two days after the breakout when it came clese to filling in the gap.

CF was the third biggest gainer and is the bonus chart for today. Here it is forming a double bottom base with a handle. Everything looks ok on this chart (volume could be just a bit better), but one thing that concerns me is that leaders of a previous rally rarely lead new rallies. I have felt for about a month now that the agriculture related stocks were topping out, and although they haven't proved me right yet, they haven't proven me wrong either.

FTI was the biggest decliner, and it has been in a nasty downtrend, failing at all levels of support. One thing I find interesting is the relative strength line staying high as this began it's decline, topping out, then going into a rapid decline. This is the first case I have looked at where relative strength gave a false signal.

NEU was the second biggest decliner. This has puked twice on the last two earnings reports. Last Friday it was right around the 200dma, but it was just before earnings, and you can see the results of trying to anticipate earnings moves.

Since we are at the start of a new rally, it is a good time to look for new leadership. One group tp look at is Machinery-Gen Industrial, currently ranked at #2, and Medical-Genetics, #3 and has moved up very fast. Unfortunately, I have had to reconstruct my database and do not have comprehensive lists of stocks in those groups yet, but I will keep an eye on these.

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