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Monday, May 31, 2010

Data Sources For Leadership Scans

I have been re-running the "leadership" scan I started a few weeks ago, but unfortunatley I have data from only one other source, Zacks.com. I also have dat from yahoo finance's screener, but unfortunately they have some weird HTML formatting in their spreadsheet that I'm going to have to fix before I can scan that. Google finance also has a screener, but the results are not in a downloadable format. So, for right now, I am comparing the data from zacks with that from Finviz,. So far all I have screened for is a 5 year earnings growth rate of 25% or better, and a return on equity of 17% or higher. With those criteria I get 167 socks from Zacks, and 238 from Finviz. Among the stocks from Zacks, there are 61 that are not in the Fonviz screen, with the most notable being AMZN. There are 132 in the Finviz screen not in the Zacks screen. It is probably not terribly important, since out of the 10 stocks  I come up with every week there are no more than one or two that are debatable as leadership material, but I will start checking the data against more than one source, and if I can get the damn yahoo spreadsheet problem fixed, I'll have 3 sources.

Gulf Of Mexico Oil Production


I was rummaging through the EIA website this morning, something I have been remiss about lately, which is perhaps the best, most unbiased source of information on energy resources. I found a series of data on Gulf of Mexico oil production which I found quite intersting, especially after graphing the data. It is unclear if this is total Gulf of Mexico production (U.S. and Mexico combined) or just U.S. production, but from this data, it is becoming clear that Gulf of Mexico production has peaked, and has started it's decline. The black line is total production, but what is really frightening is the red line, which represents production in waters less than 200 meters deep. The blue line is production in waters greater than 200 M deep, which, obviously, is more expensive and riskier. For the "drill, baby, drill" crowd, this should be pretty sobering news.

BP Censorship, With Government Cooperation

I saw an interesting story in the news the other day:
(Emphasis and comments in italics mine)

With the Gulf oil spill dominating the news cycle, journalists are flocking to the region. But getting down to Louisiana is the easy part. Once there, journalists are finding that BP — aided by local and federal officials — is making it difficult to cover the environmental disaster.


Newsweek's Matthew Philips spoke with a number of journalists in the region. Photographers tell him that officials are "blocking access to the sites where the effects of the spill are most visible," such as "oil-covered beaches, staging areas for cleanup efforts, and even flyovers."

Of course, anyone flipping on the cable networks or perusing online news sites has probably seen images from the spill. But Philips says many images "are coming from BP and government sources."

Philips' finding is not surprising given the anecdotal evidence of journalists who say they've been prevented from doing their work. Just in the last week, BP contractors stopped a CBS crew from filming and threatened arrests (arrests by BP contracters? Under what authority?); CEO Tony Hayward was caught on tape yelling "Get outta there!" at a photographer snapping pictures; and Mother Jones reporter Mac McClelland said her efforts to reach Elmer's Island on the tip of Louisiana were thwarted after she was stopped more than once by Jefferson Parish sheriff's deputies.

With such access being cut off, Philips writes that journalist trying to cover "the worst environmental disaster in the history" of U.S. waters must do so "against the will of BP."

— Michael Calderone is the media writer for Yahoo! News.


It seems that BP, after causing the biggest environmental catastrophe since Chernobyl, are now able to determine, with government cooperation, what information the public may or may not obtain? Hmmmm, sound like a merger of State and Corporate power. There is a word for it, it;s on the tip of my tongue, now what is it?

Sunday, May 30, 2010

Ponzi Finance Part 2

A ponzi scheme, as I described it last week, is destined to collapse because the earnings (usually non-existent) are outweighed by payments to investors. The early investors are paid by payments made by later investors (with the scammer, of course, taking a cut as well). This can go on for quite some time, as long as there is an infinite supply of new investors with new money, and there is a shrinking supply of old investors taking money out. Once the inflow of new money decreases to the point that money leaving exceeds money coming in, the scheme is exposed and collapses. But as long as that new money comes in, schemes can go for years, even blatantly under the noses of regulators (the Madoff case in particular comes to mind) before unraveling. So, what we have is a pool of money with an outflow, to investors thinking they are "returns" on their investments, and and inflow of new investors; money, As long as the inflow is greater than the outflow, all is well. But since there is no real "return" on the investment, and there is not an infinite number of new investors waiting to put money in,  the scheme will eventually fail.

That is a basic description of a ponzi scheme, and while I was thinking about it, it struck me that there are several similarities to fractional reserve banking (I gave wikipedia's definition of both in a post last weekend, but here and here are links to them). Actually, instead of similar, they are more like mirror images.  A ponzi requires a constant inflow of money, while fractional reserve banking requires a constant outflow of money. In a fractional reserve system, banks are able to create money, basically out of thin air, in the form of credit, and profit off the interest on the balance paid back. In such a system, if the outflow exceeds the inflow, the system is able to sustain itself. It is when there are either no more able borrowers, or those who are able borrowers no longer want to borrow, that the system gets into trouble. In order to sustain itself, it has to find new borrowers, and this is what we have been seeing for the last 20 years or so. The level of debt, both private nad public, has reached a saturation point, and the only way the system could expand was the pool of borrowers, thus the "sub-prime"mortgages and it's variants, along with such things as credit cards being sent to your dog, 60 month (or longer) car loans,, home equity lines of credit, etc. At some point there is a "tipping point" where the system can no longer sustain the debt it has created. The result of that is defaulted loans, bank failures (as outlined in my earlier post tonight), and loss of confidence in the banking system. The final act, a run on the banks and the failure of the banking system, was the root cause of the Great Depression, a fate we have so far avoided, but it hasn't been without it's costs. there has been a massive shift of private debt into public debt, and while it has saved thee banking system for now, in the long run it threatens the stability of governments all over the world.

I hope I have not over simplified this,  as I am no expert on the subject, but the more I delve into it, the more it seems that what happened in 2008-2009 was inevitable, and there can be a case made that it was no accident, and the more it seems likely it will happen again. I plan to do more on this in the future to see just how far this rabbit hole goes.

Bank Body Count

In a surprise move, the FDIC took over 5 banks, despite this being a holiday weekend. They were:
 
  - Bank of Florida-Southeast, Florida
  - Bank of Florida-Southwest, Florida
  - Bank of Florida-Tampa Bay, Florida
  - Sun West Bank, Nevada
  - Granite Community Bank, California

The 3 Florida Banks were all subsidiaries of the Bank of Florida, BOFL on the Nasdaq, which dropped 60% after hours on Friday. That brings the 2010 bank body count to 78.

Earnings Schedule This Week

Here is what I have so far for this week's earnings schedule. Unusually, I have nothing on the relative strength list scheduled. HWKN is probably not reporting tomorrow. I will try to update this as I get more accurate information.

Earnings Growth Charts

There were only two stocks on the earnings list reporting last week, and I did not have much time yesterday to do any changes to the charts. From top to bottom the lines represent: red-EPS growth rat, black, revenue growth rate, red, EPS, black-price, blue-price relative to SPX. The black bars on the bottom are volume.





First up is TLVT, which I do not have current revenue data on. EPS grew this quarter, but at a very low rate. The acceleration came due to the negative growth last quarter. This appears to be losing it's status as a high growth stock, but an interesting point here is that price is sitting right about on the pivot point from the 2008 high. This is a Spanish IT company, and from what I have gathered in the news, the growth prospects in Spain are not very high right now,





DMND has been pretty consistent and has shown flashes of high growth. This is a prime example of the proper use of "operating earnings": it's GAAP earnings this quarter were -.22, but that was due to buying out another company (apparently a cash transaction, which hit the bottom line). However, the operating earnings, when you backed out the acquisition costs, were .30, so I went with that. Revenue growth supports the earnngs growth, so in this case the use of operating earnings is not meant to pull the wool over investors eyes, unlike some other companies (cough...AAPL...cough).

Saturday, May 29, 2010

New Leadership Scan

Ticker Price as a % of 52 Wk H-L Range Return on Equity 50-Day Simple Moving Average 20 day v/ms
MED 85.4 0.3 0.06 109.09
NFLX 98.41 0.51 0.22 73.4
AAPL 87.52 0.34 0.04 35.16
LULU 87.6 0.3 0.01 33.58
VRX 86.83 0.75 0.06 31.11
MELI 91.23 0.34 0.05 26.53
CMG 98.92 0.2 0.1 22.83
IPXL 100 0.68 0.15 22.6
RKT 85.99 0.31 0.05 21.68
PRX 96.62 0.18 0.05 19.59
CTRP 99.13 0.21 0.04 18.17
ALGT 89.3 0.25 0.04 17.38
COH 91.68 0.43 0.01 16.52
DTV 98.48 0.35 0.05 14.25
DLB 94.09 0.19 0.07 14.01
LL 87.83 0.21 0.03 13.46
SCL 87.32 0.28 0.09 13.18

I ran a new leadership scan tonight and came up with 17 stocks that are pretty qualified. I sorted by 20 day volume per millions shares and took the top 10. Since we have a long weekend, I may play around with this a little more and see if I can come up with a method I can use on a permanent basis. I am also going to check other scanners, such as Yahoo, to see if I come up with much different stocks. I'm not sure the data from Finviz is all that up to date or accurate, and I want to double check it against other sources. Another thing I want to do is come up with an easy way to integrate the last one or two quarters' earnings growth into the scan, but so far have come up with nothing.

Earnings Summary

I had only 2 stocks from the earnings list reporting last week, TLVT and DMND, both reporting a quarter of accelerating growth.


All spreadsheets have now been updated. I had to delete some data from the third page of the relative strength spreadsheet to get it to load, so if you want to enter them into a screener, the first column of tickers are from Zacks, the second column from Finviz (most are the same, but something like MOG.A in Zacks is MOG-A in Finviz).

Relative Strength By Industry

We had quite a few stocks move back up into the relative strength range (the top 25% of the 52 week prce range), so I expected a lot of groups to move up as well, and that was the case. Here are the top 10 groups that increased over last week in the percentage of stocks within the relative strength range (note that already strong groups, such as those that had 90% or more last week, won't appear on this list).


Here are the 10 groups that had the biggest declines over last week (here again, already weak groups will not appear here).


Here are the top 10 differences between the 4 week and 10 week averages. Note that there are only 2 groups still trending up.

These are the bottom 10 differences between the 4 w and 10 w. More complete data is available on the spreadsheet, which will be uploaded later today.

Relative Strength Scans

Here are the results of this week's relative strength scan. This week I had about 1350 stocks in the relative strength range, almost double what we had last week. The left 3 columns are the stocks retained from last week's list, the middle 4 are the new stocks this week, and the right 4 are the stocks from last week that were removed. Once again we have higher than average turnover.

The spreadsheet will be uploaded later today.




Retained

New


Off


AAPL FNSR RBCN ADI CNQR HST SFI ABC DE LNCR RNR
ADS GCI RL AEZ COLB IAG SHOO ACTG DSW LOCM SBUX
AEC HAIN RMD AHT CPY INTU SIVB AFFY DTV LOPE SCL
AIZ HAS ROVI AIV CREE JWN SKS AIRM DVA LWSN SCSS
AM HRC SAM ALB CROX KERX SLW AKAM EE LXK SCVL
AMMD IDC SLE AMCC CRR KSU SLXP ALK EQR LXU SFLY
APKT INFA SLG AMD CTB LBTYA SWKS AXE ESL MAA SFSF
ARUN IPXL SM AN CTRN LM TEN BBBY ESRX MAC SHW
BC KEI SNDK ANN CXO LTD TGB BRE EXR MANH SKX
CBPO KFN SPRD ANV CYN LVS TGH BTN FAF MCK SMA
CGX LCC TDC ARE DAN M TIF CAG FDO MD SNI
CMG LGL THG ARM DDR MCRL TRW CATM FRED MDAS SNIC
CNL LOGM THOR AVB DEI MED TTC CBL GIII MFB SUI
COF LULU TIBX AXL DKS MHR TTES CBOU GSIC MIPS SVVS
CRM MBLX TIE BDL DOW MOLX TXT CEVA HGG MJN TEG
CRUS MELI TJX BEXP EDAC MSPD UA CLW HMIN MOH TK
CSTR MGA TLAB BID EPR NANO UNM CLX HNT MTB TORM
CTIB NFLX TREX BRCM EWBC NEM URBN CMP HRL NAV TPX
DCTH NGD UHS BRY FIS NVLS VIT CPEX ILMN NP TSCO
DDIC NPO UPI BXP FMC NWL VMED CPLA INCY OKSB TWTC
DDS OC VCI BYD FORD PACR VSI CRI IR ORLY UDR
DFT OMX VMW CAL FOSL PKI WERN CSL IRBT PERY VPHM
DGIT OPEN VRSN CAP FULT PLCE WES CTSH ISLN POL VTR
DLB OSTK VRX CAT GBX PLT WHR CVGI JLL PRAA WAL
DLTR PII VVUS CAVM GNW PPO WLL CVLT LCUT PRGO WPI
DPS PRX WFMI CBS GTIV PWER WYNN CVTI LEG PRGS WRB
EGO PXD WSM CLP HCN RKT XL CYH LEN PTP YSI
ESS QSFT XEC CLR HLF S
DAL LH REGN
FFIV R
CMI HME SANM
DBRN LMIA RMBS

IBD 100

The action of leading stocks, particularly the IBD 100, is leading me to believe, at least so far, that this is a bull market correction rather than the beginning of another bear. Many are holding up very well, and a few are breaking out, although the breakouts so far have been weak. APKT, last week's biggest gainer on the IBD 100, is one such breakout. It is probably premature, but it is a sign that it is not being targeted for selling. Here is another case of a rising price relative during a price consolidation. as is typical of most charts I have been looking at, ATR rose sharply and is now flattening out, indicating higher than normal volatility. Buying breakouts at a time like this is very risky, but if you are the risk taking type, there are several buy candidates among leading stocks, this one being one.



SAM was the second biggest gainer. This was one of the stocks affected by the flash crash, trading as low as .01, but apparently those trades have been cancelled, thank God, or this chart would be unreadable. The blew arrow is last Friday's candle, which happened to be it's most recent bounce off the 50dma,  Since then the price relative line has nearly gone straight up. This has also had a huge increase in average daily volume, another bullish factor in a leading stock.

VECO was last week's biggest decliner.  This is just the opposite, a big increase in average volume right after it peaked. If the break of the 50dma wasn't enough to scare you away from this, and you bought the dips, well, you're probably not very happy right now. This may be finding support somewhere down here, but I'm not counting on it.



AIXG was the second biggest decliner. This must have awfully good fundamentals, because a chart like this is just not IBD 100 material, It began the week well under the 200dma, and is now even farther below it. Price relative hit a six month low on the most recent swoon, something you don't see very often..

One thing of interest I saw in IBD this morning: historically, June and July have not had a succussful follow through days in the last 10 years (as I recall last year, the market had never been declares "in correction" when it reversed in July, thus no follow through day). August, however, has had 4 in the last 10 years.

Friday, May 28, 2010

Friday New Highs

There were 44 new highs today, here is the list.


These are the high volume advancer and decliners from the relative strength list.

Ticker Relative Volume Change
Ticker Relative Volume Change
HGG 3.68 3.55%
AEC 4.85 -1.15%
DFT 2.79 1.07%
OKSB 3.65 -0.64%
APKT 2.65 3.42%
DLB 1.72 -1.06%
SAM 2.58 3.85%
TDC 1.65 -0.19%
ESL 2.39 4.50%
AIZ 1.63 -1.70%
VVUS 2.07 4.80%
GSIC 1.59 -0.81%
SPRD 2.03 1.04%
FFIV 1.53 -3.95%
INFA 1.96 0.31%
TREX 1.53 -4.25%
DVA 1.88 0.41%



VCI 1.8 2.47%



REGN 1.76 2.40%



XEC 1.72 1.42%



LWSN 1.72 0.06%



ORLY 1.64 0.69%



SM 1.63 1.36%



TEG 1.61 0.18%



NFLX 1.5 2.10%




I will have a complete earnings summary this weekend. have a good long weekend.

Friday Weekly Charts

We had not one, but two reversals today, one early in the afternoon after a brutal morning, which brough us back to near even, then a last minute drop of breathtaking proportion. Volume, as expected, was light going into the holiday weekend, so just about anything could have happened, and it did. I thought 1090 would be an  important technical level, but little did I know that we would be sitting right on it at the close. The 200dma is now pretty clearly resistance (the exponential average is at 1101, the simple at 1104). The 20dema, which was what stopped the last bounce, is now approaching a crossover of the 200, and  the 50dma has turned down.  We could get a lot of volume on Tuesday, but it is also possible the big money boys are just going to let the market thrash around until after Labor Day. Either way, I don't see the likely hood of another V shaped rally very high, but I'll be ready just in case.


On the weekly chart, the situation does not actually look that dire. We have a pretty well established range, with 50 point steps between 950 and 1150, with an outside possiblity of reversing here with a target of 1250. So far 1050 has provided support, but a protracted correction could take us down to 950, which, ironically, is the most bullish scenario. A correction that deep that lasts until, say, September or October will gve leading stocks a chance to build well formed bases, form which another bull move can launch. A V shaped move from here will probably move us up to 1250 or so before another collapse. Of course, there is always the possibility that we will go to 950 and not stop, but I won't contemplate that until we get there.


The Dow industrials are in much the same boat, but even weaker. Nobody pays any attention to it other than CNBC, so it probably doesn't matter.


The Nasdaq is the leading index, and is in a more bullish position, having successfully (so far) tested the 40 week moving average, and is within spitting distance of it's previous high. However, that previous high is almost exactly where the 2008 high was, which could mean serious resistance.Stochastics and MACD have both strengthened a bit, but there is still downward momentum, so unless proven otherwise (such as with a follow through day) I have to assume this is a bounce.


The Russell 2000 also equaled it's 2008 high, so this should have resistance there. this barely touched the 40 week line before moving back up, so it does have strong support there, and came nowhere near undercutting the February low.


The Dow transports have probably been the strongest of the indexes, for reasons I can't fathom. The 40 week line has served as a launching pad for big moves twice in the last year, and so far it hasn't given us a reason to believe it won't again, and has plenty of room to move before it challenges it's 2008 high. Right now it is airlines, but I wouldn't be surprised to see the truckers or railroads pick up the slack if they falter. If oil continues it's latest collapse, these could really take off.

We are So far in the midst of a long awaited correction, but there is still the possibility of a reversal here and another move up.  There are a huge number of possibities, from a 4-6 month W shape, another V shape, or an outright bear market, or even another visit to that devilish 666 on the SPX, and frankly, none of them will surprise me.

I will have the new highs update shortly.,

OVTI

OVTI had a lot going for it: reporting earnings, big volume, and a strong price relative line, but it formed the dreaded black candle and the breakout failed, This is fairly typical of a lot of the charts today, and may be an indication that the market isn't quite ready to start moving higher yet.

HGG

HGG tried to break out of a pattern which looks like a double bottom on a daily chart, but is probably too short to be a proper dowble bottom. It did poke out to a new high, but ended up closing below the breakout point. Volume was a bit of a disappointment for a breakout attempt, but price relative is very strong, so if we do get a follow through day next week, this one may be one of the first to break out.

DWCH

Not exactly my idea of the "breakout of the day", but at least it succeeded. DWCH barely gets volume at all, and even the recent "surge" has been less than 100k shares a day. It sure is funny how the support and resistance levels line up so well even on a thinly traded stock, and how the price relative line stayed high even with the recent volatility. This is way to thinly traded to contemplate now, but it might be one to keep an eye on if the recent increase in volume keeps up.

Today's Leading Industry

Today's leading industry is savings & loans, a 118 stock group which has most of them in positive territory today (my bandwidth problems have come back, so I am only uploading one chart). Most of the group are microcaps, under $100 M, but with so many up on the day, and weakness everywhere else, this group is leading. the relative strength by industry data, now a week old, shows a very weak group, which at it's peak had only 40% of the group in the relative strength range, and with the ongoing correction, it is collapsing.

Market Leadership

Ticker 50-Day Simple Moving Average 52-Week High Change Volume
CMG 10.56% -4.18% -0.94% 324597
DLB 7.03% -5.13% -0.87% 306390
DTV 5.31% -2.22% -0.78% 3180550
IPXL 15.35% -2.42% -1.29% 281370
MED 7.90% -16.66% -2.24% 323409
NFLX 21.34% -7.82% 1.19% 2830314
PRX 4.84% -4.07% -0.18% 152133
RGR 6.52% -11.74% -3.25% 119358
SCL 9.90% -8.63% -1.89% 33450
VRX 6.17% -7.32% 1.26% 546650

Here is today's look at the market leadership. There are only a couple up on the day, but all are still above the 50dma. Several of them are in bases and appear to be getting ready for breakouts, so if we do get a follow through day nest week, those will be the ones to watch for.

Here is a link to the charts.

Breakout Candidates

Here are the top 4 relative volume breakouts so far today. OVTI and HGG are on earnings, I don't know what the other two are.

Friday Morning Update

It looks like we can expect a relatively quiet day going into the long weekend. Yesterday's late breakout was given back right at the open this morning, as it appears that the 200dma is going to put up a fight here (it is located at approximately 1104. 1090 appears to be the clear pivot point, and is probably going to be today's most important level, and 1076 is the bottom of the range, but I don't think we will be spending much time, if any, below 1090. XLU is the strong sector today, followed at a distance by XLP. Leading to the downside are XLE and XLF. Despite the market weakness the Nasdaq and Russell 2000 are both leading, which could signal a reversal coming later. I have oil up slightly, gold down slightly, but those are delayed quotes. The Dollar index is strong across the board. Treasury yields gapped down this morning, then staged a fill in the gap rally and are now about even. So far there is no sense of a real direction, and with low volume we will probably wander around near flat most of the day.

I have 28 new highs so far, with breakouts in KFED, OVTI, CCIX, ULTA, XEC, and BJ. There was nothing scheduled to report today, but last night we had ESL, up 3.8%, UPI down 0.2%, and DMND up 4.4%.

Thursday, May 27, 2010

Thursday New Highs

There were 38 new highs today, here is the list.



These are the high volume advancers and decliners from the relative strength list.

Advancers


Decliners

Ticker Relative Volume Change
Ticker Relative Volume Change
DGIT 9.4 1.71%
LOPE 3.18 -3.05%
REGN 4.07 1.86%
RMBS 2.68 -5.58%
LGL 3.66 9.63%
CBPO 1.68 -0.37%
SPRD 3.3 8.95%



DFT 2.8 4.42%



QSFT 2.79 6.61%



AEC 2.63 3.66%



CSTR 2.33 4.38%



DLB 2.31 4.91%



OPEN 2.29 5.46%



CRUS 2.22 4.44%



HGG 2.21 8.87%



VCI 2.14 7.06%



CBOU 2 6.80%



KEI 1.96 5.08%



GSIC 1.9 6.37%



TREX 1.75 6.07%



DBRN 1.74 4.51%



CBL 1.67 8.83%



IRBT 1.66 7.77%



APKT 1.63 6.38%



R 1.63 3.01%



MTB 1.62 1.44%



IPXL 1.61 5.42%



PRGO 1.6 3.68%



RNR 1.59 3.72%



MGA 1.59 2.55%



DVA 1.56 4.31%



TSCO 1.54 5.88%




After the close we have reports from DMND, up 4% after hours, UPI down 1%, and ESL up 6%.
 I have nothing scheduled for tomorrow.\

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