Almost Family (AFAM) - 12-04-2008
I have professed my love for healthcare stocks in the past, and I still believe they’re good things to have on the watch list at least. Almost Family provides home health care services and AFAM, the stock, has been sitting atop the IBD list for a little bit now. Throughout the recent rough period, the stock has somehow managed to stay afloat, but I actually don’t think it can keep this up. I would normally be very bullish on the long term prospects of a stock like this, but I’m not looking too hard at the long term right now. As with all stocks that sit atop the IBD list for an extended period of time, this one will probably crash spectacularly at least once before it moves on to untold riches — that’s what forms double bottoms. And that crash is exactly what we’re looking for in this market.
Triggers
- Below $33 - short
- Above $50 - shift lower watch point up; consider long if this is after a lengthy consolidation and the market is better by then
Oil Bubble Popped
Back in June I talked about the oil bubble that was forming. That one turned out to be spot on, and as with most bubbles, the pop tends to push the oversold state to the extreme too. Once again, don’t buy oil against the trend since it could easily see $30 before it turns around. Demand is shrinking, but so is OPEC output and eventually they’ll find their sweet spot again. This is one industry where I wouldn’t mind trading against the general market direction, so at least it gives an interesting long that has potential to do something within the next couple years.
Triggers
- Breakout Above $80 - Long term buy
- Below $55 - Shift breakout points according to monthly trend line
99 Cents Only Stores (NDN) - 11-07-2008
NDN has been following all the discount retail stores, like DLTR and FDO, whose stocks have been doing quite well in the current economic crisis. The thinking goes, if people have less money they’ll go shop at places where they can get bargains. If you check out the numbers on NDN though, they haven’t done enough to justify bucking the market trend. Revenues are up a little, margins are horrible. Now is probably not the time to be attempting a retail expansion, and I don’t see anything in them that tells me they’re that much better than the average corporation under these conditions.
I don’t trade against trends, but if the industry gets more overbought this one should be an interesting swing trade in the down trend. Remember, look for industry trends and then look for the best candidates within that industry. In this case, wait for the discount retailer industry to hit the down trend and then look for the weakest company, NDN right now, to swing trade.
Triggers
- Below $10.50 - swing trade short
- Above $12.50 - shift lower watch point up
Mosaic (MOS) - 10-17-2008
This is another one where I’m looking at a group of stocks and not just MOS. Include AGU, POT, TRA, and any of the other hot agricultural stocks from the past year here too. After starting out good in 2006, then bumping up the slope in 2007, and then just exploding into 2008, these stocks have all gotten beaten back down to the ground over the past month. Maybe the drop will continue and you’ll be able to get in to this one at 20 again. Or maybe it’s already too cheap so it will consolidate here. Either way, this is definitely a sector to watch closely over the next year.
Google (GOOG) - 10-03-2008
Google continues their domination of the online search and targeted ad market, and it doesn’t seem like they’re going to get knocked off any time soon. With their recent forays into TV ads and mobile stuff amongst numerous other things, there’s still a lot of room for growth here. $500 has been a sticking point since 2006, probably largely due to the psychological resistance such a nice round number always produces.
There are two things you could watch for: a breakout over $500 as shown on the weekly chart or a break of the downward channel as shown on the daily chart. Currently that would mean breaking $460, but of course that will go down before the time to buy actually comes. Remember, patience is the key. Try to catch a falling knife and you’ll get hurt.
Apple (AAPL) - 10-03-2008
It’s probably time to start revisiting some stocks to update the trigger levels on the likely leaders for when the market reverses back upwards. AAPL has always been strong and seems to be a fan favorite, so I’ll start there. On the weekly chart there’s been some support/resistance around 115 that we’ve recently tumbled through. On the daily chart there’s been a big slide in September, followed by a couple of strong support days in the 120s, and culminating with the dive off the cliff, 18% loss day. To me, that currently means set an alert when the stock breaks 120, and start really looking hard as it fills the gap up to 130. Of course the broader market conditions should dictate what you do too. The next earnings call is at the end of October, so look to adjust these levels after that. If we’re lucky, there may be an extra 30% off sale in the near future.