One New CANSLIM Swing Long, Two New Speculative Swing Longs With CANSLIM Traits, And Two Stocks I Am Adding To My Existing Positions

March 23, 2007

new CANSLIM swing long: SXC

SXC is bouncing off support, in the middle of a flat base pattern, on very strong volume. This chart has been in an overall uptrend since the July lows with the stock finding steady constant support at the 50 day moving average along the way up. All of the rallies are coming on very heavy volume (accumulation) while the pullbacks that follow happen on very low volume. BOP has been strong since the July lows, with it staying around the zero line, except for a short time in late December. Since the powerful move in January, BOP has been green almost the entire way since. Today’s strong bounce with a surge in price and BOP to max green, along with the overall price and volume action, makes this a very pretty chart. The move today appears to be a tip off of what will hopefully be a strong breakout to the upside. The fundamentals are very strong on this stock, with EPS and sales growth consistently increasing. EPS growth has been 47%, 6%, 13%, and 100% the past four quarters; sales growth has been 37%, 43%, 45%, and 19% during the same time. Fund ownership has increased from 48 to 56 funds the past four quarters. Even with this nice chart and fundamentals, this stock still is not the best for new emotional traders as the stock is very thinly traded and the final cut loss is a little over 10% away. The fact that the stock has not broken out yet puts its at a higher risk of failing. Cut your first loss with a close below the 26.92 level and your final loss with a close below the 25.44 level, if the stock does not follow-through and breakout immediately.

new speculative swing longs with CANSLIM traits: RC HOOK

RC is breaking out of a flat base with a shakeout and bouncing off the 50 day moving average, on very strong volume. This stock has been in a steady uptend since October last year and before that put in a nice base off the April lows. During that base to October, BOP was max green almost the entire way and managed to stay above the zero line most of the way. After the October breakout on a volume surge with BOP going max green again, the stock rallied into the short quick selloff in February. The stock quickly reversed finding support at the 200 dma and recaptured the 50 dma. Today’s breakout on a price and BOP surge, along with the overall action in this chart, makes this a very pretty chart. The fundamentals are good but not that great; EPS is a bit mixed but positive with gains of 440%, 999%, 7%, and 33% the past four quarters. Sales growth has ranged between 4% and 70% the past seven quarters. So this stock is not the best investment for weak emotional newbies as the avg. daily volume is very thin (only 10k average), the stock can be very volatile, and the fundamentals are good but still very mixed between growing and shriking. If you do go long this stock, cut your loss with a close below the 50 dma, if the stock does not follow-through on its breakout immediately.

HOOK is bouncing off the 50 day moving average, on very strong volume, after a low volume consolidation. This stock has been in a steady slow uptrend since 2001. Around November of 2005 the stock really started to see heavy accumulation on the upside with low volume pullbacks. This lasted all the way until the January top. During that uptrend, BOP stayed above the zero line in green to max green territory almost the entire way. The pullback in January was quickly supported near the 50 day moving average and the stock is now building a base that it appears it is starting to breakout of. BOP in the base blasted back up to the max green level, along with volume drying up, setting this stock up for more gains. Today’s bounce on strong volume with BOP going green again, along with this overall uptrend on strong volume, makes this a very nice chart. The fundamentals are very mixed, with EPS going negative again after just gaining 333% and 300% the previous two quarters and sales growing between 8% and 18% the past six quarters. This random action in EPS and sales, along with the low avg. daily volume (32k avg.) and illiquid nature of this stock makes this a poor long for emotional new traders. Cut your loss with a close below the 50 day moving average, if the stock does not follow-through immediately on this bounce.

adding to existing CANSLIM position: AFAM

AFAM is breaking out of a short flat base that can also be classified as a cup with high handle, on extremely strong volume. This stock has been in a nice steady uptrend since 2003. This uptrend, the whole way, has been filled with high volume price advances (accumulation) and low volume declines, showing plenty of institutional support out there amongst investors. The stock really got itself together in March of 2006. Then the stock broke out of a base on very strong volume with BOP going max green. After that strong uptrend, off of that move, the stock broke out again in November on a huge surge in volume with BOP going max green. The whole rally was just simply impressive, leading into the base from January to March. The base was built on very quiet volume and with BOP over the zero line. On the breakout in March, volume surged and BOP surged to max green again. This short base was created with another pullback in volume and with BOP still max green, giving more support that this breakout has a good chance of succeeding. Today’s breakout on a surge in volume with BOP staying max green, along with the overall chart pattern, makes this a very beautiful green chart. The fundamentals are really good also, with EPS growing between 29% and 150% the past seven quarters and with sales growing between 11% and 36% the past eight quarters. This stock is still, like all the others, a bit risky due to its average daily volume being under 100k a day (29.3k avg.) and the amount of volatility that is inherent in this stock by being a small-cap thin stock. However, there are clear lines in the sand to cut your loss. Cut your first loss with a close below the 24 level and your final loss with a close below the 50 day moving average, if the stock does not follow-through on the breakout immediately.

adding to existing speculative position: SOFO

SOFO is bouncing off the 50 day moving average, on very strong volume, after a very quiet consolidation off the December highs. This stock has been in a steady uptrend since the 2003 lows that has seen the stock go through some major periods of accumulation followed by low volume pullbacks. The two year long pullback between early 04 to early 06 had many high volume up days with very few days of distribution, giving the chart even a nice look on the pullback. The stock got its act back together in March of 2006, rallying on a huge surge in volume and a surge in BOP back to the max green area. After another low volume pullback in the middle of 2006, the stock took off again on strong accumulation and max green BOP, leading to the current pullback. Today’s breakout above the 50 day moving average on a surge in volume and a surge in BOP back to the green territory, along with this overall pattern, makes this a pretty chart. The fundamentals are not that strong on the earnings front, with nothing but red there. But sales have been growing between 18% and 120% the past eight quarters, giving some reason behind the higher stock price and possible future gains. The only thing bad about this stock is its lack of earnings. Besides that, everything else looks good. Cut your loss w/ a close below the 50 day moving average, if the stock does not follow-through on its breakout/bounce immediately.

One New CANSLIM Swing Long, Two New Speculative Swing Longs With CANSLIM Traits, And Two Stocks I Am Adding To My Existing Positions

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