One New CANSLIM Long Position, Two New Speculative CANSLIM Long Positions, Two New Speculative Long Positions, And One Stock I Am Adding To My Existing Position

September 20, 2007

new CANSLIM long position: HLF

HLF is breaking out of an odd shaped cup with handle pattern, on strong volume. After putting in an insane bottom in January, HLF rallied higher ever so slowly until July where at the end it put in a short term top with green BOP and accumulation finally entering the chart again. The stock started its base on very low volume and, like most stocks in August, tested its 200 day moving average on strong volume. It succeeded and rallied higher for a few days before it started to create a very low volume handle. Now the stock is breaking out of this very nice handle on strong volume and with green BOP ticking to a higher green area confirming the buying. The RS line is also hitting a new high with the stock price, confirming the move. The fundamentals are very strong, with EPS growing between 26% and 273% the past eight quarters, sales growing between 11% and 25% the past eight quarters, a ROE of 59%, cash flow of $2.57 a share, 51% debt, a 46% EPS growth rate, an SMR rating of A, an EPS rating of 92, and YOY earnings estimates for 2007 and 2008 for gains of 27% and 16% respectively. There is also a solid 1.8% dividend that comes with owning this stock. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.

new speculative (one to three quarters away) CANSLIM long position: JASO DCO

JASO is breaking out from a cup with handle pattern, on very strong volume (and yes I know what happened AH). This stock has been acting perfectly since its IPO. Shortly after the IPO, this stock took off, in April, when a ton of accumulation entered the market sending BOP from green to max green. That was the beginning of this nice chart’s setup. Eventually it put in a short term high in July and pulled back on low volume creating a cup pattern. After making a short handle here in September it is now breaking out to new September highs on strong volume. I do know that it lost all of its gains after hours and I can only tell you that that just gives us a better price to enter the stock. The 50 day moving average is the cut loss area anyways, so it should be looked at as a bullish setup for our stock. The fundamentals are strong and are expected to get much stronger, with EPS growing between 320% and 999% the past five quarters, sales growing 999% and 399% the past two quarters, a ROE of an AMAZING 102%, 0% debt, an SMR rating of A, an EPS rating of 75, and YOY earnings estimates for gains for 2007 and 2008 for gains of 197% and 43% respectively. Fund ownership has grown from 18 funds to 31 funds during the past two quarters. That kind of fund growth in an IPO is a clear showing of HUGE interest in this story. Besides the huge fund growth, management owns 44% of the shares outstanding. So obviously they have a financial interest in making sure this stock continues to grow with those amazing numbers. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.

DCO is very close to breaking out of an odd shaped cup with handle pattern and bouncing off recent support near the 50 day moving average, on extremely large volume. This has been a very strong stock off the 2006 lows, minus the end of April, and is recently coming back in great form. After putting in a short term top in April after a huge run up on very heavy accumulation and max green BOP, the stock started forming a base finding support at the 200 day moving average. After initially rising on lower volume, it eventually succumbed to heavy volume selling and undercut the 200 day moving average. However, it snapped back right above both the 200 and 50 day moving average on even higher volume. That is a very bullish reversal. After the great reversal, the stock has been climbing higher on very strong accumulation and green BOP. Now, as the stock nears a breakout, it is creating a beautiful handle, on green to max green BOP, that is being made on very low volume, besideds today’s strong move. The fundamentals are good and are getting better, with EPS growing between 37% and 78%, sales growing between 6% and 44%, a ROE of 8%, a cash flow of $2.35, 16% debt, an EPS growth rate of 2%, an SMR rating C, an EPS rating of 77, and YOY earnings estimates for 2007 and 2008 for gains of 19% and 19% respectively. Fund ownership has grown from 35 to 44 funds the past four quarters, showing that institutional quality funds are still attracted to this company’s story. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.

new speculative long positions: CATS GNK

CATS is very close to breaking out of a base on short base pattern, on above average volume. This stock started to gets its act together in December of last year and began a very strong uptrend in March. The uptrend really picked up steam in August as volume surged and BOP went max green. During the pullback, the stock’s price acted perfectly, staying very tight and showing intraday support almost every single day. Normally, a lot of volume in such a tight base would be bad but something tells me that the tight price action, with positive intraday action, a strong right side the past three days, and all the green to max green BOP is going to be a bullish scenario for this stock. If it isn’t, we have a game plan to limit the damage. Unfortunately, the stock’s fundamentals are not nearly as nice as the stock’s chart. EPS has just turned positive with a 200% gain this quarter after five quarters of zero to negative growth, sales have grown from 14% to 30% the past three quarters, the ROE is 0%, the stock has 0% debt, a cash flow of $0.13 a share, an EPS growth rate of -27%, an SMR rating of D, an EPS rating of 49, and YOY earnings estimates for 2008 and 2009 for gains of 999% and 38% respectively. This is not the best stock to load up on as it is a very cheap (cheap for a reason) stock that has a moderately low average daily volume. If you do go long this stock, make sure you use some limit orders. Cut your loss with a close below the 5.55 level, if the stock does not move higher immediately.

GNK is breaking out of a cup with handle pattern and bouncing off the 50 day moving average, on above average volume. This stock has been in a powerful uptrend since July of last year. That uptrend has kept this stock above the 50 day moving average during almost the entire uptrend. Seriously, folks, that is simply incredible. After a very strong move higher on extremely strong volume and green BOP, GNK has pulled back into a cup with handle pattern. While volume was strong at the start of the cup you can see two days where there were very bullish intraday reversals on the two biggest volume bars in the base. The right side of the cup started slow but topped out on strong volume and the handle that followed was also on very quiet volume. After the low volume handle, the stock has now moved higher again on strong volume and green BOP. This base is a lot more volatile than previous bases but the Transportation-Shipping group is so strong and carries a group RS of 92 that the stocks chances of succeeding are still very high. The fundamentals are definitely worse than the chart, with EPS bleeding red ink again, sales growing between 4% and 14% the past five quarters, a ROE of 17%, a cash flow of $3.61, 59% debt, an SMR rating of A, an EPS rating of 23, and YOY earnings estimates for 2007 and 2008 for gains of 22% and 77% respectively. It isn’t bad, but it isn’t good either. At least the stock also offers a 4.1% dividend to go along with management still owning 15% of the shares outstanding. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.

adding to existing speculative long positions: ASYS

ASYS is breaking out of a cup with handle pattern and bouncing off the 50 day moving average, on very strong volume. This stock has been beyond beautiful since November, with the wonderful uptrend, on extremely strong accumulation, low volume pullbacks, and all the green to max green BOP ALL OVER this chart. This extremely pretty chart with all the green and max green BOP really took off in July with a huge move on extremely strong volume. That put in a short term top that allowed the stock to pullback on very quiet volume into a nice base where the stock found excellent support at the 50 day moving average putting in many bullish intraday reversals around that key moving average line. The breakout from the handle, today, came with a massive surge in volume and with BOP almost moving back up to the max green area. Hopefully, tomorrow, we will have max green BOP and another 10% gain. The fundamentals are nothing like the chart at all, with EPS growing 40% this quarter after two quarters of declines, sales growing 24% after a 3% loss last quarter, a ROE of 9%, a cash flow of $0.56, 4% debt, an SMR rating of C, an EPS rating of 46, and YOY earnings estimates for 2007 and 2008 for a loss of 7% and a gain of 114%. Fund ownership has grown from 9 to 11 funds the past four quarters, showing that quality institutional investors are gaining interest in this stock despite the poor earnings history. I don’t recommend loading up on this stock due to the inherent risk in it with a possible natural pullback to the 50 day moving average. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.