One New Very Speculative CANSLIM Long Position For Monday’s Trading Session

November 10, 2007

This market is no longer rewarding longs like it used to. The fact that FNDT and EXLS got taken to the woodshed yesterday proves that the time to go long has passed. I am not for sure that the bull market from the 2002 lows are over but I would not be surprised if it is. For the first time, that I can remember from the March 2003 follow through, there are no leading sectors that are taking over from an old leading sector. All the old-leaders have been hit and all the current big-cap tech leaders are now hit also. The last group remaining was solar stocks. And after the stunning move by FSLR, it appears the juice might have been squeezed out of these stocks as SPWR and JASO have put in very significant reversals. So, to sum it up, I do not recommend anybody going long stocks until you see me freaking out over how pretty the chart is and how strong the fundamentals are. Until we get a perfect looking chart setting up and breaking out from a proper base, I recommend staying away from longs. It has been an amazing five year run and this pullback looks much more vicious than the pullback in 2004, 2005, 2006, and in February and August this year. This pullback is hitting all the leaders and now there is nowhere to hide. R.I.P. bull market October 2002-November 2007. I hope I am wrong but to be honest a big fat bear is what we need to get the VIX at a level to where our new longs from hot pretty chart patterns will produce 300% plus gains in six months.

new very speculative CANSLIM long position: PHX

PHX is breaking out of a cup with handle pattern, closing at its HOD, on strong volume. There sure are not a lot of nice looking charts out there in the market anymore. Even the stocks with nice charts are suffering some major pullbacks. So it is a surprise to actually find a stock that has a nice base. This stock has been in a steady uptrend since its 1995 IPO but has recently started to move up more rapidly after going through a couple of splits (necessary because the average daily volume is only 6k a day).The stock started trading in a tighter and more liquid range after January this year when the stock started moving higher on good accumulation with periods of green BOP along the way. As it topped out in July it setup in this nice cup base that was made with the majority of it on extremely quiet volume–just what you want to see in a base. The only surge in volume in the base was a big up day in August that took BOP to the max green territory and kept it there for a while. The handle was create on very low volume and the BOP went green, helping make this stock look very nice. The RS line is leading the price to new high ground which should be bullish for this stock. The fundamentals are getting better, with EPS growing 36% the most recent quarter, sales growing 48% the most recent quarter, a ROE of 24%, a cash flow of $2.82, 2% debt, an EPS growth rate of 65%, an earnings stability rating of 99, a timeliness rating of B, a composite rating of 94, an Acc/Dis rating of B+, an SMR rating of B, and an EPS rating of 82. Fund ownership has grown from 6 funds to 8 funds the past four quarters, showing that there is some small interest in this story. But until this stock’s average daily volume increases the fund ownership is really not going to go very far. This stock is way too thin to be a long candidate for new investors/traders and experienced investors should use limit orders only for this one. If it gaps too much in the morning, you must wait for it to pullback or you must pass on it. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.

One New Very Speculative CANSLIM Long Position For Monday’s Trading Session

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