One New CANSLIM Long Position And One New Speculative CANSLIM Long Position For Wednesday’s Trading Session

November 27, 2007

new CANSLIM long position: EGN

EGN is bouncing right off the 50 day moving average, on strong volume. I really like this stock’s chart since 11/8 when the stock put in a very bullish “spinning top” candlestick pattern bullish session on huge volume with BOP going green. Since then the stock has pulled back very quietly to the 50 day moving average, with green BOP steadily growing to the potential max green BOP level, and the RS line has held up very well even making higher lows while the stock consolidated. The intraday support this stock has received, also, the past fifteen sessions has been very impressive in a market that has seen its high fair share of late-day reversals with some market sessions coming with the indexes closing near the LOD. Those slight bullish technical attributes is what will make the difference in this stock being a great long compared to a stock with weak closes that has a higher chance of failing. Obviously, if BOP was max green since the 11/8 move and the RS line was hitting new highs ahead of the price, I would be pounding the table on this one as it is a Utility stock which is a sector that does very well in weak markets. On top of the nice chart, the fundamentals are great, with EPS growing from 22% to 43% the past three quarters, sales growing between 1% and 45% the past eight quarters, an impressive ROE of 33%, a strong cash flow of $5.32 a share, 48% debt, an EPS growth rate of 31%, a timeliness rating of A, a sponsorship rating of C, a composite rating of 96, an Acc/Dis rating of B, an SMR rating of A, an EPS rating of 95, and YOY earnings estimates fro 2007 and 2008 for a gain of 32% and a loss of 3% respectively. Fund ownership has been growing the past three quarters from 145 to 150 to 155, showing increasing interest by the smart money. That can be directly contributed to the weakening market and rising EPS/sales. The stock also has a dividend yield of .7%, giving it just one more bonus to all the goodies it already has. If this stock fails, so be it, our cut loss is very close. However, I really like this stock in this horrible market and this will be my biggest long position since my failed venture into FNDT on 11/1. And that right there, my friends, should prove to you that the best traders wait for the right moments to go long. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.

new speculative CANSLIM long position: ELMG

ELMG is bouncing off support right near the 50 day moving average, on below average volume. This stock may not have any volume at this point in the bounce but with the stock closing right near its HOD it appears the momentum in this stock is going to take it higher tomorrow. By then we will probably see the volume come in. If not, as you will see, we have a very clear cut loss area. This chart has been very pretty since the May lows where the stock started an uptrend on strong volume with BOP going green. As the rally advanced, more and more accumulation entered the stock (you can see it increase on every price level higher) and BOP stayed in the green area most of the way higher. And when BOP did fall it only fell below the zero line a few times and never went red. With all the green BOP, heavy accumulation, excellent candlestick price action, low volume pullbacks, constant support at the 50 day moving average, and a strong RS line, it is impossible for me to pass up this stock when it is so close to the 50 day moving average. Not only is the chart very pretty but the fundamentals are quite strong, with EPS growing between 53% and 90% the past four quarters, sales growing between 10% and 23% the past seven quarters, a ROE of 6%, cash flow of $1.26 a share, 6% debt, an EPS growth rate of -3%, a sponsorship rating of B, a timeliness rating of A, a composite rating of 91, an Acc/Dis rating of B+, an SMR rating of D, an EPS rating of 76, and YOY earnings estimates for 2007 and 2008 for gains of 58% and 20% respectively. Fund ownership has fallen from 59 to 55 funds the past quarter, making me scratch my head wondering what they see that we don’t see. Since things are not perfect with this chart, there is no way I am going to make it a big position. However, I would hate myself if I passed up on this pretty chart and this stock ran to $50 in a few months without me. So I am definitely going to take at least 100 shares minimum. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.