One New CANSLIM Long Position, Two New Speculative CANSLIM Long Positions, And One New Speculative Long Position For Thursday’s Stock Market Session

February 20, 2008

There are three great CANSLIM long candidates for tonight and a great speculative long candidate for tomorrow’s opening bell. However, none of them are perfect as there is something wrong with all of them and therefore there is no need to load up on anything. CALM is a nice gift showing up the very next day after profiling it on Realmoney.com. The breakout is not the best and the most green but the industry group and the strong earnings along with the breakout are worth something. AUY is one stock that I have wanted to get long for over a month now, with the AMAZING EPS and sales growth, but the stock just doesn’t act perfectly. Hopefully, this move, will start to launch a powerful rally as the volume has been showing up on the accumulation side quite heavily the past six of seven weeks. AXYS is HOT HOT HOT and near-perfect when it comes to both fundamentals and chart quality. But the stock is very thin and the breakout has gone a little too far too fast to make it a safe large long. GTU is a gold closed end fund with one of the best looking charts I have seen for a closed end fund in a long time. Passing on this would be foolish, with gold stocks, gold futures, and gold bullion just exploding to the upside. This is a bullish market for certain stocks right now. But don’t get these four longs confused with the overall market. These stocks are just the best of the best. In a real bull market, the stocks look MUCH BETTER and there are more high quality candidates. For now, however, I will take whatever I can get and some of these are nice enough to be worth a good portion of the account. But still there is no reason to load up the portfolios in any one stock. Be careful out there.

new CANSLIM long position: CALM

CALM is breaking out from a base on base pattern, on strong volume. This is not the prettiest chart in the world but the stock is in the HOT HOT HOT Food-Meat Products group and the stock’s RS and moneystream line show how strong this stock is compared to the rest of the market. The fundamentals are growing at an incredible clip which is why the stock’s fund sponsorship has gone from 16 funds to 55 funds. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.

new speculative CANSLIM long positions: AUY AXYS

AUY is nearing a breakout of a base on base pattern, bouncing off the 50 day moving average, on above average volume. This chart is just like CALM in that it is not that pretty but it is a part of the metal ore group that has ZOOMED up the list of industry groups in IBD. This stock is easily the best stock in terms of quality with an EPS rating of 99, a composite rating of 99, A’s in every category that receives letters, and an RS rating of 95. That makes this easy to buy despite the chart not having really any green on it. As O’Neil said in the interview, as long as the stock is acting right, you buy a stock with HUGE EPS growth over a HOT HOT HOT chart. This stock is definitely a buy based more on the huge fundamental growth than the chart. But the chart is still very bullish rallying on strong volume and holding above the 50 DMA. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.

AXYS is breaking out of a long perfect cup base and bouncing off the 50 day moving average, on extremely strong volume. This is as close to a perfect chart as we are going to get in this market, I would assume. But, dang it, of course, it is too speculative to load up on as the stock is too far away from the 50 DMA in a rough, choppy market. If this was a clearly bullish market with stock indexes hitting new highs day after day on strong volume, this stock would be a “load up on the stock” kind of long. However, the 34,000 average daily volume stops that plan dead in its track as the stock has a chance of flying early in the morning and giving us a bad fill making it even more risky and more prone to a pullback to the 50 DMA. The green to max green BOP, huge accumulation, and great price action from early July to December helped set this stock up as one of the hottest charts in the current market. The pattern of a HOT chart was complete with today’s breakout. Now, what would have me loading up even with 34k average volume? Max green BOP from early July to now, huge accumulation, not a single day of distribution, and a breakout where the stock would have been up less than 10%. If that would have been the case, then sure 5-10% of the port could have gone. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.

new speculative long position: GTU

GTU is nearing a breakout to a new all-time high and bouncing off of support near the 50 day moving average, on extremely strong volume. This is a very hot chart in a very hot sector. The green to max green BOP, strong accumulation, and great price action with this gold trust fund. I especially love the price, volume, and BOP action since January as there is a ton of green on the chart with the stock finding excellent support along the way up ahead of the 50 DMA. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.

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Posted by Joshua Hayes | Filed Under Free Archives Longs

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2 Comments »

Comment by Felix Chapovsky

2008-02-21 12:11:30

Hey Josh,
Do you like think or swim? I am now with scottrade but after your post a few weeks ago I want to get out. I looked at interactive brokers but I don’t have $10k for the minimum to open a new account. Thanks for opening my eyes and getting me out of scottrade.

Felix

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Comment by MauiTrader

2008-02-21 14:18:17

i would go with:

them or mbt

tradeking or just2trade

i must plead the 5th on thinkorswin only because i do do not know that platform.

but you are very welcome!! Getting out of all brokerages that charge more than $5 a trade is ANOTHER goal of mine to do with my readers.

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