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

February 27, 2008

WARNING: CEDC has earnings tomorrow, I believe in the AM. Therefore, newbies, go ahead and stay completely away from this as it is too extended. Instead, wait for a low volume pullback to the 50 DMA before going long. However, besides the earnings it is a very strong chart and the earnings are fantastic. I don’t expect the earnings to come in poor, but in this market anything is possible with the price. Even if CEDC beats and kills, it could still fall. But I play the charts, NOT the news. So I don’t care about the earnings coming up. What I will do is keep it much smaller due to the earnings. Therefore, I will buy half of what I normally would. STSI is in the Tobacco group which has risen from #121 to #36 in IBD’s 197 industry groups. This industry group FLYING up the industry group ratings is not bullish for the overall market as tobacco stocks ONLY lead during bad market. When you see the current leaders, along with this group starting to move higher, you know things could possibly turn very ugly. Therefore, keep these longs small and do not forget that cash is king, in this market!

new CANSLIM long position: CEDC

CEDC is breaking out of an ascending base pattern to a new all-time high, on very strong volume. This stock has broken out with a little gap higher that then saw the stock take off intraday on very strong volume with BOP going green. This has made the chart really nice, especially with the RS line zooming into new high ground the way it did. However, the move, overall, is odd considering it is a day before earnings. To see a stock move like this is either a leak and/or a big mutual fund or a group of them took what they could from the ask and bid the stock higher. So newbies should probably avoid this long and experienced active investors should keep the long smaller. If it can pullback on lower volume a bit (like 5%), I might look to add a full buy. Cut your loss with a close below the 50 day moving average, if the stock does not move higher immediately.

new speculative long position: STSI

STSI is breaking out of a short cup base, on strong volume. This stock took a long time to hammer out a bottom but it appears that it has finally done so as it is now breaking out of a nice little base. That creates the first set of higher highs in a long time. The move off the January lows came very strong volume with BOP going green sporadically. After putting in the highs in early February the stock pulled back on very low volume,with one day of strong accumulation, thus creating a very well formed base. To top it off BOP went green before the base started and stayed that way during the base. Now that the stock has broken out, BOP has moved slightly higher again. The only disappointing item on this chart is that the RS line is not hitting a new high ahead of price. Cut your loss with a close below the 1.76 level, 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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Comment by Juan Alcala Subscribed to comments via email

2008-02-28 15:42:16

Wow, Josh. Sorry, but I’m a newbie here and don’t know how appropriate it is to ask the obvious question regarding STSI. Sales have been plummeting for many years, from the many millions to now only hundreds of thousands. Is there some turnaround you know about to make a recommendation on this stock?

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Comment by MauiTrader

2008-02-28 17:08:12

It is the chart. This is a play on that extremely bullish chart. In the analysis I make it clear why I like it and why it is dangerous.

Obviously, newbies SHOULD NOT be going long. This is a play for people with a shitload of money that want to play a HOT chart in a HOT group. Very bullish intraday reversal in it today. The trade is long and strong. This is a VERY HOT SECTOR…EVERY SINGLE tobacco stock is going to rise in this bad market.

And Juan BEFORE there is EVER a turnaround with the fundamentlas, THE CHART IS GOING TO KNOW BEFORE WE DO. So the chart is saying it is a long now and if the stock does move alot higher we will then learn why. I will tell you why now. ITS INDUSTRY GROUP. A rising tide lifts all boats.

If you want quality in tobacco: BTI UVV MO UST

ALOHA Juan!!

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