Monday, May 12, 2008

One Earnings-Related Play for Tuesday Plus a Few Other Nice Charts

As I said earlier, the S&P 500 bounced off of its support nicely today. My only worry is that this pattern looks like a bearish wedge pattern as it gets more and more narrow, and volume is declining as price increases. These are not good characteristics to see if you are hoping the market moves much higher. Let's see what tomorrow brings - hopefully some volume. On a good note, the small caps look like they may be ready to break out a bit here - the 200 day moving average looms ahead for them as well, however.

S&P 500, Russell 2000Charts from Telechart2007, Courtesy of Worden Brothers, Inc.

Here are some of the charts I went with today. The first, FSYS, may be a nice earnings-related breakout based on after-hours action, and their earnings release was impressive. Earnings per share were up about 500% ($0.40 vs. $0.07) and they beat the estimates by over 100% ($0.40 vs. $0.18). Revenues were up 73% y.o.y. ($94.6 mill vs. $54.8 mill) and they also raised their guidance. Fairly small float at 15.5 million shares outstanding. I did enter this after-hours and we'll see what tomorrow brings. With my recent luck, it will probably gap down two bucks. The only reason this isn't an absolutely perfect earnings play is because this stock is already up a lot over the past few months - ideally, it would be moving sideways when this earnings news hit. Watch out for CFSG as a possible earnings play as well tomorrow - I don't know how it will react. EXM is one that is going to stick with me in a bad way - I don't know why I set my stop so tight - mainly because of the overall market. Typical mistake I make getting rid of stocks too early.

FSYS, EXM
PSEM, XIDE
DGLY, RCH
Charts from Telechart2007, Courtesy of Worden Brothers, Inc.

Here are some charts to watch for tomorrow. Both MA and V look nice here - I though long and hard about buying some V today. I see a lot of other charts setting up as well or possibly breaking out - EW, KDN, WGOV, TDY, MATK, LUFK - but don't want to post them just because their fundamentals are only good - I want to try and focus on finding only the companies with tremendous growth. These stocks may work here as well however if the market does head higher.

MA, V
NGA, RICK
AUTH, DECK
MORN, SDTH
Charts from Telechart2007, Courtesy of Worden Brothers, Inc.

This continues to be a confusing market. Even though we haven't had above-average volume on the S&P 500 since March 20, there are still many stocks that are moving. Going through my main watchlist, I continue to see stocks going higher. Look at GEOI, SOHU, ENER, PDO, JST, VISN, SNHY, TTES, VIT, ISYS, ARBA, TBSI, and CSIQ from today. All continue to put in nice gains. I wish I was in more of them - none of these are stocks I haven't watched. So there is some money to be made out there - it certainly isn't easy however. Keep watching those support levels from last week and pay attention to how the indices act as they approach the 200 day moving average for a second time. As always, watch for volume as well. Best of luck Tuesday.

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