Friday, April 2, 2010

Weekly market report

Ever weekend on Financial Tides we do a market wrap-up. It's not the weekend yet but since the market is closed for the Good Friday holiday my weekly market barometer report is a day early. I use the data on Barchart to find objectively what happened in the market. I use 3 different yard sticks because over the years I've found that no single indicator is 100% effective all the time but if you look at the market in several logical ways you might be able to look past all the headlines and figure out for yourself how to approach your investing in the future. Let's see what my yard sticks reveal.

Value Line Index -- Contains 1700 stocks so it's much broader than the S&P 500 or the very narrow Dow 30 -- Positive price momentum
  • Up 3 days out of 4 for a net gain of 1.16% last week
  • If the Index were a stock it would have an over all 88% Barchart buy rating, hitting buy signals on 11 of 13 technical indicators
  • Hit new highs in 12 of the last 20 trading session and 3 for 5 recently
  • 30 day price appreciation of 6.91%
  • Tracking above its 20, 50 and 100 day moving averages

Barchart Market Momentum -- Approximately 6000 stocks -- Percentage of stocks trading above their 20, 50 and 100 day moving averages -- Above 50% always good -- Market improving

  • 20 DMA -- 64.97% closed above -- 65.03% last week
  • 50 DMA -- 82.49% closed above -- 79.08% last week
  • 100 DMA -- 81.61% closed above -- 78.77% last week

Ratio of stocks hitting new highs to new lows for various periods -- 1.0+ bullish, 1.0 neutral, below .99 bearish -- Bullish for all 3 time periods

  • 20 day ratio of new highs/new lows -- 1362/501 = 2.72
  • 65 day ratio of new highs/new lows -- 856/147 = 5.82
  • 100 day ratio of new highs/new lows -- 794/109 = 7.28

Next week's investment strategy -- A rising tide floats all boats. It's easier to have a portfolio of winners if more than 50% of the stocks are rising than it is to find winners when more than 50% of the market is sinking. Just a little common sense. Next week I'll prune out the stocks that aren't maintaining a price above their 50 day moving averages and won't be afraid to replace them with rising stocks.

Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email

Wednesday, March 31, 2010

Here's looking at Time Warner Kid

In my Wall Street Survivor portfolio I had to clear some deadwood. GOL Linhaus Aereas Inteligentes SA ( GOL ) and Cytori Therapeutics ( CYTX ) just quit performing the way I wanted them to. Both have dropped below their 20, 50 and even 100 day moving averages, so they have no place in my momentum based portfolio.

I wanted a large more stable company for my portfolio so I used Barchart to screen the S&P 500 stocks having the highest relative strength and Time Warner Cable ( TWC ) was near the top of the list. It has been a long time since I looked at cable TV companies and thought of them as just a simple utility company where you take the number of subscribers times the monthly rate and there you have revenue. Things have changed.

I looked at my own TWC bill and discovered that I now have HDTV, Internet, phone, equipment rentals and some extra pay for view movies on the bill. My wife has been paying the bills so I didn't realize my old bill of $24.95 has grown to a base of $165.00 per month plus some extra movie charges. 15 years ago I hadn't imagined all the bundled services I'd be using. Not a simple revenue model anymore.

Since I' m a victim of their revenue model I wondered how the investing numbers looked.

The stock has enjoyed a 13.45% price increase in the last month and hit new highs in 9 of the last 20 trading session and was 4 for 5 recently. I looked at the technical indicators on Barchart and there were 13 out of 13 buy signals for a 100% technical buy rating.

Checking in with Wall Street, 15 buy and 9 hold recommendations have been released. They estimate level but slowly growing sales of 3.9% for both this year and next. They have a brighter prediction of increased earnings per share with an increase of 14.4% expected this year, followed by 13.5% next year and a 5 year annual EPS growth rate of 8.28% forecasted.

Investor sentiment on Motley Fool is high with the CAPS members voting 157 to 36 that the stock will out perform the market with the All Stars in agreement 53 to 5. Fool noted that the Wall Street columnists they follow have written favorable articles by a count of 17 to 0.

My stock replacement has:
  • Increasing price momentum with technical support on Barchart
  • A solid Wall Street backing with increases in earnings projected out for at least 5 years
  • Positive investor and Wall Street columnists sentiment.

The stock is selling around 53.72 with a 50 day moving average of 47.

I'm adding Time Warner Cable (TWC) to my Wall Street Survivor portfolio but before you consider adding the stock to your portfolio please do complete due diligence. Every investor and portfolio has unique needs.

Jim Van Meerten in an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email

Disclosure: I do not hold a position in TWC at the time of publication

Tuesday, March 30, 2010

How to find the best of the best

Once in awhile on Financial Tides I like to look at the best of the best. Value Line has used this trading strategy for years and it seems to have worked well for them. Their theory is if you pick the most timely stocks in the most timely industries you should do better than the market. These days I have a different way of locating the best of the best.

I look at which sector ETF hit the most new highs in the last 20 trading sessions and then analyze the stocks in that sector. This month the Powershare Aerospace and Defense ETF (PPA) hit new highs in 15 of the last 20 trading session. After screening the stocks in that sector I see that Boeing (BA) and General Dynamics (GD) have had the greatest price appreciation over the last 5 trading sessions.

Are these stock worth adding to your portfolio? Let's see how they stack up on a side by side basis:

Boeing (BA) hit new highs in 10 of the last 20 trading sessions and appreciated 14.56% last month. It has a buy signal on 12 of 13 Barchart technical indicators for a 96% buy rating.

Analysts have 12 buy, 12 hold and 4 negative recommendations published. This year sales are estimated to be down 4.8% but up 6.6% next year. Earnings are expected to increase 116.0 % this year, 12.1% next year and 8.33% a year for the next 5.

On Motley Fool investor sentiment is that the stock will beat the market by a vote of 3,489 to 373 with the more experienced All Stars in agreement 917 to 53.

If I use the same criteria to evaluate General Dynamics (GD) I find:

GD hit new highs in 7 of the last 20 session with a 5.03% price increase last month. Barchart has 12 of 13 technical indicators signalling a buy for a 96% rating.

Analysts have 14 buy, 7 hold and 1 sell recommendation published. Sales are expected to increase 6.1% this year and 3.9% next year. Earnings are estimated to increase 5.6% this year followed by 7.3% next year and maintain a 7.8% per year growth for the next 5 years.

On Motley Fool the CAPS members think the stock will out perform the market by a vote of 1168 to 51 with the All Stars in agreement 327 to 12.

Both companies have:
  • Recent price momentum
  • Positive analysts recommendations
  • Investor sentiment that the stock will beat the market

The numbers of the 2 companies are not really that much different but there seems to be 3 times as many investors willing to commit to BA than to GD.

I'm not making a recommendation either way but I thought I'd like to share with you an alternate way to find the best of the best:
  • Start out with what you think is currently the strongest performing Sector ETF
  • Look for the best individual stocks in the sector
  • Decide to go with the sector or the individual stock.

I'd like to hear your ideas on this approach. Please do your own complete due diligence to make sure you are comfortable with your selections.

Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email

Disclosure: I do not own any of the stocks mentioned.