Is the market starting to stall?

I love flying small planes. My first flying lesson was in a J-3 Cub at a grass field in Newberry, SC. Under the wing was a little horn that would beep if the plane was going to stall. When you heard the noise you had to make a quick decision: either drop the nose and apply power or let it stall and hope you didn't spin and lose control. The market is right in that stall warning place now and you have to make your decision: 1-- false alarm buy more on the dip, 2 -- tighten my stop losses and ride it out, or 3 -- the market is in a true stall and it's time top go short.

Let's step back and go through my standard weekly exercise on evaluating the market by using some of the data readily available on Barchart. Actually I do this every evening but just publish it once a week.

Value Line Index - contains 1700 stocks so it's broader than the S&P 500 or Dow 30 a lot of others use -- Not as strong as last week but still no sign of panic

• The Index was up 3 days and down 2 days for a net loss of .82% for the week
• The Index is still closed above its 20, 5o and 100 day moving average
• 9 of the 13 Barchart technical indicators give buy signals -- that's fewer than last week but still a 20% short term buy and a 56% overall buy rating

Barchart market momentum -- approximately 6000 stocks -- the percentage of stock trading above their daily moving average for various time frames -- still good but weakening on the short term

• 20 DMA -- 66.84% are trading above the DMA
• 50 DMA -- 78.96% are trading above the DMA
• 100DMA -- 82.97% are trading above the DMA

Ratio of stocks hitting new highs to stock hitting new lows for various time periods -- 1.0+ bullish, 1.0 neutral, below .99 bearish -- Still more new highs than new lows but weakening

• 20 day new high/new low ratio -- 872/569 = 1.53
• 50 day new high/new low ratio -- 545/75 = 7.27
• 100 day new high/new low ratio -- 423/52 = 8.13

Summary and my investing strategy for the upcoming week: The market is strong but not as strong as it was last week. This week I will make sure I have all my stop losses were I feel comfortable. I will not replace any till I see what the market does each day. I'm not ready to go short but I do heed the warning signs. In order for me to present a "Fair and Unbalanced View" -- to paraphrase Fox -- I'd like to share an article by Michael Shulman titled : Shorting the Double Dip. He's one of the smartest guys I know and although I don't agree with him 100% he's that little horn on the wing giving out an early warning I'm not getting from the other instruments on my dashboard.

Over on Wall Street Survivor the contributors to Top Stocks that recommend stock still have that little friendly competition with our model portfolios. The S&P was up .42% month to date but our leader so far this month Anthony Mirhaydari with a nice gain of 8.24%. I'm down in the number 4 spot with a gain of 3.33% so far this month.

Disclosure : I do not hold positions in any of the stocks in my Wall Street Survivor portfolio

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

Profits is data security

Back when I first got out of college I was an Internal Auditor at Retail Credit Company - later renamed Equifax, Inc. Back then the company was on the cutting edge in data security, but since it was a closed system computer security was making sure no one could enter your computer room, cut off your land line connection or power source and all your back up data and programs were properly secured off site in a vault. People had to physically get into your installation to do damage.

Boy have things changed. Hackers with a $500 computer and an Internet connection in Nigeria or Romania can raise havoc to computers any where in the world. They can access not only private computers, but even the computers of companies, governments and even worse defense systems. Data and access is everywhere and lots of hackers consider it a challenge. If I can believe my spyware detection programs even the computer I use at home has 15 - 35 hacking attempts a day. Identity theft is a fear and concern of anyone who does anything on line.

Luckily we can all make a profit not only on the prevention of data theft but the fear that drives software and computer users to purchase and constantly upgrade their protection software. Symantec ( SYMC ) is at the center of this industry and provides Internet security technology in the form of anti-virus protection, Internet content and e-mail filtering, and mobile code detection technologies. Look down on your tool bar and you just might see their logo.

The company is making money and has a large Wall Street following. Analysts think the company will increase sales by 4.2% and earning per share by 7.6% next year. They estimate a 5 year annual growth in EPS of 9.23% per year. The 31 analysts presently following the stock have 21 buy recommendation with the others recommending hold and no major firms signal a sell. In the past year short interest has come down from 33 million shares to 22 million shares by year end.

The company has had price advances on 11 of the last 20 trading sessions and was also had 5 increases on the last 5 sessions. They have enjoyed a 65 day price appreciation of 21.24%. All 13 of Barchart's technical indicators signal buy for a 100% buy signal.

On other sites Wall Street Survivor readers give it a 5/5 Survivor Sentiment rating and the Motley Fool crowd thinks the stock will out perform the market by a vote of 461 to 94. The All Stars concur with a vote of 125 to 25. Fool's Wall Street columnist have buy stories out 19 to 1 but the lone dissenter's vote was back in 2007 -- too far back to even count.

Recommendation: Access to computer and mobile device data has never been more open and available but with that open access are open threats from hackers. Symantec is a leader in protecting your computer's data. The stock is making money and has a positive 5 year consensus to increase sales and earning. Barchart's 13 technical indicators all signal buy and other sites agree. Buy around 19 and have a protective stop loss no lower than 17.50.

Disclosure : no positions in this stock at the time of publication

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

My favortie Dow pick

Drugs have always fascinated me - the legitimate kind of course. What can I say I was in high school and college during the 60's? The reason drugs hold my interest is I'm amazed how by adding some chemicals to your body, the body either begins rejecting the disease that has taken over or turns off its bad habits and makes you well. No surgery, just the addition of some chemicals and poof -- wellness.

One of the best drug companies is Merck (MRK). It's one of the largest companies in the world and a Dow 30 component. They make drugs for both humans and animals. What a market - curing our families, pets and livestock. I can't read a magazine or turn on my TV without being exposed to one of their ads. See what you recognize from this list: Singular -- asthma and allergies, Fosamax -- osteoporosis, Procepia -- male pattern baldness or Gardacil -- cervical cancer. They do a great job of not only discovering new drugs -- with new patents of course -- but also manufacturing, marketing and distributing them. All full service drug powerhouse.

Analysts love this stock too with 10 buy, 5 hold and no sell recommendations. They look for 67.0% growth in sales next year with a 6.1 EPS growth and additional positive EPS growth for the next 5 years. The smart boys of Wall Street -- the short sellers -- made a big 180 and cut their short interest from a high of 206 million in the fall to only 23 million by year end.

Barchart's 13 technical indicators all signal buy; its not often a Dow 30 get a 100% buy signal. Since the stock's low on 3/9/09 the stock has gained 49.29% and since mid July has never seen a day below its 100 day moving average.

On other sites Wall Street Survivor readers give the stock a 5/5 Survivor Sentiment rating. The Motley Fool CAPS members think the stock will out perform the market by a vote of 2338 to 184 with the All Stars in agreement voting 705 to 38. Even the Wall Street columnists Fool follows have had 27 to 1 favorable endorsements.

Recommendation: All portfolios need some foundation stocks and what better one then Merck (MRK). They find, manufacturer, market and distribute drugs for humans, pets and livestock. Their products a some of the most recognizable and they keep adding to the pipeline all the time. Growth expected in both sales and earnings for the next 5 years and a positive following with short interest falling like a rock. The technicals are recently very positive. Purchase around 40 and since this is a long term holding use the 100 day moving average of 36 as your stop loss. Just keep sliding that stop loss up on a monthly basis to preserve your long term profits.

Disclosure: No holding in Merck at the time of publication

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

Illuminate profits with Illumina

I always begin my search for good investments by screening on Barchart for those companies hitting the most new highs recently. Illumina (ILMN) has had price appreciation on 15 of the last 20 trading sessions and is 5 for 5 recently. There has been a 57.01% price appreciation in the last 65 days.

ILMN is a developer of tools for the analysis of genetic variation and function. Hopefully, that information that could be used to improve drugs and therapies, customize diagnoses and treatment, and cure disease. Molecular medicine is a new and growing field. I've heard Warren Buffet advice that you shouldn't invest in a company you don't understand but although everything that they do might be over my head I do know that the analysis of DNA to fight both inherited and acquired diseases and viruses is the direction medicine is headed. Not everything can be cured with an antibiotic anymore.

Of the 15 analysts following this stock 10 of the 15 have buy recommendations in with the other 5 giving holds. They are looking for a 22.5% increase in sales next year and a 35.1% increase in EPS. Their expected 5 year compounded EPS growth rate of 19.98% is a big reason to consider this as a long term holding.

On a technical basis Barchart's 5 short term technical indicators all signal buy. Other sites like Wall Street Survivor have rating of a 5/5 Survivor Sentiment rating, a 5/5 technical rating and a 5/5 fundamental rating. Motley Fool CAPS members think the stock will outperform the market by a vote of 536 to 43 with the All Stars in agreement 192 to 13. The Wall Street columnists that Fool follows give it a 16 to 1 vote. The lone dissenting vote is from Jim Cramer and he hasn't reviewed the stock since February 2007. The stock has increase 117.16% since then.

Recommendation: This stock has it all. They are on the cutting edge of medical research. They have great fundamentals with analysts predicting increases in both sales and earnings. I do have one reservation. In the last quarter there has been an increase in short interests. Because of this please keep your stop losses tight. The stock can be purchased around 43 and set your initial stop loss no lower than 30 and be prepared to move it up to keep this trade profitable.

Disclosure: I hold no positions in Illumina at the time of publication

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

Late to the party?

Sometimes you can see a good investment but sit on the sideline trying to make up your mind too long. When I began looking for an addition to my S&P 500 portfolio I screened on Barchart for the S&P 500 companies with the highest relative price strength and Ford ( F ) came up on the top of the list. At first I was a little skeptical because I'd watched it run on up and in the back of my mind thought it might have had its run but the numbers tell me otherwise.

Ford seems to have a good solid plan to take advantage of the recovery and also seems to be at the center of the Buy American ideas that appear to be sweeping the country. The forecast for survival is better than the prospects for GM or Chrysler for those who wonder if the company will be around to honor their warranties. They are producing the products that the American public likes. It has the auto market covered with 4 major divisions: Auto manufacturing, automotive systems, auto financing and truck and auto leasing through it's Hertz division.

The stock has had price appreciation in 12 of the last 20 trading sessions and is 4 for the last 5. The price appreciation in the last 65 days of 76.06% gives me butterflies. The stock has a buy signal on 12 of the 13 technical indicators on Barchart for an overall buy rating of 96%

There are 15 Wall Street analysts following the company and although they aren't predicting sky rocket sales they are looking for a 15% per year EPS growth for the next 5 years. Short interests are falling from a high last year at 292 million to around 140 million at year end.

Other sites like the stock too. Wall Street Survivor readers give the stock a 5/5 Survivor Sentiment and over on Motley Fool the CAPS members vote 5536 to 2496 that the stock will out perform the market. The All Stars are more positive with a vote of 1313 to 387.

The stock does meet my normal criteria:

• Price appreciation on better than 50% of the recent trading sessions
• A Wall Street following that predicts increased sales and earnings
• A falling short interest
• Confirmation from other popular sites that I appear to be on the right side of the stock.

Recommendation: The auto industry will be in the center of our recovery and this is the most successful American auto company. If you're looking to add to your foundation portfolio of S&P 500 companies try to buy Ford below 12 and put a protective stop loss in no lower that 9. Move it up as the stock appreciates.

Disclosure: No positions in Ford at the time of publication.

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

Scanning for profits

Whenever I begin looking for stocks to add to my portfolios I always begin by screening on Barchart for the stocks hitting the most new highs in the recent trading sessions. I don't look for the highest percentage appreciation but I look for the stocks hitting new highs day after day on a consistent basis. Today ScanSources (SCSC) was near the top of the list.

As this economy begins to turn around control of the movement of merchandise from manufacturer, to wholesalers and distributors and finally from the retailers to the consumer will be essential. SCSC is a distributor of the optical scanning devices that will be at the heart inventory control as the inventory goes through the various levels. They are a key player in optical scanning devices in the US, Latin America and Europe.

It has had a price appreciation on 15 of the last 20 trading sessions and continues with 4 of the most recent 5 sessions. The price appreciation in the last 65 days has been 30.04%. The stock's price has recently turned upward and the stock has 5 buy signals on Barchart's 5 short term technical indicators of a 100% short term buy signal.

The stock is not widely followed by Wall Street but analyst predict that sales will increase by 6.6% and EPS by 17.1% in the coming year. There are no major sell recommendations out there and the smart money -- the short sellers -- have reduced short sales from 2.8 million shares to below 980,000 share in the past year. Fewer people are betting against them.

On other sites Wall Street Survivor reader give the stock a 5/5 Survivor Sentiment rating. Over on Motely Fool their CAPS members think the stock will out perform the market by a vote of 73 to 4 with the All Stars in agreement 31 to 1. Of the Wall Street columnists Foll follows they are favorable 3 to 0.

The stock has what I look for :

• Hitting new highs in better than 50% of recent trading sessions
• Analysts predict increased sales and earnings
• Short sellers are reducing their bets against the company
• Other technical sites have the same opinion I can up with.

Recommendation: No business can compete effectively without proper inventory control. Optical scanning devices have a pivotal place in inventory control. The company is positioned in the prime markets of the US, Latin America and Europe. I'm adding SCSC to my Wall Street Survivor portfolio around 29.64 with a protective stop loss no lower than 25.50.

Disclosure: I hold no positions in SCSC at the time of publication

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

Model portfolio changes 1/11/10

Just a few changes to the model portfolios:

Deletions:

VMFIV -- I'm deleting EXPE - Expedia -- not maintaining a price above its 50 DMA

VMFOR -- I'm deleting GPN -- Global Payments -- not maintaining a price above its 50 DMA

Jim Van Meerten is an investor who write about financial matters here and on Financial Tides. Please leave a comment below or email JimVanMeerten@aol.com

Disclosure: I do not hold positions in EXPE or GPN at the time of publication

Nuts and bolts investing

Whenever I'm looking for new stocks to add to my portfolios the first thing I do is go to Barchart and sort for the stocks that are hitting the most frequent new highs and then sort through that list. Fastenal (FAST) came right at the top of that list this weekend. The economy, according to the leading economic indicators is recovering and the stock market has been advancing nicely so what I needed was a real nuts and bolts investing idea and that exactly what FAST does.

The company is a wholesaler and retailer of all kinds of fasteners like nuts, bolts, screws in addition to janitorial supplies. If you are going to run a factory, machine shop or repair facility you will need most of the products FAST sells and distributes. They also provide products to the electrical and construction industries. If this economic party is going to get started companies are going to need to buy products through FAST to being production. This company will be in the middle of it all if this economic engine ever gets started.

On the technical side FAST has enjoyed prices advances in 16 of the last 20 trading sessions and was 5 for 5 this week. It's had a nice 36.53% price appreciation in the last 65 days. All 13 of Barchart's 13 technical indicators have a buy signal for a 100% overall Barchart buy recommendation.

Wall Street analysts feel the stock will have an 8.9% sales increase and a 20% earnings increase next year and Piper Jaffray has just this week came out with an overweight recommendation. The fundamentals look very good.

On other sites Wall Street Survivor readers give the stock a 5/5 Survivor Sentiment rating and on Motley Fool CAPS members think the stock will out perform the market by a vote of 785 to 46 with the All Stars in agreement 240 to 11.

This stock meets my criteria:

• The stock has had recent price appreciation in more than 50% of the recent trading sessions
• Wall Street brokerage firms have positive recommendations out with growth expected in both sales and earnings -- also no trash talking
• Other sites confirm my thoughts on the stock

Before I give my recommendation those of you who follow me might start to say that I have a programmed - cookie cutter approach to investing. I think I have a disciplined approach to investing. I look for stocks hitting new highs, then a reason that the company should prosper and lastly see if others disagree. If they disagree, that doesn't mean that I'm wrong and they are right; it's just a flag of caution to rethink my idea to see if they saw something I missed. No matter how much in love I am with a stock if it can't pass those last 3 steps I'm not adding it to my portfolio.

Recommendation: The economy is recovering and FAST will be right in the middle of it all providing what the manufacturing and construction industries need in supplies and fasteners. I'm adding this stock to my Wall Street Survivor portfolio around 47 with a stop loss no lower than 42.

Disclosure: I do not have a position in FAST at the time of publication.

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