Welcome. The contents of this blog comprise my personal observations on the stock market from the perspective of using both fundamental and technical analysis by reviewing market data and stock charts based on the methodologies of William O'Neil of Investors Business Daily and his books, from Stan Weinstein's books, and most of all, through lessons learned over the years by listening to Gary Kaltbaum's "Investor's Edge" radio show on Business Talk Radio.

Criteria of stocks include first researching sectors to determine which are strong and which are weak using the ADX indicator (>40 = increased volatility); focusing in on a leading sector and buying leading stocks on a high volume
breakout (minimum 2x average) above a base; stock prices are higher than $25/share with daily average volume higher than 300K; positive and increasing PVT (indicating institutional ownership), positive and increasing RSI (indicating relative strength compared to other stocks in the market).

Please keep in mind that
I am by no means an expert, nor are my posts intended for anything other than to share my opinions of what stocks are doing for the purpose of getting feedback. Thus, please do your own research before taking action on what you read here. I will be adding posts on topics of interest as I learn about them.

Tuesday, July 1, 2008

Work-in-progress: Fundamentally sound stocks.

Now applying the principles from William O'Neill's book, I have generated a list of 15 stocks with good fundamental growth which I believe have a good chance of improvement over the coming months.

Without looking at stocks which are not yet moving more than a few cents a day, I have isolated the top stocks so far to be: 1) Apache Corp. (APA), 2) Devon Energy Corp. (DVN), and 3) Amazon.com (AMZN). I'll go into my technical analysis of each.

1) Apache Corp. (APA):

Apache Corp. (APA) appears to be close to breaking out, but I am unsure whether to the upside or the downside. A break above $143.80 would suggest to me that it has broken out to the upside; a break below $135.60 would suggest to me that I have made a mistake and so it would be time to exit the trade at a loss.

2) Devon Energy Corp. (DVN)

Devon Energy Corp. (DVN) appears to have two patterns going at the same time -- an ascending channel, and a base. The ascending channel started two days ago which should give us an idea of how the stock should move within the channel; the buy point would be at $123.30 and the stop would be the bottom trendline within the channel at the time the purchase is made.

3) Amazon.com (AMZN)

Amazon.com (AMZN) has recently been both out of favor with the institutional investors and weak relative to the rest of the market. Yet, under the surface, it has already started making some waves. I am wary of it because it has broken down along with the rest of the market, but I would quickly change my opinion and consider a buy if the stock moved above $84.85, the top for the last three tops and a bottom in December '07. There is possibly room for a few trades above $74.30 as it has broken out of a short-term descending trading channel, albeit without impressive volume which makes such a short term trade considerably more risky (see 10-day 15-min chart).

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