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The Growth Stock Landscape

An overall bearish tone in the market has us more focused on the brakes rather than the accelerator.

Multiple Distribution days across the major indexes in the last couple of weeks has warned us very clearly. Odds are the major indexes will continue trading under their 50-day moving averages as long as the selling volume dominates.

But as always, we’re alert for anything. Bear legs are notorious for sharp u-turns. Heavy selling Wednesday was followed by strong buying into the close, and it’s often the smart money that ends sessions. We’ve been on the lookout for a high-volume rally with at least one of the indexes powering about 2% higher in a session. Without this type of follow through any rally we might get will be suspect – at least that’s what history tells us.

As many stocks break down across the market, we still see some top-quality names setting up to break out of technical bases. While none meets our strict Matrix criteria of stellar back-to-back improving quarters, we have a number of solid growers we deem “A” grade.

The success of these breakouts will be telling of others looking to do the same. We’re not aggressive buyers just yet.

Setting up or breaking out are:

Alamo Group (NYSE:AG)

Affymax Inc. (OTCPK:AFFY)

Ulta Salon (NASDAQ:ULTA)

K12 Inc. (NYSE:LRN)

Maidenform Brands (NYSE:MFB)

Amerigroup Corp. (AGP)

Hasbro Inc. (NASDAQ:HAS)

Patni Computer Systems (NYSE:PTI)

American Greetings (NYSE:AM-OLD)

Chipotle Mexican Grill (NYSE:CMG)

Akamai Technologies (NASDAQ:AKAM)

On the short side, we like the look of the following trading below their major moving averages and with raised volatility:

Overseas Shipholding (OSG)

Comstock Resources (NYSE:CRK)

Wellcare Health Plans (NYSE:WCG)

Unit Corp. (NYSE:UNT)

Terex Corp. (NYSE:TEX)

Intrepid Potash (NYSE:IPI)

Quicksilver Resources (NYSE:KWK)

Digital River Inc. (NASDAQ:DRIV)

Affymetrix (NASDAQ:AFFX)

Barnes & Noble (NYSE:BKS)

Just to keep a finger in the market, we’ve nibbled a bit on Affymax, as increased volume hints to a breakout, and Hi-Tech Pharmacal (NASDAQ:HITK), which has also seen a volume boost and threatens to reverse a bearish head-and-shoulders pattern. We love it when these patterns fail and test the faith of technical analysis geeks.

AFFY and HITK are not full positions for us. We have small profit targets, of 5% to 10%, assuming market conditions remain. They’re listed in the Special Situation section below.

Remember, certified buy signals for Growth Stocks come with moves through buy-points on high-volume.

Our one full short position is in Terex Corp.

Run Down On Our Open Positions:

Box Score

LONGS

Symbol
Buy- Point
Last
-8% Stop
-5% Stop
-2% Stop
10% Target
20% Target

100% Target

none

SHORTS

Symbol
Sell-Point
Last
-5% Stop
-2% Stop
10% Target
20% Target
TEX
23.50
22.15
24.68
23.97
21.15
18.80

SPECIAL SITUATION

Symbol
Bought @
Last
-8% Stop
-5% Stop
-2% Stop
10% Target
20% Target

100% Target

AFFY
25.35
25.37
23.32
24.08
24.84
27.89
30.42
50.70
HITK
24

24.06

22.08 22.80
23.52
26.40
28.80
48

*Bold Marks Hit

Terex Corp., our short position, got some downside fuel via heavy sell-volume under its 50-day average, though has its 200-day as support.

Disclosure: We may own the stocks discussed here.

Source: Weekly Market Report: Growth Stocks Outlook