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Referencing the weekly homework and stock radar, I am highlighting a few of the charts below for potential trades in undervalued stocks.

On the outside, it may look like Monday was a flat day in the markets, but the underlying action was far more bullish than that view provides. Bonds were weak again helping provide fuel for equities in the form of additional support and "ammo" for dip buyers to put to use. If bonds continue to weaken this week, all of this talk of a market top forming will likely be far too early.

It seems to me that everyone is looking for a top and trying to predict a market turn. It seems many market players are expecting something negative to happen and are being cautious, even trying to dip their toes in various short indexes. It is that which makes me more bullish for the short-term. It is the unexpected that can catch us by surprise and topple the markets, but the more cautious and prepared we are, the less likely negative news can give us severe damage. It is not a perfect science, but is a general rule of thumb that has been proven true more often than not over the years.

With bonds selling off yesterday morning and my continued use of ProShares UltraShort 20+ Year Treasury (NYSEARCA:TBT) as my shadow chart, I added to select long positions, per my StockTalks. Usually on a Monday morning I am trimming positions, but after taking profits late last week, I had plenty of capital to put back to work. If we can continue to see bond weakness, these positions may grow more aggressive. For now, they are modest bets as I can not completely discount the downside risk this early. As soon as I have an edge, even if it is just a day trade, I will be very aggressive to net larger gains. With a significant amount of earnings this week, the FOMC meeting, economic news, and headlines from Europe, we will have plenty of forces at work this week to digest. Keep your eyes peeled.

I'm still focusing on charts that are showing overall strength with established trend line support levels for favorable risk-reward buys. In a truly healthy market, I am more than willing to buy on breakouts expecting momentum traders to follow. In this market, I am finding that many breakouts are fizzling fast due to overall fearful sentiment and fast profit-takers. With that being said, I am more inclined to make moves near trend line support rather than breakouts.

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Harry Winston Diamond (HWD)

Notes On Yahoo Finance Fundamentals:

HWD has a low forward P/E of only 8.6 with an undervalued PEG Ratio of only .29. It has a negligible amount of shorts in it as of December 30th, 2011 with only 157k shares short on an 84 million share float. HWD has about $83 million in cash, but a significant amount of debt compared to cash (mostly long-term) around $344 million. This will impact long-term holders more-so than those holding with a shorter time-frame. Lastly, the median price target from four analysts is $20, a significant price difference from the current price just above $11.

Annotated Chart and Trade Details:


(Click to enlarge)

Perficient (NASDAQ:PRFT)

Notes On Yahoo Finance Fundamentals:

PRFT has a low forward P/E that is under 12 with an undervalued PEG ratio of only .42. The shorts are minimal in PRFT with only 3.3% of the float short as of December 30, 2011. PRFT has no listed debt on Yahoo Finance with about $2 million in cash. Currently, PRFT is trading at about $11, but the median price target from three analysts is $15.

Annotated Chart and Trade Details:


(Click to enlarge)

Voyager Oil & Gas (VOG)

Notes On Yahoo Finance Fundamentals:

VOG is the most speculative of the detailed trades today therefore it is riskier. VOG has EPS growth estimates of 1600% next year with a fair forward P/E of 17. Shorts have a decent foundation with 7.7% of the float short as of December 30, 2011, which is a short ratio of 14. The median price target from five analysts is 4.50, nearly double the current price.

Annotated Chart and Trade Details:


(Click to enlarge)

As always, do your own homework to see if you agree. Good luck out there.

Disclosure:

I am long HWD.

Source: Potential Trades With Charts: Signs Of A Market Top?