John V.'s  Instablog

This weeks results from my Super Stock Screener.  Screening is an excellent starting point for finding winning stocks.

My thoughts:  This week the market continued with its ascent but I know that a number of factors are still making investors wary as to whether this summer bounce is the real deal or not.  Some say that the chart is too V-ish (V shaped charts are more prone to failure, others point out the relatively low volumes, and market history is not on the side of things being sustainable as 3rd-year rallies to not last.  If you don't like this market you can find plenty of reasons and people willing to agree with you.

However, I don't think we are in 'normal' times at all, and you can definitely throw most precedents out the window, and you can listen to all the reasons why things shouldn't be happening but the one reality that trumps everything is that stocks are up, and for me that is all the information I need.

Price and volume tell the story and the story is that stocks (at least leading stocks) are having bullish moves right now and this fact overrides all the opinions and reasons out there.  It's ok to be cautious, but it's not ok to be wrong.

The latest Super Screener results have held steady as there are now 49 stocks that make the list as compared to the July 5th screen which had 51 stocks.  A drop of only two is nothing to be concerned about, though again there is some volatility in the number of names dropping off versus new ones appearing.

One notable name that dropped off primarily due to a drop in Relative Strength is Illumina Corp. (NASDAQ: ILMN).  Illumina is an interesting company in that it deals with genomics and DNA analysis, but the reason why it's Relative Strength score knocked it off is simply because its stock is not performing as well as many others are.  An example of an RS score dropping is when 'your hot stock' goes up 5% on a given day, and on that same day ILMN will only be up 1%.  This shows that ILMN is not performing and if it's not going up when others are then that's a problem.  It may be a great company but if investors don't want it then neither do I.

Remember my motto: if big investors want it then I want it, if big investors don't want it then I don't want it.  It's as simple as that.

Stocks that have high RS scores should be market leaders, so a declining Relative Strength score means that the stock is probably not a market leader at this time.  I want to stay on the leaders so we'll say good-bye to Illumina for now.

As always this is not a buy list but rather a starting point for doing more research.  Stocks that are new are underlined and have an Asterisk (*) next to their company name.

Stock that fell off the Super Stock Screener results from July 5th are below:

Note: This screen is fairly wide (EPS>=45%, Sales>=25%, ROE>=10, RS>=90, Price within 20% of High) and I do have tighter screens as well.  To keep the screen results manageable I removed Industry Groups that I either do not believe in (Financial) or are so Commodity that I have no idea how to pick one from another (Oil&Gas).