My thoughts:

This past week saw the stock market rise and begin to possibly, possibly start recovering from the crash during August.  Green was found in many places and more importantly, a few leading stocks broke out to new highs on high volume.  In a bad market this does not happen, so this should be taken as good news.

However, not everything is positive.  In Europe we still have a giant mess with defaults hanging like a proverbial sword of Damocles hovering over us, ready to sever our heads from our torso financially.  Just this weekend it was learned that another rogue trader lost $2.3 Billion dollars (yes $2.3 Billion!) in fraudulent trading since 2008 and finally got caught.  What is it with these traders and investment banks that they keep having these types of problems?  Unbelievable.

Despite all these problems things are showing potential improvement and so is the Super Stock Screener.  Last week the screener featured 27 stocks that made the list, and this week the screener improved and is now showing 34 stocks for an overall improvement of 7 new names.  Some are familiar ones that have clawed their way back onto the list while a few others are brand-new.

One thing to keep in mind is that I do not feel stocks are buy-able if they trade below their 50-day moving averages, and several of the stocks on the screen do trade under those levels.  You can always buy them if you want (don't let me stop you), but I feel there is a higher probability of success if the share price is above the 50-day.  Thus that is something to consider when you do your own analysis.

Below you'll see the new stocks highlighted and underlined, so take a look at each one if they interest you.  If you have a process like I do then you can go thru them quickly and efficiently.  I don't think I talk about process enough, so let me re-iterate what mine is:

1.  I first do Screening for stocks.  This ensures that stocks I look at (below) have passed my minim thresholds for Sales growth, Earnings growth, Return on Equity, etc.  That is why my screener is a good starting point in my process and it is amazing how people will buy stocks with unfavorable metrics.

2.  I'll review the charts for every stock on the list as I am looking for very specific characteristics.  I want to see big up-volume spikes with few down-volme moves, I want to see new highs, and an upwards trend.  I want to get a positive impression that big institutional investors like the stock as well.

3.  If I like the chart then I'll go further in-depth into researching the company.  I want to understand what the product is, I want to see the quarterly Sales and Earnings, I want to see Analyst Estimates, and I'll look at recent News as well.  I'll put a lot of thought into why people might be buying the product (and continue to buy) and I want to come away with a good feeling for the business.  This step is probably where I spend the most time because no matter how great a chart may look, if the underlying business is bad or not growing as much in the future then the stock will eventually reflect that and why so many stocks seem fine one day and then get crushed the next.  The best example of this is Sodastream (NASDAQ: SODA). 

4.  After I've done the fundamental work I have to decide whether to buy the stock.  If I decide to buy then I consider what the general market is doing (good or bad) and whether there is a high-probability spot for buying that can help increase the odds of a successful trade.  Also to consider is how much to buy as well.  You never know what will happen so being flexible in this step is important.

5.  After buying I then implement risk-management rules using stop-loss trade-triggers, and after inputting my parameters I then become a big cheer-leader for the stock.  If things are right then I will make money, if I'm wrong then I hope to only lose a little.

And that my friends, is my system in a nutshell.  Hopefully it will help you as you form your own system for investing in the market.

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 September 10th are below:

It seems like months since we've had that kind of move considering how bad the markets have been, and yet it has really only been since August 1st.  I'll definitely take it as I'm not complaining, but it shows how bad things are/were when I'm amazed at a four-day win streak.

In every up-move there are always stocks that breakout to new highs and are the new leaders to watch.  As I looked thru my charts tonight I saw some worth buying or keeping an eye on, and I feel that I also found some that should be avoided as well.  The new leaders are the ones to buy and own because the odds are that we'll make the most money from them in the future.

Before we get to them let's look at the mandatory index charts.  The Nasdaq is the strongest index by far and that makes sense because it is loaded with technology stocks and we live in a technological world.  The S&P 500 is much more of a laggard and that makes sense as it has lots of stocks that the Nasdaq doesn't have.  While the Nasdaq is showing lots of improvement, the S&P has a lot more work to do.

The VIX or "Fear" Index is showing elevated fear levels and slowly dropping to reflect a lessening of fear.  This means that market participants are still fearful generally, yet this is also where new bull movements begin as well.

Stocks to consider:

Stocks worth considering are those that are relatively new to our eyes, that are making new highs in price, and are showing positive up-volume that indicates that big Institutional investors like them and are buying the stock.  These below should make the cut and find a home on your watch-lists.

Athena Health (NASDAQ: ATHN) is the first stock that I think makes the new-leaders list.  The price is volatile but lately the stock broke-out to new highs on big up-volume.  That is enough for me and when you see  the chart you'll probably agree.

Next is Alexion Pharmaceuticals (NASDAQ: ALXN).  I don't like Alexion as much as I like Athena, but it has a similar chart-pattern and is also making new highs.  I wish the volume was higher but I still think it is a solid name.

The third stock is Ralph Lauren Corp (NYSE: RL).  Ralph Lauren is Polo, and I like that he is the company founder and also a fashion-genius and good manager as well.  I am always observant of other people and lately I've seen many wearing Polo shirts with a giant horse emblem on it, so I can only assume Polo has found a marker for these new looks.  The stock recently broke to all-time highs so something must be going right over there.

One other to consider is Copa Holdings (NYSE: CPA).  Copa Holdings is actually a very profitable Latin-American airline and I think it is a very interesting stock and story.  However, be aware that the stock is relatively thin and illiquid so one should not buy tons of shares in it because you'll never be able to get out when you want to.  A good rule of thumb is to buy no more than 1% of the monthly average volume.  Thus if the average volume is 100,000 shares then the max one should buy is 1,000 shares.  Despite all that the stock does look interesting.

Lastly, I think Priceline.com (NASDAQ: PCLN) is a stock that appears to have put in what is called a "Double-Bottom" chart pattern.  This can be a powerful pattern though the real test will be whether the stock breaks to new highs or not.  I am not an expert on double-bottoms so I think it would be wise to do more research on this in case it is not.

Stocks to Avoid:

This list of stocks to avoid is much bigger than the stocks to consider and that makes sense since recently it seemed like the economy was on the verge of imploding and taking every stock with it. What is amazing is how many seem to be former leaders whose time is now over.

In alphabetical order, here is CF Industries (NYSE: CF).  CF is the most 50/50 of the bunch.  Yes the stock has moved up into new highs and showed strength when most others were falling, but the volume has not been that great in my opinion and lately the shares have been a little weak.  The way I run my stop-loss trade-triggers is such that I probably would have set it for the low of the most-recent range at about $175, and thus I would have been stopped out of the stock a couple of days ago.  CF could go higher and do great things, or it may not.  I don't know.

The next stock that is  probably one to avoid is similar to CF in that it is 50/50 whether it continues going up or instead fails outright at this point in time.  The stock is Green Mountain Coffee Roasters (NASDAQ: GMCR).  I believe there has been a lot of hidden selling lately as the stock has struggled to break into new highs because high-volume with small price-movement is what gives this away.  GMCR has also been running for a while and is not exactly a new name, so I think it is getting tired and running out of gas here.  I may regret this posting so we'll see what happens.

Another stokc that appeared strong a few weeks ago and now is flashing warnings signs to me is Hansen Natural (NASDAQ: HANS).  The stock looked great until all of a sudden there was some 'big' sell-volume, and since then the stock has risen but on low-volume, thus it appears the demand has disappeared.  I may be wrong on this too so we'll see how it plays out.

One of my favorite stocks that also now looks like an 'avoid' is Lululemon Athletica (NASDAQ: LULU).  It's chart went from looking great to now looking downright awful as there is lots of 'wide and loose' action, and I find it ironic that the resistance levels for it at this time appears to be the exact same level that I sold the stock at right before the crash.  Coincidence?  I don't know but we'll see what happens.

Good luck out there and let's hope that this upward streak continues.

My thoughts:

A quick post today.  Apparently the world is be bracing for more bad news from Europe and especially Greece.  Bear Markets typically feature all sorts of bad things financially, and I think the problem is that no one knows what exactly will happen if the Greeks do default on their debts.

Some fears include whether there will be a chain-reaction that hurts banks in France and Germany, or could a default possibly topple financial institutions around the world including in the US?  Because investors don't know the answers to these questions I thus feel that markets will remain in a very negative position with bearish sentiment on stocks and all financial assets in general.

The individual investor has the wonderful good fortune to be able to sit in cash during periods like these until the damage gets done and the danger passes.  Professional investors such as Hedge-fund and Mutual-fund managers get no such benefit.  They have to position things as best as they can, and even if they predict the market correctly they can still lose money because their investors require them to be fully-invested at all times.  What a crazy set of rules!

Years ago I thought I wanted to be a professional portfolio manager at an investment firm, but what I realized is that it would just kill me to own stocks during a bear market and ride them all down.  I would have gone crazy being long stocks and unable to sell, and I think if you're well-intentioned and want to do well for your investors then that would be doubly tough to do.  Instead, I much prefer being able to sit out in cash for as long as necessary and if that means taking an extended break then so be it.

Interestingly, an extended break before a real bounce occurs might only be a few weeks away.  In my prior post I listed a rudimentary table that compared the number of down weeks before meaningful potential bottoms from each of the 2008 and 2010 market drops along with where we are currently.  We have finished 7 full weeks since the markets began falling in August, and since the average length of time before a meaningful bottom from the other two market episodes was 10 weeks then it means that we may be closer than we think to an attempt at a real bottom...provided that the current period rhymes with 2008 and 2010.

Many charts are still broken and there is still plenty of bad news that has not come out yet, so until that bottom attempt arrives then I suggest maximum caution.  I for one will be sitting out, and hopefully I can enjoy margaritas on the beach before it becomes time to get serious about the markets again.

Below is the latest results for the Super Stock Screener and if you're going to watch any stocks then these are a good start.  Have a safe, cautious trading week.

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 September 3rd are below:

The market averages do not look good at all as they display continued volatility and uncertainty.  Traders who are adept at handling volatility should do well, but for someone like me who stinks at intra-day trading it is a nightmare come true and way too easy to lose money.

The worst thing is that one typically sees stocks that either look compelling, that are holding up despite the turmoil, or maybe might have bottomed on a chart.  Don't believe it, because prolonged downward volatility has a tendency to destroy all those beliefs.  The stocks that held up eventually fail, bottoms do not hold, and prices in general get dragged down further than anything you might expect.

I mentioned before that I am not a news analyst yet I am struck by all the bad news coming out of Europe.  They have lots of problems that need to be resolved, but somehow their problems keep getting put off.  Eventually the pressure will force something to give way, and in my idle speculation time, I wonder if a major bank needs to go bankrupt before things really do get better.  Now that Labor Day is over with perhaps those problems will be dealt with soon.

Bad markets typically get bad news while Good markets typically get good news.  Right now there is nothing but bad news so that should tell you enough about the state of the market as it stands.  When good news starts occurring we'll know that things have a chance to get better.

Charts:

For charts I have included the two main Indexes and the VIX Index as well.  The Nasdaq is the best of the bunch at the moment as it has performed the best on a relative basis compared to the others.  However, if it slips further then it will find itself back at the lows from earlier in August, and if it goes below those points then the market may be in big trouble.

The S&P Index is in the same boat as well as the Nasdaq.  If it goes below into my "Uh-oh" area then people who tried fishing for a bottom may wish they had stayed home.

Below are weekly charts showing the 2010 market drop for the S&P and the Nasdaq.

On a historical basis, there is also precedent for a continued move towards lower prices on the Nasdaq Composite Index because on a weekly basis, major down moves have typically taken longer to resolve than where we are currently at.

To arrive at this conclusion, I compared the number of weeks it took for the markets to drop in 2010 and also in 2008.  What I found was that it took about 10 weeks or so before the Nasdaq fully bottomed.  In between that time there were up weeks, but none were strong enough to keep the indexes from dropping further.  Currently we have only been dropping for 6 weeks which would imply that we have another 3-4 weeks to go before a chance of a real bottom.  This was not an exhaustive study, rather I simply looked at the last two major market events to see what happened.

Below is a table of the weekly results.  All the drops have had a similar weekly rhythm that I find fascinating, though what weeks 7-10 will look like is anyone's guess.  I thought it was interesting to look at and wanted to share this info.

Lastly, here is a chart of the VIX or "Fear" Index.  We are at the same levels of fear shown by market participants in 2010, yet still far from the levels in 2008.  Let's hope we don't re-visit those levels.

Hopefully things improve but right now I am not optimistic.  In years that have bad things occurring things seem to manifest in August, September, and October, so let's hope that we run out of bad things to occur.  Until then please remember that Cash is a viable position too.  We'll see what happens.

My thoughts:

Wow!  I'm back from vacation and when I look at stocks all I can think is the word "Wow".  When I left the Super Stock Screener had only six stocks on it, and since then the market rebounded sharply and now is tumbling again as we head into the Labor Day weekend/holiday.

I am still of the opinion that we set the lows in the market back in early August and when I ran the Super Stock Screener today I felt justified in that view seeing as how the results have rebounded back to a respectable 26 names total.  These 26 stocks below are probably the best of the best out there as they probably have the best earnings growth, the best sales growth, and in any comparison they probably all come out ahead in one way or another.  This is the good news that I can see.

The bad news is that while these 26 stocks may be the vanguard for the next bull market, the problem is that the majority of stocks out there all have broken charts in one way or another.

I define Broken Charts as ones with big swings in prices, where the price is not near 52-week highs, and where the price is below the 50-Day Moving Average.  Many former favorites/winners that have broken charts now include stocks such as LULU, UA, PII, etc. and all share the simple fact that their share prices are all over the place which in turn makes them extremely difficult to trade.

The best rule you can implement for yourself is to make sure that you don't fall in love with former winners that have broken charts, because most likely they will not repeat the winning performances that made them so great in the first place.  If they do then that is the exception and not the rule.

Bull markets have much less volatility in prices, and you can see the difference simply by looking at daily price ranges from before August 1st and then comparing them to daily price ranges from after August 1st.  Quite a difference if you ask me.

Instead, look for new stocks that have good charts that include:

1.  tight price action; not a lot of crazy swings in price

2.  near 52-week highs

3.  above the 50-Day Moving Average

4.  big up-volume

5.  exceptional earnings and sales growth

The list of stocks below is a good start, but if the economy does go into recession then there is a high likelihood that all stocks will continue to go down rather than up.  I am not a news analyst but I do know that one rule of thumb is that bad markets generally have nothing but bad news, and that good markets usually have nothing but good news.  So ask yourself "is the news generally bad or generally good right now?".  I think we both know the answer to that question at the moment.

Bad news causes investors to sell and stocks always go down much sloppier than they go up.  This is why you may think you're in a good trade during times like these, and then you look up and all of a sudden you've swung from gains to losses in the blink of an eye.  Thus investing in bear markets is much harder due to the price volatility.

Bear markets are a great time to sit things out and relax and remember, Cash is a position too.  When the Bull market re-appears it will be obvious to all, so until then just remember that sometimes (pause) the best move is not to play.

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 August 21st are below:

My thoughts:

The "R" word is back, as in Recession (gasp!).  This past week the market showed that it is still far from bottoming.  That possibility was destroyed when some spectacularly bad news hit Thursday morning and told stocks that they still have farther to fall.

The bad news I mentioned came from something called the Philly Fed Index, where the Philadelphia Federal Reserve Bank tracks manufacturing conditions and activity within it's region.  A positive number means that expansion is occurring while a negative number means the opposite.

In July the Index was at +3.2 which is not great but at least it's positive.  The August Index was (-30.7), ouch!  That is a huge crash in the index number and so Wall Street then concluded that economic conditions must be a lot worse than thought, therefore stock prices had nowhere to go but down.

Many people look at stocks and think that because the current earnings are good when a stock drops they then become bargains and worth buying.  The problem with this theory is that Future earnings must be considered and not current ones, and that is why when a bad number like the Philly Fed Index comes out the market gets punched because it is predicting that future quarters will be worse than current ones.

So when the market crashes and your favorite stock is down 10 points and looks like a huge buying opportunity, try and consider the possibility that the company might not be be as well in it's future quarters.  When the market crashes like it did over the last two weeks it is telling you that the probability of future quarters being worse has greatly increased, and that is why you have to sell when your rules tell you to even though the stock looks like the buy of the century.  Sometimes buying low is the worst thing that can happen to you.

The only benefit of a market crash for me is that it becomes very easy to see which stocks still have some potential.  My Super Stock Screener may have set a record with a new total of only 6 (yes, 6!) stocks that make the screen.  If you have a watch list then it will be very easy to keep track of these.

The market is still volatile and if we do go into a recession then probably all six of the below stocks will fail as well, so please do not consider these as can't-miss stocks simply because they have survived.  Instead, keep your eyes open and searching for the signs that thing are getting better and not worse.  It will come but it may take awhile to get there.

Until then, I'll see you at the beach.

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 August 13th are below: