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Mike Turner
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Mike Turner, editor of StreetAuthority's "Mastering the Markets" and co-editor of their free letter "Trade of the Week," is a stock-trading expert with a focus on using technical indicators to buy and sell fundamentally sound stocks. A published author on the subject of... More
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  • When a Good Stock Moves Higher in a Bad Market...
    For the past two weeks, I've been informing my Mastering the Markets subscribers that a market correction is likely. Could that correction have started last Friday? Quite possibly. (Much more on this topic in my latest issue.) However, I am not calling for a deep correction, although that is a distinct possibility. If a correction occurs, I expect it to be of the garden-variety type, perhaps -5% to -7%. A correction of more than -10% would surprise me.

    Since I do not believe the correction will be severe, staying long could make some sense. And, if you're going to stay long in this market, the better stocks to own are those that go up in a down market (of course).

    As I was preparing this week's letter, I had my proprietary systems focus on the best scoring stocks that were moving higher in price on Friday. My top scoring stock for this test is GameStop Corp (NYSE: GME).

    GME, a video game retailer, has a total score of 157 out of a maximum of 200.

    The fundamentals score is fairly high for this stock: 57 out of a possible 100. The fundamentals that had the largest impact on this score include:
    • The trailing twelve-month growth rate for total sales over a year ago came in at +3.1%, compared to the S&P 500's +1.9%.

    • The five year growth rate in sales for GME is +37.6%, compared to the industry average of +13.6% and the S&P's average of +6.4%.
    My technical score on GME is 100 out of a maximum score of 100. Below are some of my technical observations on GME:
    • GME trades in Zone 1 and is trending higher. This gives the stock a lot of upside room to move before possibly encountering a major resistance level. The $27 level could prove to be a minor resistance level that it needs to break through before moving higher.

    • The average daily volume has been either steady or increasing for several months on mostly increasing share price, which indicates investors are generally more positive than negative about the stock.

    • Both the industry (Retail Technology) and the sector (Services) are in bull mode. This means the average price of every stock in GME's industry and sector is above the trend-line and moving higher. This also means it is likely that more money is flowing in than flowing out. This can put pressure on GME to move higher.
    Finally, GME was up well over +2% last Friday when the market was down nearly -2%. I like owning stocks that can hold their own or, even better, move higher in a negative market.Once the correction is over, I am bullish on the overall market and, especially the retailers. UPS (NYSE: UPS) blew the doors off earnings numbers last week, which I suspect bodes very well for the retail market. GME could outperform in this environment and be a stock to consider if you want to get in ahead of a potential correction. I would not fault you, though, if you wanted to wait until the correction is behind us before putting your money to work. In the meantime, GME could be a great hedge against a falling market, if it continues to fight the tape as it did last Friday.

    Disclosure: No positions

    Disclosure: No positions
    Apr 20 11:01 AM | Link | Comment!
  • Why Transports Could be a Huge Winner
    The iShares Dow Jones Transport Average ETF (NYSE: IYT) is flashing a big time buy signal in my propretiary systems. As such, I am selecting this ETF for my Trade of the Week.

    Keep in mind that I am also forecasting a mild correction to occur within the next few weeks, so any opening trade should be taken with some caution. Also, the IYT ETF has exhibited more than a fair amount of volatility during the past year, moving from a low in March of 2009, where it traded all the way down to less than $40.00 to its current level near $80.00. I believe this ETF has room to run even higher if the market does not correct too severely or, hopefully, not correct at all.

    One more word of caution: The "Expected Move" of 7.64% (my estimate of the relative volatility of a stock on a week-to-week basis) is at the upper end of how much loss many investors can stomach. This means IYT could move lower by $6.05 and still be in an up trend. The higher the EM (Expected Move), the higher the risk of losing money on the trade in a correction. Keep this in mind before jumping in.

    • My technical score for IYT is a very respectable 163 out of a maximum of 200, which rates the fund a "Strong Buy."

    • Even though the fund has doubled in a little over a year, it would not surprise me to see it move much higher. This could be a good trade if it can weather a correction without stopping out.

    • The average daily volume has been increasing on increasing share price for almost three months. This could be a good sign for upward momentum in share price.

    • Both the industry focus (transportation) and global focus (United States) market segments are in bull mode. This is indicative of increasing demand by investors to own equities in these two groupings.

    Disclosure: No positions
    Apr 06 11:47 AM | Link | Comment!
  • A Large-Cap Name Seemingly Poised to Take Advantage of a Stronger Market
    My systems are telling me that stocks will likely move higher into mid-April, so potentially we've got a few weeks to make some money in an upwardly trending market.

    Helping the rally in stocks in April will be what I believe could be a weakening of the U.S. dollar during the month. The reason a weaker dollar might be supportive for the stock market is that U.S. goods and basic materials would in effect be cheaper around the world, which could lead to increased demand for corresponding stocks. This week's pick is a play on that scenario.

    Vanguard Growth ETF (NYSE: VUG) is an exchange-traded fund that tracks the overall performance of the MSCI U.S. Prime Growth Index, a benchmark index comprised of a diversified basket of growth stocks of large U.S. companies.

    VUG has a composite score of 167 out of 200. Below are some of the technical factors that lend support to VUG:
    • VUG trades in the top third of Zone 3 and trending higher toward Zone 4, the highest 25% of the ETF's three-year trading history. This is a bullish trend.

    • Average daily trading volume has been trending slightly higher during the past couple of months, an indication that investors are beginning to have more interest in this ETF.

    • Both the industry focus (large caps) and the U.S. markets are in bull-mode. This tends to support the likelihood of VUG continuing to trend higher in the near term.
    Action to Take: Based on the analysis above, I believe VUG is a good trade to put on now with the following trading parameters:
    • Buy VUG with a limit order at $55.01  (Good for the Week)
    • Set an initial stop loss at $50.09
    • Target price = $61.50

    Disclosure: No positions
    Tags: VUG, growth etf
    Mar 23 10:58 AM | Link | Comment!
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