Petroleum Development Corp (PETD $26.60) is an independent energy company engaged in the development, production and marketing of natural gas and oil. The Company has grown primarily through drilling and development activities, the acquisition of natural gas and oil producing wells and the expansion of its natural gas marketing activities.  

To get an idea of the underlying fundamental growth this company has demonstrated it is worth noting the sales revenue comparisons over the last 8 quarterly financial reports. In them, the percentages versus the year earlier from December '01 to September '03 demonstrate a substantial turn around from  -17%, -39%, -29%, -16%, +1%, +50%, +26%, +68% over that string of reports.   Earnings improvements over the year earlier have also been very impressive in the past four financial reports, which helps to justify and explain the recent price strength.  The company's annual earnings (the "A" in CANSLIM) shows us some ups and downs rather than steady year after year growth like we'd prefer.

Confirming strength among other high-ranked leaders within the energy sector has given a nod of confirmation.

Today PETD has cleared prior highs hit 7-weeks ago, yet it is not exactly a great flat base. While in the midst of its ongoing upward trend, PETD only closed under its 50 DMA once, that being January 12, 2004.  It promptly repaired the violation with gains on three consecutive above average volume days. A reversal and close back under $25 would also drop it back under the prior significant high close that occurred on  December 30th, 2003. Dropping back into the prior base alone could be considered a technical sell signal.  Its present Up/Down volume ratio of 1.0 may be understating the recent few weeks of bullish price/volume action. 

IMPORTANT NOTES: Over the coming weekend the company is due to report its latest quarterly financial results.  We know that earnings news often leads to excessive volume and price volatility, and that could likely be exaggerated since this stock has already become a highly visible leader (it was included in the IBD 100 late last year).  If it is bought, be certain to insist on either a strict 7-8% sell stop order or at least a mental stop and clear cut plan to sell it the day that it violates any technical sell rules.  Recent reversals in other stocks we've seen clearly exemplify why discipline to limit losses is absolutely crucial to your success.    

Also, note that if the M (Market) was more ideal we wouldn't have to hunt really hard, but there would instead be numerous ideal breakouts everywhere and we would have a lot of ideal looking candidates to choose from.  In at least some sense, that lack of conviction also is telling us that we may be wise to wait for more obvious strength and leadership to appears in the broader market before being very assertive and aggressive on the buy side.  

More Info: 5-year Chart from BigCharts.com

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