An essential skill to successful investing is knowing when and how to add to a winner.  The ideal time to purchase a stock is when it breaks out through its pivot point from a first stage base.  Ideally, the stock spends the next few weeks rising then begins building a base-on-base pattern.  A smart time to add to the position would often be when the stock breaks out of another new base.  When adding to a winner, buy a smaller amount of shares at the higher levels so as to not raise your average cost too much.  For example, if you initially bought 2,000 shares on the first breakout, you might buy only 1,000 shares on the add-on purchase. This pattern can be repeated after multiple breakouts, however at later stages stocks become more failure prone.   When the stock tops out and sell signals start to mount, ultimately one must be ready to sell their entire position when critical support is violated. 

Almost Family Inc (AFAM +$1.45 or +3.16% to $47.32) has been consolidating near its 50 DMA line in an orderly fashion. Its color code was changed to yellow with new pivot point and max buy levels noted. Its last appearance on Friday, December 19, 2008 in this section came under the headline "Technical Support At Upward Trendline Connecting Recent Lows" (read here). Since, it actually violated that trendline (not included on the chart below) with a light volume loss, then came its "positive reversal" on 12/29/08 for a gain on above average volume.  That was a reassuring sign it was attracting insitutional support.  Now, any violation of its recent chart low ($39.33) could trigger worrisome technical sell signals.  Disciplined investors will watch for a proper technical buy signal before making initial entries or adding to current positions in this high-ranked leader - which has traded up as much as +122.89% since featured in a 6/04/08 CANSLIM.net Stock Bulletin. AFAM was first featured on Wednesday, May 21, 2008 in the CANSLIM.net Mid Day Breakouts Report (read here).

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An upward trendline, by definition, develops as a stock steadily appreciates over an extended period of time.  During that period the stock vacillates between the lower and upper boundaries of trendlines which can be drawn connecting a series of recent highs or lows.  In order to ensure the overall health of the stock, the lower boundary should not be violated.  Technically, if the lower boundary is violated this signals that the trend is deteriorating and bears are gaining control, making the odds start to favor the possibility of further downside testing. 

Almost Family Inc (AFAM -$0.40) or -0.91% to $44.30) is consolidating above support at its 50 DMA line again. A subsequent violation of its 50 DMA line would raise concerns, while deterioration below the upward trendline connecting its near-term chart lows would trigger an additional technical sell signal. It encountered distributional pressure following its last appearance in this Featured Stock Update section on 12/04/08 under the headline "Consolidation Continues Above 50-Day Moving Average" (read here). Since then, gains with above average volume helped it challenge prior chart highs, but there it encountered distributional pressure and promptly fell back to trade near its short-term average again.  Its choppy chart offers no sound base now.

AFAM has been a great example, working out well during a difficult market.   AFAM was first featured on Wednesday, May 21, 2008 in the CANSLIM.net Mid Day Breakouts Report (read here). Following that first mid-day report appearance in yellow, AFAM was analyzed in greater detail in a 6/04/08 CANSLIM.net Stock Bulletin (read here), after which it traded as much as +122.89% higher! 

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An investor with basic chart reading knowledge should know the importance of the 50-day moving average (DMA) line. Healthy stocks commonly consolidate above that short-term average for many weeks while base building.  In order to ensure the overall health of the stock while it is base building, prior chart lows should not be violated. So, technically, while chart readers watch a stock consolidating above or below its 50 DMA line, the stock's prior chart lows also become a very important lower boundary to watch.  Violations of the 50 DMA and prior chart lows may both be considered technical sell signals.  Whenever multiple sell signals occur, investors should be ready to take the necessary action to lock in gains and/or limit losses.  Do not underestimate the importance of multiple signals!  Most of the serious stock implosions that have occurred throughout history have come well after there were already numerous signs of impending weakness shown in the stock's price/volume chart. When the bears are gaining control, odds start to favor the possibility of further downside testing. 

Almost Family Inc. (AFAM UP $0.14 or 0.32% to $43.51) has found support above its 50 DMA line while volume has been light or near average behind its recent gains. AFAM has been a great example, working out well during a difficult market.  Its late-stage breakout was negated after its gap down on 11/20/08, when violations of its 50 DMA and prior chart lows triggered technical sell signals, prompting its prior appearance in this Featured Stock Update section with extensive details and annotated daily and weekly graphs under the headline Buy on Fundamentals and Technicals; Sell on Technicals!  Its color code was changed to green then.  It may spend more time consolidating before a sound new base and new buy point might develop. Meanwhile, any close below its 11/21/08 low close of $39.01 would be acknowledged as more worrisome deterioration, as that or any breach of that day's low ($36.13) would trigger additional sell signals.  The next chart support would be its 200 DMA line and its October lows, both coinciding in the $30 area.  AFAM was first featured on Wednesday, May 21, 2008 in the CANSLIM.net Mid Day Breakouts Report (read here). Following that first mid-day report appearance in yellow, AFAM was analyzed in greater detail in a 6/04/08 CANSLIM.net Stock Bulletin (read here), after which it traded as much as +122.89% higher!

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One of the critical characteristics of successful investing is knowing when to sell. Investors are best served when they buy based on the combination of strong fundamentals and technicals, then sell based on the technicals. The reason is because fundamentals often tend to lag a stock's technical condition and come to light later to help explain the technical chart action after the fact.  

Almost Family Inc. (AFAM -$3.50 or -9.78% to $39.27) gapped down today for a considerable loss on heavy volume, violating an upward trendline, its 50 DMA line, and prior chart lows. Those support violations are considered technical sell signals, and its late-stage breakout has been completely negated. Concerns were already raised by some obvious distribution (institutional selling) occurring in the 11/10/08 to 11/12/08 period. Institutional holders in this small firm have generally been on the rise over the longer term. However, the weak close at the lower portion of today's trading range may be considered an indication that some of the funds that owned and had been accumulating shares are now choosing to abandon the stock.  The next chart support lies at its 200 DMA line and its October lows, both coinciding in the $30 area  Its strength in a difficult market environment (the M criteria) throughout this year has made it an attention grabbing leader.  It had been consolidating and recently noted, "prior highs in the $43 area are now an important support level to watch above its 50 DMA line."  Follow a sell discipline to protect and lock in profits and always limit losses whenever any stock falls more than 7-8% from your buy point.

An important point for prudent investors to remain cognizant of is that a strong stock normally builds several bases before it eventually tops out.  Needless to say, earlier stage bases are less risky than their later stage counterparts.  A general rule that is derived from studying leading stocks over the course of the past several decades is that if volume swells as the stock advances then odds favor that further price appreciation is likely. However, the converse is also true, and a lack of volume behind gains gives investors another reason to question a stock's ability to make a sustained advance in price.

Almost Family Inc. (AFAM -$-0.70 or -1.47% to $46.89) fell on lighter volume today, and its strength in a difficult market environment (the M criteria) throughout this year has made it an attention grabbing outlier.  Concerns would increase and technical sell signals would be triggered if an upward trendline violation, or worse, a 50-day moving average line violation occurs. This is especially important as we consider the extent of the stock's ongoing rally. It has been consolidating recently and noted, "prior highs in the $43 area are now an important support level to watch above its 50 DMA line."  Follow a sell disipline to protect and lock in profits and always limit losses whenever any stock falls more than 7-8% from your buy point.

The company has shown solid sales revenues growth and its quarterly and annual earnings increases have been reported well above the +25% guideline, which satisfies the C & A criteria. It recently reported strong sales revenues and earnings increases for the quarter ended September 30, 2008, and volume and volatility often increase in response to fundamental news (earnings).  Another positive is increasing ownership by top-rated mutual funds (the I criteria - institutional buying).  Some of these comments concerning the strong aspects of these key investment criteria were left out of the latest appearance in this Featured Stock Update section on November 11, 2008 under the headline, "Important to Know the Proper Time to Buy or Add (Averaging Up)", which included cautionary comments - "because it is too extended from a sound base to be buyable under the investment system's guidelines" (read here). That followed an earlier appearance in this Featured Stock Update section on October 29, 2008 with an annotated graph under the headline "Resilient Healthcare Firm Forming Possible Double Bottom" (read here). It ended October with gains on above average volume that helped it rally above its latest pivot point and trigger a new technical buy signal.

AFAM has traded up +122% since was first featured in yellow in the 5/21/08 CANSLIM.net Mid-Day BreakOuts Report on Wednesday, May 21, 2008 in the CANSLIM.net Mid Day Breakouts Report (read here).

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An essential skill to successful investing is knowing when and how to add to a winner.  The ideal time to purchase a stock is when it breaks out through its pivot point from a first stage base.  Ideally, the stock spends the next few weeks rising and then begins building a base-on-base pattern.  A smart time to add to the position would often be when the stock breaks out of another new base.  When adding to a winner, buy a smaller amount of shares at the higher levels so as to not raise your average cost too much.  For example, if you initially bought 2,000 shares on the first breakout, you might buy only 1,000 shares on the add-on purchase. This pattern can be repeated after multiple breakouts, however at later stages, stocks become more failure prone.  When the stock tops out and sell signals start to mount, ultimately one must be ready to sell their entire position when critical support is violated.

Almost Family Inc. (AFAM -$1.09 or -2.24% to $49.72) is consolidating after a negative reversal at a new all-time high on 11/10/08, and it is color coded green again because it is too extended from a sound base to be buyable under the investment system's guidelines.  Prior chart highs in the $43 area are an important support level to watch above its 50 DMA line.  It had been color coded yellow and a new pivot point was noted as it made its last appearance in this Featured Stock Update section on October 29, 2008 with an annotated graph under the headline "Resilient Healthcare Firm Forming Possible Double Bottom" (read here). Then, it ended October with gains on above average volume that helped it rally above its latest pivot point and trigger a new technical buy signal. AFAM traded up more than +122.89% since featured in a 6/04/08 CANSLIM.net Stock Bulletin. This stock was first featured on Wednesday, May 21, 2008 in the CANSLIM.net Mid Day Breakouts Report (read here).

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Almost Family Inc (AFAM +$2.50 or +6.82% to $39.15) posted a gain today on average volume while rallying up near its 50-day moving average line.  Following its previously strong uptrend, it has been consolidating for the past 8 weeks (after getting very extended from a sound base), and it may be forming a "double bottom" pattern. Its outlook would technically improve with a convincing rally helping it to clear its 50 DMA line. To complete its double bottom and trigger a proper new technical buy signal, it must rally with heavy volume and close convincingly above its recent chart high - which is the basis for the new pivot point noted. The color code is now changed to yellow again to highlight this high-ranked leader as a buy candidate near a proper buy point.  Disciplined investors know very well to avoid the urge to "get in early", as a technical buy signal is again needed to confirm that institutional buying demand is sufficient to lead to another sustained advance. Right now the stock is perched about -15% from its all-time highs and still faces some resistance. Market conditions (the M criteria) also are a serious concern, and until more leadership emerges, great caution is still advised.

Prior reports prompted investors to consider locking in profits.  Following the Monday, August 25, 2008 analysis that appeared under the headline "Upward Trendline is Initial Support Level to Watch After Big Gains" the stock rallied even higher, but it eventually showed deterioration below its upward trendline and 50 DMA line, triggering technical sell signals.  This stock traded up as much as +92% since it was first featured on Wednesday, May 21, 2008 in the CANSLIM.net Mid Day Breakouts Report (read here).

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Longstanding readers of this section in the CANSLIM.net After Market Report are well versed on the importance of upward trendlines. It is also important to note how stocks behave after an upward trendline is violated.  By definition, an upward trendline develops when a stock has steadily appreciated for an extended period of time.  During that period the stock vacillates between the lower and upper boundary of the trendline.  However, once the bears show up and the lower trendline is violated then odds start favoring the possibility of further downside testing.

Almost Family Inc. (AFAM -$1.13 or -3.53% to $33.11) gapped up today, then negatively reversed for its 6th consecutive loss. It gapped down for a considerable loss on 10/06/08 that violated recent chart lows and triggered a technical sell signal, following prior technical sell signals triggered by losses on above average volume that violated an upward trendline and its 50 DMA line. For its outlook to improve, AFAM would need to rally back above its 50 DMA line.  Meanwhile, its correction could lead to an even deeper consolidation back toward its 200 DMA line and the prior resistance in the $25 area, which would now be a key technical support level.

The high-ranked leader's previous appearance with an annotated graph in this Featured Stock Update section was on Monday, August 25, 2008 under the headline "Upward Trendline is Initial Support Level to Watch After Big Gains". The article went on to specify that, "An upward trendline offers an initial technical support level to watch, where a violation may prompt investors to lock in hard-earned profits" while also noting that it was "very extended from a proper base." Strong fundamentals were a crucial element to AFAM's success, as its good annual and quarterly earnings increases met the C & A criteria. As previously noted, "Its small supply of shares outstanding could contribute to greater volatility, especially if institutional investors rush in or out."  It traded up more than +92% since featured in a 6/04/08 CANSLIM.net Stock Bulletin including the CANSLIM.net Company Profile summarizing its strong fundamental characteristics relating to the key investment criteria, the What to Look for and What to Look Out For section's explanation of buy signal or sell signals to be ready to notice, and the Technical Analysis portion's analysis of its prior base. AFAM had first been featured a few days earlier in the 5/21/08 CANSLIM.net Mid-Day BreakOuts Report (read here).

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An upward trendline, by definition, develops as a stock steadily appreciates over an extended period of time.  During that period the stock vacillates between the lower and upper boundaries of trendlines which can be drawn connecting a series of recent highs or lows.  In order to ensure the overall health of the stock, the lower boundary should not be violated.  Technically, if the lower boundary is violated this signals that the trend is deteriorating and bears are gaining control, making the odds start to favor the possibility of further downside testing. 

Almost Family Inc's (AFAM +$0.98 or +2.29% to $43.69) early gains today helped it hit a new all-time high, however it pulled back to close with a smaller gain while it was bucking the broader market's weakness. An upward trendline offers an initial technical support level to watch, where a violation may prompt investors to lock in hard-earned profits. As noted recently, it is "very extended from a proper base".  It traded up more than +83% since featured in a 6/04/08 CANSLIM.net Stock Bulletin with detailed analysis and an annotated graph (read here). This stock was first featured on Wednesday, May 21, 2008 in the CANSLIM.net Mid Day Breakouts Report (read here).

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