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Approaching New Pivot Point and Max Buy Levels Noted - Thursday, March 27, 2008
Healthy stocks that are within close striking distance of new highs are often great buy candidates for investors to keep on their watch lists, especially when the companies match favorably with all of the investment system's criteria. When a stock is more than -10% off its 52-week high, and if it has violated its 50-day moving average (DMA) line, then the outlook only gets worse and worse as it spends a greater period of time trading deeper under that important short-term average line. By the time a stock's 50 DMA line starts sloping downward it should also be acknowledged that the stock has been struggling for a long while, in which case it might be time to reduce exposure and look for places to put that money to work in stronger buy candidates.
Bois D'arc Energy LLC (BDE +$0.67 or +3.20% to $21.60) rallied on above average volume for the fourth consecutive day. The stock was first featured in the February 28, 2008 CANSLIM.net Mid Day Breakouts Report (read here) with a $22.09 pivot point and a $23.19 maximum buy price. The stock technically broke out from a "double bottom" type pattern on 2/26/08 with a gain on above average volume helping it rise above its $22.09 pivot point. Since then, however, the stock experienced a sell off, falling below its pivot point by more than -7% as it found support near its longer term 200 DMA line. As always, disciplined investors know that it is of the utmost importance to sell a stock if it drops 7-8% below your purchase price. That means anyone who may have bought the stock would have been stopped out if they had followed the rules. Now the stock is rallying back towards its prior chart highs, and it closed -8.6% below its 52-week high. BDE has shown solid earnings increases and strong sales revenues growth in recent quarterly comparisons, and it has a good annual earnings history (good A criteria) since it began publicly trading in 2005. At this point, there is very little resistance remaining due to overhead supply up to the $22-23 level. Its Earnings Per Share (EPS) is 93 and its Relative Strength (RS) rating stands at a very healthy 95. The number of top-rated funds owning an interest in its shares rose from 50 in Mar '07 to 72 in Dec '07, helping to satisfy the I criteria.
The small supply of only 17.3 million shares in its float could lead to dramatic price volatility, especially if the institutional crowd rushes in or out. Disciplined investors can consider accumulating this stock if it trades above its $22.96 pivot point on at least +50% above average volume to trigger a new technical buy signal.
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High Ranked Energy Issue Trading Below Max Buy Level After Breakout - Thursday, February 28, 2008
A classic example of the success enjoyed by many CANSLIM.net readers usually starts when an investor reads a CANSLIM.net report and buys a featured stock before it has risen above the pivot point by greater than 5%. After a stock breaks out above its pivot point, there is only a +5% window that investors have to purchase the stock under the proper guidelines. Once a stock rises above the "maximum buy price" the risk of a shake out balloons, meaning that even a normal retracement in the stock might force you to employ the 7-8% loss cutting rule. Much can be told by the stock's daily action in the weeks and months that follow a breakout. Typically, a light volume and orderly pullback suggests that the bulls remain in control. However, high volume pullbacks that violate support paint a totally different picture.
Bois d'Arc Energy Inc. (BDE +$0.21 or +0.94% to $22.59) rallied on above average volume and was first featured in today's CANSLIM.net Mid Day Breakouts Report (read here) with a $22.09 pivot point and a $23.19 maximum buy price. The stock technically broke out from a "double bottom" type pattern on 2/26/08 with a gain on above average volume helping it rise above its $22.09 pivot point. Since then, the stock has moved sideways and is still trading below its maximum buy price. BDE has shown solid earnings increases and strong sales revenues growth in recent quarterly comparisons, and it has a good annual earnings history (good A criteria) since it began publicly trading in 2005. At this point, there is very little resistance remaining due to overhead supply up to the $23-24 level. Its Earnings Per Share (EPS) is 93 and its Relative Strength (RS) rating stands at a very healthy 94. The number of top-rated funds owning an interest in its shares rose from 50 in Mar '07 to 66 in Dec '07, helping to satisfy the I criteria. Technically, the path of least resistance appears likley to lead it into new high territory, however any reversal and close back below its most recent high closes would technically negate the breakout and raise concerns. As always, it is of the utmost importance to sell a stock if it drops 7-8% below your purchase price. The small supply of only 17.3 million shares in its float could lead to dramatic price volatility, especially if the institutional crowd rushes in or out. Disciplined investors can consider accumulating this stock before it trades above its maximum buy price because after it trades above that level it will be considered too extended to be considered buyable under the proper guidelines.
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