FTI Consulting (FCN -$3.68 or -6.88% to $57.18) gapped down today, flashing yet another technical sell signal. It will be dropped from the Featured Stocks list tonight.  Distributional action has brought on more damage since it was last summarized in detail in this section on Monday, October 13, 2008 under the headline "200-Day Moving Average - Important Long-Term Support Level".  This stock was first featured in yellow when trading at $61.88 on Friday, December 28, 2007 in the CANSLIM.net Mid Day Breakouts Report (read here).

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A very important technical tool that savvy investors have learned to incorporate in their technical analysis is the 200-day moving average (DMA) line.  The 200 DMA line plays a pivotal role relative to a stock's price.  If the price of a stock is above its 200 DMA then odds are that its 200 DMA will act as longer term support.  Conversely, if the price is below its 200 DMA then the moving average acts as resistance.   Obviously, if a technical breakdown or violation takes place on heavy volume it is a more serious concern.  Sometimes quiet violations are repaired quickly, without a lot of additional losses.  However, the key moving averages are always an important line to watch. 

FTI Consulting (FCN +$2.25 or +3.39% to $68.62) gapped up today and closed less than -15% off its all-time high, but its gain on average volume still left it trading below its 50 DMA line.  It had encountered distributional pressure and traded under its 200 DMA last week. For its outlook to improve it must first repair the latest 50 DMA breach.  It makes a good candidate for an active watch list while waiting for meaningful gains and a new high close backed by heavy volume to eventually confirm a more convincing buy signal.  Its previous appearance in the Featured Stock Update section was on Thursday, September 25, 2008 under the headline "Volume Totals and Closing Prices Offer Important Technical Clues".  FCN was first featured on Friday, December 28, 2007 in the CANSLIM.net Mid Day Breakouts Report (read here).

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Volume is a vital component of technical analysis, as well as paying attention to where a stock ends its session.  Prudent investors that incorporate volume into their stock analysis have often benefited several fold. Ideally, healthy stocks will more often tend to rise on higher volume and pullback on lighter volume.  Volume is a great proxy for institutional sponsorship.  Conversely, high volume declines can be ominous, as this usually signals distribution and further price deterioration are more likely to follow.  If a stock closes in the upper third of its intra-day trading range it is a sign of strength and support, while a stock that ends in the lower third or near its session lows could be showing subtle, or not so subtle, signs of weakness.

FTI Consulting Inc (FCN -$3.45 or -5.31% to $68.48) ended near its session low today, and while its volume total was near average, there was an increase in the volume over recent sessions - which is considered a sign of distributional pressure. It traded up sharply on 9/19/08 after gapping up, but it was disconcerting that it promptly reversed and closed in the middle of that day's range. Volume was also barely above average, showing a lack of buying conviction from the institutional crowd.  It ended in the lower extremes of its last 4 sessions and also deteriorated under its 50-day moving average (DMA) line, raising another caution flag.  For its outlook to improve it must first repair the latest 50 DMA breach.  It makes a good candidate for an active watch list while waiting for meaningful gains and a new high close backed by heavy volume to eventually confirm a more convincing buy signal.

FCN last appeared in this Featured Stock Update section on Monday, August 18, 2008 under the headline "Important to Know the Proper Time to Buy or Add (Averaging Up)". New pivot point and max buy levels were noted, however disciplined investors might note that a proper technical buy signal failed to materialize afterward.  Increasing institutional ownership has been noted as a nice reassurance, as the reported number of top-rated funds owning shares rose from 96 in Dec '06 to 164 in Jun '08, satisfying the I criteria. This stock was first featured on Friday, December 28, 2007 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 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.

FTI Consulting Inc (FCN -$0.50 or -0.69% to $73.49) most recently appeared in yellow in the August 11, 2008 at with a $74.11 pivot point (read here). It was approaching all-time highs with a considerable gain while volume was running at an above average pace. New pivot point and max buy levels were noted. It found prompt support after a steep pullback on 8/06/08 violated its 50-day and tested its 200-day moving average line, rebounding to close in the upper portion of its intra-day trading range. Increasing institutional ownership was noted as a nice reassurance, as the number of top rated funds owning shares rose from 96 in Dec '06 to 175 in Jun '08, satisfying the I criteria.  FCN was first featured on Friday, December 28, 2007 in the CANSLIM.net Mid Day Breakouts Report (read here).

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Statistically, about 40% of winning stocks will pull back after breaking out.  In other words, it is not uncommon for stocks to pullback and retest support near their pivot point after breaking out.  It is important to see the bulls show up and offer support at or above the pivot point.  This may offer investors a chance to increase their exposure before the stock continues advancing.  However, an important caveat is that volume should contract as the stock pulls back towards its pivot point. Heavy volume behind losses can be cause for concern, especially if the stock does not find support at its pivot point.  Whenever a recent breakout is completely negated by a loss that leads to a close back in the prior base, this is construed as a technical sell signal and a sign that the bears are regaining control.

FTI Consulting Inc. (FCN DOWN ($0.51) or -0.80% to $63.05) closed lower as this high ranked stock continues pulling back to retest its prior chart highs. FCN ranks are decent, its Earnings Per Share (EPS) is 80 and its Relative Strength (RS) rating is 90. The number of top-rated funds owning an interest rose from 124 in Jun '07 to 171 in Mar '08, which shows increasing institutional demand (the I criteria).  Concerns would be raised by any weakness leading to a close under its old chart highs near the $62 area which would have the effect of technically negating its latest breakout.