Verifone Systems Inc (PAY -$1.70 or -3.35% to $48.98) was down considerably again today with heavy volume. A violation of its 50-day moving average (DMA) line and prior chart lows on 5/03/11 with a damaging loss on above average volume raised concerns and triggered technical sell signals. It recently formed a short flat base, considered a riskier "late-stage" base, but following the deterioration its color code was changed to green. The "Ken's Mailbag" Q&A in the 4/29/11 After Market Update included more details about late-stage bases (read here). 

Since its last appearance on 4/04/11 in this FSU section with detailed analysis and an annotated graph under the headline, "Volume Without Progress Indicates Distributional Pressure", its 50 DMA line was repeatedly noted as chart support to watch. A prompt rebound above its 50 DMA would help its outlook, however it may be a while before another sound base forms, and in the interim disciplined investors might look at other fresh breakouts as better buy candidates.

The number of top-rated funds owning its shares rose from 380 in March '10 to 623 in March '11, a nice reassurance concerning the I criteria. It traded up as much as +142.3% from its price when it was featured on 8/25/10 in yellow at $24.30 in the mid-day report (read here) while then rising from a cup-with-handle base. The downward turn in FY '08 annual earnings (A criteria) was previously noted as a concern, yet its recent bullish action and accelerating sales revenues and earnings growth in recent quarterly comparisons provided reassuring signs. Additionally, leadership (new highs) from other electronic payment-related firms has recently provided reassurances with respect to the L criteria of the fact-based system, however the Finance - Credit Card Payment Processing group currently has a mediocre Group RS rating of 62. 

Verifone Systems Inc (PAY +$0.27 or +0.49% to $54.82) is perched near its all-time high, holding its ground. However, high volume without meaningful price progress in recent sessions is a sign that it has been enduring some distributional pressure. It has been repeatedly noted - "No resistance remains due to overhead supply, but it is extended from a sound base pattern. Its 50 DMA line defines chart support to watch."  It has shown mostly healthy action since its last appearance on 3/02/11 in this FSU section with detailed analysis and an annotated graph under the headline, "Gap Up Gain Followed Another Strong Earnings Report" after reporting earnings +65% on +27% sales revenues for the quarter ended January 31, 2011 versus the year-ago period. 

The number of top-rated funds owning its shares rose from 380 in March '10 to 591 in December 2010, a nice reassurance concerning the I criteria. It has traded up as much as +142.3% from its price when it was featured on 8/25/10 in yellow at $24.30 in the mid-day report (read here) while then rising from a cup-with-handle base.

The downward turn in FY '08 annual earnings (A criteria) was previously noted as a concern, yet its recent bullish action and accelerating sales revenues and earnings growth in recent quarterly comparisons provided reassuring signs. Additionally, leadership (new highs) from other electronic payment-related firms has recently provided reassurances with respect to the L criteria of the fact-based system, however the Finance - Credit Card Payment Processing group currently has a mediocre Group RS rating of 37. It may be a while before another sound base forms or any secondary buy point develops, so in the interim, disciplined investors might look at other fresh breakouts as better buy candidates.

Verifone Systems Inc (PAY  +$3.84 or +8.61% to $48.45) gapped up today after reporting earnings +65% on +27% sales revenues for the quarter ended January 31, 2011 versus the year-ago period. Its color code was changed to green after again getting extended from a sound base. Since its last appearance on 1/27/11 in this FSU section with detailed analysis and an annotated graph under the headline "Ascending Base Pattern Formed After +84% Rally" it found prompt support at its 50-day moving average (DMA) line.  Then it blasted higher on 2/14/11 with heavy volume triggering a technical buy signal, but it quickly got extended beyond its "max buy" level.  During its subsequent consolidation its color code had been changed to yellow while it found support near its prior highs and well above 50 DMA line.

The number of top-rated funds owning its shares rose from 380 in March '10 to 565 in December 2010, a nice reassurance concerning the I criteria. It has traded up +105.4% from its price when it was featured on 8/25/10 in yellow at $24.30 in that day's mid-day report (read here) while then rising from a cup-with-handle base.

The downward turn in FY '08 annual earnings (A criteria) was previously noted as a concern, yet its recent bullish action and accelerating sales revenues and earnings growth in recent quarterly comparisons provided reassuring signs. Additionally, leadership (new highs) from other electronic payment-related firms has recently provided reassurances with respect to the L criteria of the fact-based system, even though the Finance - Credit Card Payment Processing group currently has a mediocre Group RS rating of 40. 

Verifone Systems Inc (PAY  +$0.35 or +0.85% to $41.77) is now consolidating -7% off its 52-week high.  It has formed a new "ascending base" pattern since breaking out in July. Its 50-day moving average (DMA) line defines important near-term chart support to watch. Its color code was changed to yellow while a new pivot point was cited based on its 52-week high plus ten cents. Subsequent gains with heavy volume may trigger a new (or add-on) technical buy signal.

Disciplined investors would avoid the temptation to get in "early" and watch for compelling proof of fresh institutional buying demand driving it to new highs. The number of top-rated funds owning its shares rose from 380 in March '10 to 500 in December 2010, a nice reassurance concerning the I criteria. It has traded up +84.65% from its price when it was featured on 8/25/10 in yellow at $24.30 in that day's mid-day report (read here) while then rising from a cup-with-handle base.

The downward turn in FY '08 annual earnings (A criteria) was previously noted as a concern, yet its recent bullish action and accelerating sales revenues growth in recent quarterly comparisons provided reassuring signs. Additionally. Leadership (new highs) from other electronic payment-related firms has recently provided reassurances with respect to the L criteria of the fact-based system, even though the Finance - Credit Card Payment Processing group currently has a mediocre Group RS rating of 40. 

Verifone Systems Inc (PAY -$0.43 or -1.04% to $40.84) has been getting extended from a sound base. Its prior high in the $36 area defines initial chart support to watch above its 50-day moving average (DMA) line. Disciplined investors would avoid chasing it and watch for a new base to eventually develop. It has traded up +70.6% from its price when it was featured on 8/25/10 in yellow at $24.30 in that day's mid-day report (read here) while then rising from a cup-with-handle base.

The downward turn in FY '08 annual earnings (A criteria) was noted as a concern, yet its recent bullish action and accelerating sales revenues growth in recent quarterly comparisons provided reassuring signs. It found support well above its 50 DMA line and continued higher since its last appearance in this FSU section was on 10/25/10 under the headline 'Strong Performance Since Returning to Featured Stocks List".

Verifone Systems Inc (PAY +$1.29 or +4.11% to $32.68) hit a new 52-week high today, and volume totals have been above average behind 3 of its 4 consecutive gains. It is extended from a sound base pattern, so disciplined investors would avoid chasing it and watch for a secondary buy point to eventually develop. Its 50-day moving average (DMA) line and recent lows near $27 define chart support. It is up +34.5% from its price when it was featured on 8/25/10 as it blasted higher following better than expected results and was noted in that day's mid-day report (read here) while then rising from a cup-with-handle base.

The downward turn in annual earnings (A criteria, see red circle) was noted as a concern, yet its recent bullish action and accelerating sales revenues growth in recent quarterly comparisons provided reassuring signs. Its last appearance in this FSU section was on 8/30/10 under the headline "Payment Solutions Firm Overcame Previous Setback" as we observed - "It has rebounded impressively and is now clear of overhead supply after a powerful technical breakout with 6 times average volume, however the M criteria is now arguing against new buying efforts until a new follow-through day occurs from at least one of the major averages."  The follow-through day arrived on September 1st (read here), confirming the new rally.

The next earlier appearance in this FSU section was a follow-up story that was published on 12/18/08 with an annotated graph under the headline "Patience Did Not Pay; Fundamental Flaws Prompted Technical Gap Down" - that illustrated its decline after it had earlier been dropped from the Featured Stocks page!  Keep in mind that stocks that are dropped from the Featured Stocks list have typically triggered multiple sell signals that were previously noted as raising concerns. In the event that any dropped stock rebounds and matches favorably with the investment system guidelines it may eventually be noted as it returns to the Featured Stocks list.

Verifone Systems Inc (PAY +$0.39 or +1.59% to $24.91) hit another new 52-week high today and its color code was changed to green after inching above its "max buy" level. It blasted higher on 8/25/10 following better than expected results and was noted in that day's mid-day report (read here) while then rising from a cup-with-handle base. The downward turn in annual earnings (A criteria, see red circle) is a concern, yet its recent bullish action and accelerating sales revenues growth in recent quarterly comparisons are reassuring signs it has overcome the previous setback.

Its prior appearance in this FSU section was a follow-up story published on 12/18/08 with an annotated graph under the headline "Patience Did Not Pay; Fundamental Flaws Prompted Technical Gap Down" that illustrated its decline after it had earlier been dropped from the Featured Stocks page. It was noted in the 8/25/10 mid-day report - "Long ago, based on disappointing fundamental news and very weak technical action, it was dropped from the Featured Stocks list on 12/3/2007 as it gapped down for a considerable loss after the company said it would restate its earnings for the past three quarters, with the added warning that revelations of deeper problems may follow. It has rebounded impressively and is now clear of overhead supply after a powerful technical breakout with 6 times average volume, however the M criteria is now arguing against new buying efforts until a new follow-through day occurs from at least one of the major averages."

PAY was first featured at $24.89 on Friday, December 2, 2005 in the CANSLIM.net Mid Day Breakouts Report (read here). However, during 2005 it went through a tough correction below its 50 & 200 DMA lines. After a technical breakout late in the session on 9/25/07, it gapped up and extended its gains, and it was featured once again in yellow in the CANSLIM.net Mid Day Breakouts Report on 9/26/07 (read here). After the damaging gap down, those who may have decided to ride it out as "long term investors" made a huge mistake by ignoring the technical and fundamental warnings that were very clear.

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Group action plays a very important role, and experienced investors learn that they can increase their odds of picking a great winner by always focusing their buying efforts in the market's leading groups.  The "L" criteria tells us to choose leading companies in leading industry groups, thus it is suggested that investors choose from the top quartile of the 197 Industry Groups (listed in the paper most days on page B4). As is the case in today's example, leadership from other strong stocks in the group can also help to satisfy the "L" criteria. 

VeriFone Holdings Inc. (PAY +$2.30 or +5.03% to $43.46) gapped into new high territory today for a second consecutive gain on monstrous volume. The healthy action prompted this high-ranked leader to be featured in yellow in today's CANSLIM.net Mid Day Breakouts Report (read here) with a new $40.10 pivot point and $42.11 maximum buy price. The note read, "Y - It gapped up and is extending the gains after a technical breakout late in the session on 9/25/07. Sales and earnings have been up strong, satisfying the C and A criteria. It may be possible to accumulate shares on a pullback under its max buy price."  It is encouraging to see the company earn a healthy Earnings Per Share (EPS) rating of 98 and an admirable Relative Strength (RS) rating of 84.  The company has managed to increase its earnings by well above the +25% guideline in the past four quarterly comparisons versus the year earlier, easily satisfying the "C" criteria. PAY resides in the Financial Services- misc group which is currently ranked 89th of out the 197 Industry Groups covered in the paper, placing outside the top quartile, however there are other strong stocks in the group including Checkfree Corporation (CKFR), and Intercontinentalexchange (ICE), that help satisfy the "L" criteria.

This stock was first featured on Friday, December 2nd, 2005 in the CANSLIM.net Mid Day Breakouts Report (read here) at $24.89 as it gapped open after reporting solid quarterly earnings. Then, this stock spent the next few weeks edging higher, but its consolidation grew a bit worrisome in early February as losses on high volume led to a 50 DMA violation.  It proved resilient enough at that time to stay near its 50 DMA though, and it eventually gapped higher on March 3rd, 2006 with considerable gains on massive volume. Then, on April 10, 2006 it blasted to yet another new all-time high close with gains on above average volume while it announced the acquisition of a key competitor. It had traded up +34.83% from the price when first featured, but since that time it has failed to make more headway.  As the major averages ran into trouble this stock was also dragged lower. After reporting only an +18% earnings increase in the quarter ended April 30th, 2006 its EPS rating subsequently fell to a mediocre 57 rank on the 1-99 scale.  Shortly thereafter, this former leader pierced its 50 day moving average line and it also sliced through an important upward trendline, both of which were earlier sell signals noted.  That action was discussed on Tuesday July 18, 2006 in the CANSLIM.net After Market Report (read here). The stock spent the next year building a huge base.  Its recent healthy action brings this strong leader back into play.

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