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Latest Breakout Hindered By Negative Reversal And Tough Market - Wednesday, August 15, 2007
A very important technical tool that savvy investors have learned to incorporate in their technical analysis is the 50-day moving average (DMA) line. The 50 DMA line plays a pivotal role relative to a stock's price. If the price of a stock is above its 50 DMA then odds are that its 50 DMA will act as formidable support. Conversely, if the price is below its 50 DMA then the moving average acts as resistance. Healthy stocks sometimes trade under their 50 DMA lines briefly, but usually a strong candidate will promptly bounce and repair a 50 DMA violation. When a stock has violated its 50 DMA line and then lingers beneath it, the stock's outlook gets worse and worse as it spends a greater period of time trading under that important short-term average line. Once the 50 DMA line starts sloping downward it should also be acknowledged that the stock has been struggling for a while, and it might be time to reduce exposure and look for places to put that money to work in stronger buy candidates.
Perficient Inc. (PRFT -$1.1 or -4.96% to $21.09) pulled back to its 50 DMA, after recently negating its latest breakout on above average volume. Earlier this month, PRFT surged into new high territory after reporting a very strong second quarter. The company managed to increase its earnings by +58% in the quarter ending June 30, 2007 compared to the same period in the prior year. Meanwhile, sales jumped +40% which is the fourth consecutive quarter of better than +25% needed to satisfy the "C" criteria. Despite the strong fundamental action, the stock's technical action has been less than stellar. On August 10, 2007, PRFT negatively reversed after hitting a new all-time high, trading a whopping 3.3 million shares that day, the largest volume day on the chart. CANSLIM.net reports have covered negative reversals before, pointing out that they are often ominous signs which suggest lower prices will follow. And considering the poor market environment (the "M" criteria) it was not surprising to see more weakness. The failed breakout coupled with the poor overall market conditions again reiterated the importance of remaining safely on the sidelines in cash. Disciplined investors know to wait until a new rally attempt and proper follow-through-day occur, along with an expansion in market leadership from numerous stocks. Those signs do not provide any failproof guarantees, but historically they have been reliable indicators for investors that showed when odds were most favorable.
PRFT was first featured on Friday, September 8, 2006 in the CANSLIM.net Mid Day Breakouts Report (read here) with $14.57 pivot point. The stock spent the next few months advancing, but it encountered excessive volatility which made it difficult to hold on to. A detailed analysis of this stock's recent action appeared in the July 31, 2007 CANSLIM.net After Market Report (read here) which illustrated how PRFT was consolidating above its 200 DMA line. Any subsequent breach of the 200 DMA line and its latest chart lows in the $19 area would trigger more definitive sell signals.
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Important Support at 200 DMA Line Being Tested - Tuesday, July 31, 2007
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.
Perficient Inc. (PRFT -$0.27 or -1.35% to $19.77) recently found support near its 200 DMA line. On Monday, the stock briefly violated its 200 DMA line, but a late-day rally helped it close above that important level. Interestingly, PRFT is currently resting on its multi-year upward trendline (best viewed on a longer term weekly or monthly chart, not shown) which coincides with its 200 DMA line. Therefore, at this critical threshold, a close below this important threshold might violate several important areas of support and cause further technical damage, tipping odds in favor of even lower prices following. Conversely, if the stock defends this important support level, its longer term outlook remains positive. Obviously, the broader market action is likely to dictate what happens next, and regular readers of the "Market Commentary" section of CANSLIM.net reports know that the "M" criteria has not recently made the case for any bullishness. In fact, the poor action has raised a caution flag for investors, reminding them to limit losses and protect any hard earned gains.
PRFT was first featured on Friday, September 8, 2006 in the CANSLIM.net Mid Day Breakouts Report (read here) with $14.57 pivot point. The stock spent the next few months advancing, but it encountered excessive volatility which made it difficult to hold on to. A detailed analysis of this stock appeared in the May 8, 2007 CANSLIM.net After Market Report (read here) which illustrated how PRFT was consolidating above its 50 DMA line. It is unlikely that many disciplined investors own PRFT now, unless they were fortunate enough to have bought much earlier at much lower prices, and even then they'd have to have endured great volatility. PRFT remains on the Featured Stocks list at CANSLIM.net, however it would need to rally above its 50 DMA line and jump into new high territory before much of a case could be made for buying.
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Ongoing Weakness Leaves Stock Near 200 DMA Line - Thursday, June 14, 2007
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.
Perficient Inc. (PRFT -$0.02 or -0.11% to $18.62) continued pulling back to its longer term 200 DMA line on Thursday. The stock has been steadily pulling back since its latest breakout was negated in late April 2007. Remember that approximately 40% of leading stocks pullback and retest their pivot points, but it is extremely important for the stock to find support near its pivot point and quickly rally to new highs. Chart readers should recognize that, whenever a stock fails to find support at important technical levels, the odds of further declines increase markedly. PRFT is a perfect example of why it is important to keep your losses small and always sell a stock if it drops -7-8% below your purchase price. First, it negated its April 4th breakout and closed back in its prior base. It subsequently violated its 50 DMA line during a flurry of 4 distribution days in 5 trading sessions. It has produced only one day of gains backed by meaningful volume in nearly two months. It is now resting at its 200 DMA line ($18.64), and its Relative Strength line and rating (now a mediocre 65) have fallen precipitously along with its Accumulation/Distribution rank. once may expect to see it find support near its 200 DMA line and above its March lows near $18, however any violations there would trigger additional sell signals.
This stock was first featured on Friday, September 8, 2006 in the CANSLIM.net Mid Day Breakouts Report (read here) with $14.57 pivot point. The stock spent the next few months advancing, but it encountered excessive volatility which made it difficult to hold on to. A detailed analysis of this stock appeared in the May 8, 2007 CANSLIM.net After Market Report (read here) which illustrated how PRFT was consolidating above its 50 DMA line. You know what has happened since! It is unlikely that many disciplined investors own PRFT now, unless they were fortunate enough to have bought much earlier at much lower prices, and even then they'd have to have endured great volatility. PRFT remains on the Featured Stocks list at CANSLIM.net, however it would need to rally above its 50 DMA line before much of a case could be made for buying.
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Earnings News Can Heighten Volatility - Tuesday, May 08, 2007
It is very important to isolate the noise and pay attention to price and volume as we make our way through yet another earnings season. There are a slew of analysts that come out and set "targets" and who constantly engage in publishing upgrades or downgrades on various securities. An important element in profitably navigating through a busy earnings season is to see how your individual holdings react to their latest earnings news and guidance. While it is a common occurrence to see stocks sell off after a new earnings report, it is healthy to see investors promptly bid the stocks higher after a company reports their quarterly results. Investors that objectively analyze price and volume will likely do better than blindly following a plethora of analysts' upgrades and downgrades.
Perficient Inc. (PRFT +$0.51 or +2.22% to $22.45) is slated to report its first quarter results on May 10, 2007, and it has recently rallied back above its February 2007 highs with gains on below average volume helping it stay well above its 50-day moving average (DMA) line. This stock was first featured on Friday, September 8, 2006 in the CANSLIM.net Mid Day Breakouts Report (read here) with $14.57 pivot point. The stock spent the next few months advancing, but it encountered excessive volatility.
A detailed analysis of this stock came again in a CANSLIM.net Special Report released on March 22, 2007 (read here) which illustrated how PRFT was setting up to potentially break out of its latest base. Included were the remarks - "It is now again near new highs; this high-ranked leader should be on your watchlist as a possible buy candidate. Like other stocks CANSLIM.net features as "set-ups" (not yet breaking out) any trading above the new pivot point of $21.65 with volume of at least 150% of its 50 DAV would trigger a technical buy signal." Nine trading days later, PRFT surged above its pivot point on heavy volume and triggered its latest buy signal.
Since its April 4, 2007 breakout, PRFT has spent the past few weeks quietly pulling back on below average volume to consolidate its recent move. This high-ranked leader sports a near-best 98 Earnings Per Share (EPS) rating and a solid 91 Relative Strength (RS) rank. Light volume pullbacks into support offer investors a chance to accumulate shares as the stock advances. As always, excessive volatility can be expected around earnings news announcements. And this reality is compounded when Perficient's erratic history is analyzed. Technically, if the stock gaps down or falls badly enough to violate support near its most recent chart lows and its 50 DMA line, such weakness would be considered a sell signal. Conversely, if the stock rises from its short base-on-base pattern with gains on heavy volume the implications would be bullish.
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Recently Featured Leader Breaks Out - Wednesday, April 04, 2007
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.
Perficient Inc. (PRFT +$1.71 or +8.26% to $22.40) triggered a new technical buy signal today as it surged to a fresh 52-week high on more than 4 times its average daily trading volume. This stock was first featured on Friday, September 8, 2006 in the CANSLIM.net Mid Day Breakouts Report (read here) with $14.57 pivot point. A fresh, detailed analysis of this stock can be found in the CANSLIM.net Special Report released on March 22, 2007 (read here). The Special Report illustrated how PRFT was setting up to potentially break out of its latest base, and included these remarks - "It is now again near new highs; this high-ranked leader should be on your watchlist as a possible buy candidate. Like other stocks CANSLIM.net features as "set-ups" (not yet breaking out) any trading above the new pivot point of $21.65 with volume of at least 150% of its 50 DAV would trigger a technical buy signal." Regular readers may have also noticed PRFT covered earlier, in the 3/06/07 CANSLIM.net After Market Update with an annotated DailyGraph(R) here. Comments and questions regarding this issue are welcomed via email to jamest@canslim.net.
PRFT spent the past three months quietly consolidating its recent move, and in the process a new pivot point of $21.65 was created. This high-ranked leader that sports a near-best 98 Earnings Per Share (EPS) rating and a solid 94 Relative Strength (RS) rank. It is also very encouraging to see its Relative Strength line (jagged blue line below) confirming the breakout to a new high. The technical action helps improve the odds for even further gains. However, any failure back under its prior chart highs would start prompting concern, and it would be a technical sell signal if the bears show up and send this stock back to a close in its prior base, negating the bullish breakout.
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Computer Stock Still Under its 50 DMA Line - Tuesday, March 06, 2007
A very important technical tool that savvy investors have learned to incorporate in their technical analysis is the 50-day moving average (DMA) line. The 50 DMA line plays a pivotal role relative to a stock's price. If the price of a stock is above its 50 DMA then odds are that its 50 DMA will act as formidable support. Conversely, if the price is below its 50 DMA then the moving average acts as resistance. Healthy stocks sometimes trade under their 50 DMA lines briefly, but usually a strong candidate will promptly bounce and repair a 50 DMA violation. When a stock has violated its 50 DMA line and then lingers beneath it, the stock's outlook gets worse and worse as it spends a greater period of time trading under that important short-term average line. Once the 50 DMA line starts sloping downward it should also be acknowledged that the stock has been struggling for a while, and it might be time to reduce exposure and look for places to put that money to work in stronger buy candidates.
Perficient Inc. (PRFT +$0.82 or +4.12% to $19.07) ended higher today on very light volume, failing to rally back above its 50 DMA line. This stock was first featured on Friday, September 8, 2006 in the CANSLIM.net Mid Day Breakouts Report (read here) with $14.57 pivot point. One trading session later, on Monday September 11, 2006, it blasted above its $14.57 pivot point as gains on above average volume triggered a technical buy signal. Recently, PRFT appeared in the December 18, 2006 CANSLIM.net After Market Report (read here) as it broke down under its 50 DMA line. However, the damage was repaired a few weeks later when PRFT gapped up and repaired the 50 DMA violation. It then spent the next few weeks rallying into new high territory. But as the market entered a correction last week, PRFT pulled back with the majority of stocks, and it failed to find support at its 50 DMA line. It also fell under its November 2006 high ($19.41), which raised additional concerns, since old chart highs should also act as a support level. This high-ranked leader should be on your watchlist as a possible buy candidate, with more improvement (in it and the market) being necessary before action is justified.
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Failing to Find Prompt Support; Worrisome Action Does Not Bode Well - Monday, December 18, 2006
After three months of mostly healthy action, last Friday (December 15th, 2006) was the first time this leader actually closed a session below its 50-day moving average (DMA) line since its early-September breakout. Instead of promptly repairing that technical violation (as it did on prior pullbacks), today the bears overpowered the bulls and it closed in the bottom half of its intra-day range. In addition, another important technical violation today was its violation of recent chart low of $16.70 which it had successfully found support at in recent weeks. Volume rose to nearly 4 times its average daily trading total, and such intense volume further compounded the bearish action. The technical damage was so severe that the positive action it had enjoyed over the past three past months was thoroughly erased. The violence of Monday's selling reiterates the importance of promptly selling when a technical sell signal is triggered. Before it might eventually repair the damage, further declines appear more likely due to the particularly weak close near the bottom of today's range.
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Leader Finds Support At 50 DMA - Thursday, November 30, 2006
A very important technical tool that savvy investors have learned to incorporate in their technical analysis is the 50-day moving average (DMA) line. The 50 DMA line plays a pivotal role relative to a stock's price. If the price of a stock is above its 50 DMA then odds are that its 50 DMA will act as formidable support. Conversely, if the price is below its 50 DMA then the moving average acts as resistance. Healthy stocks sometimes trade under their 50 DMA lines briefly, but usually a strong candidate will promptly bounce and repair a 50 DMA violation. When a stock has violated its 50 DMA line and then lingers beneath it, the stock's outlook gets worse and worse as it spends a greater period of time trading under that important short-term average line. Once the 50 DMA line starts sloping downward it should also be acknowledged that the stock has been struggling for a while, and it might be time to reduce exposure and look for places to put that money to work in stronger buy candidates.
Perficient Inc. (PRFT +$0.46 or +2.57% to $17.47) bounced off its 50 day moving average line. This is the second time this leader bounced off its 50 DMA since being featured. This stock was first featured on Friday, September 08, 2006 in the CANSLIM.net Mid Day Breakouts Report (read here) with a $14.57 pivot point. One trading session later, on Monday September 11, 2006, it blasted above its $14.57 pivot point on above average volume and triggered a technical buy signal. Recently PRFT appeared in the October 31, 2006 CANSLIM.net After Market Report (read here) the first time it tested its 50 DMA line. After successfully closing above its 50 DMA this stock spent the next few weeks advancing. After a healthy advance it pulled back and is currently finding support near its 50 DMA. As long as this stock trades above support, odds favor that it will continue trending higher.
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Prompt Bounce At 50 DMA Shows Firm Support Was Found - Tuesday, October 31, 2006
Reversal days are a great way to stay ahead of potential changes to a recent trend. A negative reversal occurs when a stock opens up the session heading higher, then reverses and ultimately closes the day lower. Positive reversals are the exact opposite. Positive reversals are often considered more potent if the stock's initial losses drive it to a new low, but it then reverses and closes the day higher on heavier than average volume and ends near the session's utmost highs. Reversals can occur on a daily, weekly or a monthly chart. In general, when a longer time frame is involved, greater implications may be given as to the severity or significance of the reversal. Volume is directly correlated with the severity of the action as well.
Perficient Inc. (PRFT -$0.23 or -1.35% to $16.77) bounced nicely off its 50 day moving average and rallied to repair a considerable intra-day loss to close near its session highs. Volume, an important gauge of institutional demand, surged to +1.2 million shares, which is nearly three times its average daily trading volume. This stock was first featured on Friday, September 08, 2006 in the CANSLIM.net Mid Day Breakouts Report (read here) at $14.18. One trading session later, on Monday September 11, 2006, it blasted above its $14.57 pivot point on necessary volume and triggered a technical buy signal. Recently PRFT appeared in the October 06, 2006 CANSLIM.net After Market Report (read here) highlighting its recent action. Since then, this stock has steadily advanced and a well-defined upward trendline emerged.
This company is slated to report its third quarter results in two days. The stock sliced through a well-defined upward trendline today, yet despite this negative violation, it managed to find support at its 50 DMA and recover promptly. It was also positive to see it spend the majority of the session erasing earlier losses, ultimately closing near the top of its range. This stock may be due to spend more time building a new base, and volatility should be expected during earnings season. Today's lows and the 50 DMA should not be violated, and if they are breached it would trigger technical sell signals. Otherwise, the odds favor that higher prices will follow.
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PRFT Bounces Off Its Trendline - Friday, October 06, 2006
Reversal days are a great way to stay ahead of potential changes to a recent trend. A negative reversal occurs when a stock opens up the session heading higher, then reverses and ultimately closes the day lower. Positive reversals are the exact opposite. Positive reversals are often considered more severe if the stock's initial losses drive it to a new low, but it then reverses and closes the day higher on heavier than average volume and ends near the session's utmost highs. Reversals can occur on a daily, weekly or a monthly chart. In general, when a longer time frame is involved, greater implications may be given as to the severity or significance of the reversal. Volume is directly correlated with the severity of the action as well.
Perficient Inc. (PRFT -$0.02 or -0.13% to $15.96) bounced off the lower boundary of its upward trendline on about average volume. This stock was first featured on Friday, September 08, 2006 in the CANSLIM.net Mid Day Breakouts Report (read here) at $14.18. One day later, on Monday September 11, 2006, this stock blasted above its $14.57 pivot point on necessary volume and triggered a technical buy signal. Later that day, PRFT appeared in the CANSLIM.net After Market Report (read here) highlighting the impressive action. Since then, this stock has steadily advanced and a rather well defined upward trendline has emerged. It was very encouraging to see the bulls defend this trendline and erase the vast majority of the day's losses on Friday, losing only 2 cents on the day. One would expect this stock to find support at this trendline for the foreseeable future. As long as this stock trades above support, odds favor that it will continue trending higher.
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FSU CHART - PRFT - Monday, September 11, 2006
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Leader With High Ranks Breaks Out - Monday, September 11, 2006
Often, when a leading stock is setting up to breakout of a solid base it is highlighted in CANSLIM.net's Mid-Day Breakouts Report. The most relevant factors are noted in the report which allows prudent CANSLIM oriented investors to place the issue in their watch list. After doing any necessary backup research, the investor is prepared to act if and when the stock triggers a technical buy signal (breaks above its pivot point on more than +50% average turnover). In the event the stock fails to trigger a technical buy signal and its price declines then it will simply be removed from the watch list.
Perficient Inc. (PRFT +$0.83 or +5.28% to $14.88) closed at a fresh 52-week high with considerable gains on above average volume on Monday. Its Relative Strength line (plotted on the annotated DailyGraph(R) below) confirmed the new highs today. PRFT is undeniably one of the better looking choices in the CAN SLIM(R) spectrum at present. The company sports a near-best 98 Earnings Per Share (EPS) rank and 94 Relative Strength rank, putting it in among the top tier, high-ranked stocks. PRFT was first featured on Friday, September 8th, 2006 in the CANSLIM.net Mid Day Breakouts Report (read here) at $14.57. On Friday, this stock traded three cents above its pivot point but it quickly reversed course and closed in the middle of that session's trading range. This issue had every opportunity to blast off and rise clear of prior highs, but instead, the market was pressured by selling that kept it from closing above its best prior close ($14.29 on June 7th).
A more convincing technical buy signal came as the bulls showed up on Monday, quickly sending this stock racing higher on volume +170% above its daily trading average. This time the gains held up through the session's close. It is always encouraging to see a stock gush higher and close near its session highs on expanding volume, leaving it clear of all chart resistance. As long as this stock's pivot point is not violated, odds favor that further gains will follow. Avoid chasing the stock and buying more than +5% above the pivot point. Discipline on the downside would also, as usual, necessitate selling in the event any stock falls 7-8% from your purchase price.
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