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.
ValueClick Inc. (VCLK -$0.25 or -0.90% to $27.57) closed in the upper half of its range and found support slightly above its longer term 200 DMA line on Thursday. It was encouraging to see volume dry up in recent weeks but that takes a back-seat due to the fact that VCLK violated important chart support: an upward trendline and its 50 DMA line. The first violation occurred earlier this week when VCLK failed to find support at its 50 DMA line. The next level of support was the stocks multi month upward trendline, which was also easily breached. VCLK has been woefully underperforming its peers of late therefore the recent violations should not be surprising. In May the stock triggered a technical buy signal but after a quick rally the breakout was negated and the stock spent the next two months trading near its 50 DMA line. Whenever a stock violates support odds favor further declines will likely follow.
VCLK was first featured on Wednesday, December 1, 2004 in the CANSLIM.net Mid Day Breakouts Report (read here) with a pivot point of $12.85. Initially, the stock made nominal progress, but it turned out to need a lot more time to base before it was ultimately ready to move higher. Details of this high-ranked leader were given a close inspection in the February 2007 issue of CANSLIM.net News, in the "Stocks To Watch In This New Market" section (read here). That is where some of the most ideal buy candidates are featured every month, and includes an annotated DailyGraph(R) with the "Technical Analysis", "What to Look For and What to Look Out For" and "CANSLIM.net Profile" portions - which are all designed to give active CANSLIM.net members an overview of important fundamental and technical details. The educational format demonstrates how timely buy candidates align with the key criteria of the CAN SLIM(R) investment system. A few months ago, VCLK appeared on On May 22, 2007 in the CANSLIM.net After Market Report (read here) when it was surging into new high territory.
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.
ValueClick Inc. Inc. (VCLK +$0.71 or +1.99% to $35.00) rallied for its fifth straight winning session and its second consecutive new all-time high close. Gains for a third straight day were backed by very heavy volume, well above the +50% above average volume threshold, demonstrating very intense institutional buying demand (the "I" criteria). Rumors have spread that the high-ranked leader might be acquired. The M&A market has been red hot lately, and this stock is a great example of the bubble-type behavior seen in this space. Prior to becoming heated, VCLK had violated its 50-day moving average (DMA) line after a gap down on May 3rd, 2007, and then it soon flushed out below its previously noted upward trendline. Those technical violations were both sell signals that prior reports* had identified for investors to watch out for. Yet it found support above prior chart lows and above the December 2006 highs that were an important old resistance barrier. It also promptly fought back to repair the 50 DMA violation, a sign of institutional support. Now it has blasted higher for considerable gains on heavy volume, up nearly +40% in the past five days. The fact that volume has been dramatically above average (far exceeding the +50% above average volume threshold) clearly indicates institutional (the "I" criteria) sponsorship. Due to the choppy shape of this advanced base pattern our experts did not identify the new pivot point just prior to VCLK's breakout from what could be considered an ascending base type of chart pattern. Since rising above a new pivot point of $31.44 (its 4/16/07 high plus .10) it has quickly rallied beyond what would be the corresponding maximum buy price of $33.01, putting it outside of the buyable guidelines now.
VCLK was first featured on Wednesday, December 1, 2004 in the CANSLIM.net Mid Day Breakouts Report (read here) with a pivot point of $12.85. Initially, the stock made nominal progress, but it turned out to need a lot more time to base before it was ultimately ready to move higher. Details of this high-ranked leader were given a close inspection in the February 2007 issue of CANSLIM.net News, in the "Stocks To Watch In This New Market" section (read here). That is where some of the most ideal buy candidates are featured every month, and includes an annotated DailyGraph(R) with the "Technical Analysis", "What to Look For and What to Look Out For" and "CANSLIM.net Profile" portions - which are all designed to give active CANSLIM.net members an overview of important fundamental and technical details. The educational format demonstrates how timely buy candidates align with the key criteria of the CAN SLIM(R) investment system. A few weeks ago, VCLK appeared on March 30, 2007 in the CANSLIM.net After Market Report (*read here) discussing its latest action.
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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.
Another 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.
ValueClick Inc. (VCLK -$0.46 or -1.73% to $26.13) lost more ground and closed under its 50 DMA line, however Friday's volume total did not hint that heavy selling by the institutional crowd was any part of the problem. It actually improved from intra-day lows with an afternoon rally, first doing some downside testing near a multi-month upward trendline (shown below). VCLK was first featured on Wednesday, December 1, 2004 in the CANSLIM.net Mid Day Breakouts Report (read here) with a pivot point of $12.85. Initially, the stock made nominal progress, but it turned out to need a lot more time to base before it was ultimately ready to move higher.
Details of this high-ranked leader were given a close inspection in the February 2007 issue of CANSLIM.net News, in the "Stocks To Watch In This New Market" section (read here). That is where some of the most ideal buy candidates are featured every month, and includes an annotated DailyGraph(R) with the "Technical Analysis", "What to Look For and What to Look Out For" and "CANSLIM.net Profile" portions - which are all designed to give active CANSLIM.net members an overview of important fundamental and technical details. The educational format demonstrates how timely buy candidates align with the key criteria of the CAN SLIM(R) investment system.
Two weeks after it was featured in CANSLIM.net News, it was studied again on February 15, 2007 in the CANSLIM.net After Market Report (read here) as it was charging into new high territory with gains backed by heavy volume. The stock surged to a new all-time high of $29.33 before backing down. It endured heavy distribution during the recent market correction, yet it ended up finding support near its 50 DMA line and near a multi-month upward trendline. Deterioration below that upward trendline and technical violations of recent chart lows could both be considered sell signals to watch out for now. If important support levels are breached, the odds of it producing bigger gains start dropping. Meanwhile, a rally above its March 22nd high of $27.63 would improve its outlook by rising clear of almost all overhead supply.
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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 in CAN SLIM(R) 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). 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.
ValueClick Inc. (VCLK $1.32 or $4.64% to $27.15) surged to new highs today with considerable gains on more than twice its average trading volume. This stock was first featured on Wednesday, December 1, 2004 in the CANSLIM.net Mid Day Breakouts Report (read here) with a pivot point of $12.85. Initially, the stock made nominal progress, but it turned out to need a lot more time to base before it was ultimately ready to move higher. In the latter half of 2006, and millions of clicks later, its time had finally come. The following is an excerpt describing its recent action in the February 2007 edition of CANSLIM.net News (read here) - "Two weeks before the market's August 15, 2006 follow-through-day helped reassure investors, VCLK exploded to the upside and has steadily rallied since. After that huge move VCLK spent the next few months consolidating and building a new base. Then on October 26, 2006 the bulls showed up and sent VCLK surging to new highs! After a brief pullback, where it promptly found support near its prior chart high, it surged on 14.7 million shares, rising to a another new high close. VCLK spent the next few weeks trading in a tight range and it gapped up to another new high on November 22, 2006. The stock ultimately hit a high of $25.47 on December 11, 2006 before pulling back and finding support at its 50 DMA line. Leading stocks offer investors another opportunity to accumulate shares when they pull back and test their 50 DMA lines. The buying range referred to in the paper has recently described the way a stock with high enough ranks and solid fundamentals can be bought anytime it bounces off its 50 DMA line up until it trades +5% above its recent high (in this case $26.74)."
Volume, an important characteristic of institutional sponsorship, clearly showed up as this stock bounced off its 50 DMA in January, successfully triggering its latest technical buy signal. The odds still favor further gains, however this stock has jumped past its $26.74 maximum buy price, and it is important for investors to remain disciplined and not chase it. The odds of getting stopped out increase markedly when you buy stocks that are too extended from a sound price base. Also, note that VCLK has yet to report its fourth quarter results. As always, increased volume and volatility should be expected around an earnings report. ValueClick is scheduled to report earnings on February 21, 2007.
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Valueclick Inc. (VCLK) |
| |
Ticker Symbol: VCLK (NASDAQ) |
Industry Group: Comml Svcs-advertising |
Shares Outstanding: 97,800,000 |
Price: $25.52 4:00PM ET |
Day's Volume: 2,413,100 1/31/2007 4:00PM ET |
Shares in Float: 94,900,000 |
52 Week High: $26.62 1/30/2007 4:00PM ET |
50-Day Average Volume: 2,199,100 |
Up/Down Volume Ratio: 1.5 |
Pivot Point: $25.47 12/11/2006 high plus $0.10 |
Pivot Point +5% = Max Buy Price: $26.74 |
Web Address: http://www.valueclick.com |
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CANSLIM.net Profile: ValueClick, Inc. operates as an online marketing services company worldwide. It offers a suite of products and services that enable marketers to advertise and sell their products through various online marketing channels. The company operates in three segments: Media, Affiliate Marketing, and Technology. The company also offers ASP delivering Web-based enterprise management systems to advertising agencies, marketing communications companies, public relations agencies, and other corporate advertisers. The company’s customers primarily include direct marketers, brand advertisers, and the advertising agencies. It markets products and services primarily through direct marketing, print advertising, and online advertising, ValueClick properties Web sites, trade shows, and other media events. ValueClick was founded in 1998 and is based in
What to Look For and What to Look Out For: Look for VCLK to volume to swell as this issue moves higher. Ideally, in the days immediately ahead it would follow through with additional gains backed by higher than average volume to confirm its recent bullish action. If VCLK fails to follow through, the odds of a sustained rise and meaningful gains would be greatly reduced. If this stock reverses and falls back below the pivot point by more than 8% it would first negate the latest breakout to new highs, then it would also slice through important support at its 50 DMA line. If such deterioration were to occur, the odds of even further downside testing would increase greatly. This stock’s 50 DMA line has acted as support in recent months and any violations of that important short-term average should always be promptly repaired. Proper discipline is to always limit losses per the 7-8% sell rule, and never hold a stock if it falls more than that much from your purchase price.
Technical Analysis: Two weeks before the market's August 15, 2006 follow-through-day helped reassure investors, VCLK exploded to the upside and has steadily rallied since. After that huge move VCLK spent the next few months consolidating and building a new base. Then on October 26, 2006 the bulls showed up and sent VCLK surging to new highs! After a brief pullback, where it promptly found support near its prior chart high, it surged on 14.7 million shares, rising to a another new high close. VCLK spent the next few weeks trading in a tight range and it gapped up to another new high on November 22, 2006. The stock ultimately hit a high of $25.47 on December 11, 2006 before pulling back and finding support at its 50 DMA line. Leading stocks offer investors another opportunity to accumulate shares when they pull back and test their 50 DMA lines. The buying range referred to in the paper has recently described the way a stock with high enough ranks and solid fundamentals can be bought anytime it bounces off its 50 DMA line up until it trades +5% above its recent high (in this case $26.74).