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.

Weatherford International Inc. (WFT +$0.90 or +2.05% to $44.89) ended higher after recently finding support above its 50 DMA line. An upward trendline may be watched as an initial support level just above its short-term average. Concerns were raised by its latest quarterly earnings which were reported under the +25% guideline, however selling decisions should typically not be made based upon fundamental data unless accompanied by technical sell signals.  Violations of its upward trendline and 50 DMA line could trigger sell signals.  WFT sports strong ranks; its Earnings Per Share (EPS) rating and Relative Strength (RS) rating are both 94.  This stock was recently featured in the April 2008 issue of CANSLIM.net News (read here) with a $72.91 pivot point and a $76.56 maximum buy price and the following description of what to look for and what to look out for: "Look for the stock to confirm a new technical buy signal by breaking out and closing above its $72.91 pivot point with gains on heavy volume in the coming days and weeks. Remember that buyable breakouts require three important components: the stock must clear its pivot point with considerable gains, those gains must be backed by at least +50% above average volume, and the overall market environment must be in a confirmed rally. On March 20, 2008 the Dow Jones Industrial Average produced a follow-through day which confirmed the current rally attempt. This high-ranked leader should remain on an active watch list and could be considered as a new buy candidate in the event it closes above its pivot point on the necessary volume needed to trigger a technical buy signal. As always, it is of the utmost importance to sell a stock if it drops 7-8% below your purchase price." Remember to always limit losses per the 7-8% sell rule, and never hold a stock if it falls more than that from your purchase price.  

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