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In
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Market Report Card
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Chart Close-Ups
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This Week's Watchlist
Last
week we took a pretty deep look at the fundamental
estimates for small cap stocks. Though that's the kind of information
that should guide your bias when it comes time to pick stocks, it's certainly
not the only consideration. Today we're going to take a similar
look at market caps and styles and develop some equally-important biases.
First and foremost,
care
to guess which market caps and/or styles have taken the lead since the
mid-March bottom? Like today's headline indicated, small cap value
stocks have been hot, gaining 59.2%. Conversely, large cap growth has been
lagging... badly. It's up 'only' 40% since the March bottom.
Though we don't
have a value-specific or growth-specific index for the micro cap world,
we still have several micro cap index choices to use as a comparison.
 We
selected the Dow Jones Microcap Cap Select Index, as it had the most history.
Guess what.... since the March bottom, it's up about 64% - the
top performer.
That said, this
isn't necessarily a call to load up on small cap value and micro caps while
avoiding large cap growth. As we've always felt, yesterday's laggards become
tomorrow's leaders (metaphorically). If you want proof, here it is - small
cap value and micro cap stocks also lost the most ground during the bear
market (June of 2007 through March of 2009). On the other hand, the
trend is the trend, and right now the trend favors some groups more
than others.
That's why this
kind of analysis is important to understand, but not to go overboard
when
it comes time for action.
From our perspective,
we're highly encouraged about the strength of micro caps, but we don't
advocate getting into most of them right now. They're overbought
- wait for a pullback (which isn't bad advice for all sizes and styles
right now). Longer-term, large cap growth and mid cap growth did NOT fall
as far as other groups did during the bare market. As such, they don't
have as much recovery potential.
Here's another
surprise... though it's been generally lagging, large cap value may
offer the wisest entry prices at the present time.
Ironically,
the small caps (both value and growth) are a bit of a question mark right
now. If you find a good one with an attractive chart, go for it. Don't
go hunting for it with a strong bias though.
In summary,
the micro cap switch has been flipped 'on' again - just be picky about
your entry. And, large cap value stocks have a bit of an edge as well.
We'll hold off on making any other sweeping assessment, but stay tuned...
we'll update this chart when it's merited.
We don't have
quite as many charts to inspect today, but the ones we have are really
interesting ideas.
 Advanced
Battery Technology Corp. (ABAT)
The uptrend
for Advanced Battery Technology actually started in March, but stalled
in May. During that time, a pennant-shaped chart ....which is generally
a set up for a big move once the wedge shape is broken.
Normally one
would view Thursday's break above the resistance line as a bullish event.
However, this is one you may want to watch during the first sign of trouble.
If it holds up and recovers above the resistance line, then the breakout
is likely for real. If ABAT's surge is a fake-out, it will be back inside
the pennant formation soon enough.
 MCG
Capital Corp. (MCGC)
We zoomed out
to a weekly chart to really illustrate this chart's best feature - a major
pullback in 2008 that's been followed by a pretty nice recovery effort
so far in 2009.
What you can't
quite see on the weekly chart that shows up on a daily chart is just how
overbought the stock is in the short-term.
MCGC could fall
all the way back to a support level at $2.05 and still remain positioned
to make good on the breakout effort.
 Capital
Gold Corporation (CGLD)
This is hardly
the makings of a long-term holding, but the recent push off a major support
line could be good for a trade. The target price would be somewhere around
73 cents, where CGLD peaked in March and June.
If for some
reason the stock breaks past 73 cents, then 78 cents is another major ceiling
line to watch (not shown), as that could be the makings of a longer-term
position. Given CGLD's history though, the odds remain against that.
 Lifevantage
Corporation (LFVN)
Lifevantage
shares are no stranger to lower highs and lower lows - they've been in
that mode since April. Over the last few days though, secondary (horizontal)
support seems to have developed at 60 cents.
The potential
gain from a downside move/short trade is pretty significant, as there are
not a lot of support levels to work with if 60 cents fails to hold.
That's it for
now, but we anticipate a continuous stream of good trading ideas from this
point forward.
We're also putting
together a 'reality check' for the latest round of economic data. Be sure
to look for our next edition early next week.
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This
Week's Watchlist |
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You'll see the
watchlist has been getting a little smaller lately. That's not a bad thing,
nor is it indicative of a lack of ideas. In fact, it simply means we're
finding more higher-quality possibilities and we don't need to keep tabs
on lots of charts just to find enough trades.
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U.S. Gold Corp.
(UXG) - the breakout effort got plenty of traction this week
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Aristotle Corp.
(ARTL) - let's drop it, there's just no consistency
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Herzfeld Caribbean
Basin Fund Inc. (CUBA) - still waffling, give it one more week
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Solar Power Inc.
(SOPW) - bounced sharply on Thursday, so let's axe this one too
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Oncothyreon Inc.
(ONTY) - big move higher on Thursday, maybe overbought right now
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Affymetrix Inc,
(AFFX) - no longer in question, but now too far gone to chase
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New Energy Technologies
Inc. (NENE) - let's drop this one at its peak too, while the getting's
good
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VCG Holding Corp.
(VCGH) - good thing we kept this one on the bearish watchlist
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Echo Therapeutics,
Inc. (ECTE) - very strong uptrend, may want to take partial (or full) profits
here
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Spark Networks,
Inc. (LOV) - still battling with resistance at $2.48
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ICO Inc. (ICOC)
- exploded to the upside, so let's boot it
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BRT Realty Trust
(BRT) - big selloff today, let's drop it as well
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Reading International
Inc. (RDI) - still working at its recovery effort
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Javo Beverage Company
Inc. (JAVO) - the current consolidation could be setting up a move
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ERF Wireless, Inc.
(ERFW) - once again testing resistance at $0.37
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Evergreen Solar
Inc. (ESLR) - getting stale here, let's cut this one from the watchlist
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FCStone Group,
Inc. (FCSX) - now overbought again, let's drop this volatile mover
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Harvest Natural
Resources Inc. (HNR) - the crawler took flight this week.... let's just
observe now
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NPS Pharmaceuticals,
Inc. (NPSP) - the 20 day line broke as support, now in question
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Aradigm Corp. (ARDM)
- tumbled sharply after a big surge, but has regrouped
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COPsync, Inc. (COYN)
- resistance and support are still in play, while the chart is on hold
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Lifevantage Corporation
(LFVN) - support at 60 cents is hanging by a thread
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Options Media Group
Holdings (OPMG) - decent gain on growing volume
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Capital Gold Corporation
(CGLD) - starting to make higher highs and higher lows again
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Real Goods Solar
Inc. (RSOL) - an interesting upside reversal at bottom of range on Thursday
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MCG Capital Corp.
(MCGC) - a little overbought in the short run, but nice long-term uptrend
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China Greentech
Corp. (GRRF) - Resuming its uptrend after big pullback in June, mind the
gap
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Advanced Battery
Technology Corp. (ABAT) - Thursday's big gain may have broken the range
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Updated: 8:15 pm PDT (03:15 GMT), November 2, 2010
