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Apr 21

Review Of Open Positions – Stocks

We had a couple of changes to our portfolio this week. We exited our long in SolarWinds ($SWI) at Monday’s open for a loss of 9.3% after last week’s exit signal. During the week we entered long Alexion Pharma ($ALXN), and after Friday’s disappointing earnings got stopped in IBM ($IBM) which will see us exit at Monday’s open. We will write a separate post on that shortly.

That leaves us with 27 open positions. We currently have 10 losers with an average loss of 4.1%, and 17 winners with an average gain of 13.5%.

It was another week where despite overall market weakness and bearish commentary, there are still many stocks that continue to show great resilience and remain in strong uptrends. This again highlights the importance of following price action and not cutting winning positions simply because the market is weak. We should only be exiting positions because our entry rationale is invalidated. Nothing else. And don’t be concerned if only defensive stocks are leading, they don’t pay you any less, we ride uptrends, we don’t question their legitimacy or the implications of their leadership. Follow price. Only price pays.

As always, let’s start with the losers, then the winners, highlighting any charts worthy of additional comment.

Here are the featured losers:-

Aruba Networks ($ARUN) -7.4%

Aruba has retreated back towards the support levels first probed immediately after our entry in early February. It’s sitting just above that descending trendline we’ve long cited, with the 40-week MA also coming up to meet it.

AlphaCapture

 

On Assignment ($ASGN) -8.9%

$ASGN remains fairly volatile, we’ve known from the beginning we would need to give this some room in order to capture its potential upside, and for now the rationale remains intact but it’s very close to breaking that trendline.

AlphaCapture

 

Range Resources ($RRC) -2.3%

Although $RRC closed lower on the week after a severe test of that breakout level support, I’m giving a lot of weight to how it ended the week with a strong rally and follow through on good volume, given it was also initiated on a weak day for the broader market. Climbing above that $77-$78 could indicate the uptrend is set to resume.

AlphaCapture

 

Microchip Tech ($MCHP) -6.0%

$MCHP was very weak flushing through first support and ending the week with a test of the descending trendline we’ve cited previously, as well as the 200-day MA. A clean break of that confluence of support will see us exit.

AlphaCapture

Other losers are:-

Computer Task Group ($CTGX) -1.9%

PolyOne ($POL) -0.4%

PerkinElmer ($PKI) -5.8%

Cerner ($CERN) -1.2%

Corning ($GLW) -1.8%

Alexion Pharma ($ALXN) -4.9%

 

Here are the featured winners:-

Google ($GOOG) +5.4%

$GOOG rallied strongly Friday after earnings Thursday night. It always amuses me to see analysts spin different stories about how something should be interpreted. As trend followers we don’t need to reason why, we just need to look at price. Saying $GOOG only beat because their tax rate changed is a bit like a losing trader saying if it wasn’t for his losses he’d be profitable. Price tells you all you need to know in this case. We made back two weeks of losses in one day on huge volume. $GOOG had came close to invalidating our entry rationale but it remains in a long-term uptrend. It still has some work to do, but in the first instance holding above $790-94 would give it a solid basis to resume its longer-term uptrend in earnest.

AlphaCapture

 

Time Warner Inc ($TWX) +17.1%

One of the few stocks out there that closed higher on the week, $TWX remains in a solid uptrend. Volume continues to be heaviest on up days. The chart speaks for itself. Seek these out in all market conditions.

AlphaCapture

 

Valeant Pharma ($VRX) +13.7%

$VRX powered higher on Friday, emerging from a two-week period of consolidating in a tight range. It finished just shy of all time highs but managed to post its highest ever weekly close and looks well positioned for further gains.

AlphaCapture

 

Ameren ($AEE) +7.9%

$AEE remains in a strong uptrend, and is one of four utility longs we currently have open. $D, $SRE, $WEC have similar charts, but it was $AEE’s turn this week to move to 52-week highs. A lot has been made of defensive sectors leading this market and the supposed negative connotations. We really don’t care about that, being long a utility doesn’t pay you any less than any other stock. Ignore the noise and just follow what price is telling you.

AlphaCapture

 

Sprint ($S) +21.3%

Sprint leapt higher last Monday on news of a $25.5bn bid from $DISH that would compete with the existing offer from Softbank announced in October. Thank goodness we didn’t listen to the fundamental and arb players who told us when we entered this long that technicals could play no part in assessing this stock because of a tender offer. If that was the case, price would simply remain unchanged. Why even bother opening? Instead price continued to edge higher out of a lengthy consolidation as buyers came in at ever higher prices, and had already successfully broken out before this additional offer was on the table. Listen to price, not pundits.

AlphaCapture

 

Nike ($NKE) +11.7%

Another stock with a small gain on the week in the face of a falling market. Take a look at the volume, there’s just no appetite for lower prices here, all the conviction remains with the buyers and they continue to come in at higher levels, an excellent sign of strength and likely institutional support.

AlphaCapture

Other winners are:-

Green Mountain Coffee ($GMCR) +18.3%

LinkedIn ($LNKD) +41.3%

Visa ($V) +3.1%

Hertz ($HTZ) +30.2%

Dominion Resources ($D) +11.9%

Sempra Energy ($SRE) +8.3%

Wisconsin Energy ($WEC) +9.9%

Fifth & Pacific ($FNP) +16.0%

HCA Holdings ($HCA) +1.1%

Corrections Corp ($CXW) +10.7%

Packaging Corp ($PKG) +1.6%

 

 

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