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All,
Another down week for my portfolio. It's time for a change <G>.
Looking at the indices, the OEX and SPX have moved sideways through the
bottom of their Intermediate Term Up Trend Channels (ITUTCs). On the other
hand, the DJI index is mid-channel and the NASD OTC index looks like it is
trying to bounce off the bottom of its ITUTC. Finally, the Russel 2000
index is in a strong up move having broken through the top of a Horizontal
Channel (HC) earlier this month. This may mean the large caps are going
to take a breather while the small caps catch up.
With this in mind, I want to add some small caps this week. I also
want to move somewhat to the value investing direction, but not forget
momentum entirely. Therefore, I decided to concentrate on some "Growth At
Reasonable Prices (GARP) type screens for small cap stocks. I used Schwab's
Research revised Stock Screener for the screens. My entry strategy will
still be to look for stocks that are breaking out or are bouncing off the
bottom of
up trend channels. After looking at several candidates, I decided on
Colorado
MedTech (CMED) and Pomeroy Computer (PMRY).
CMED at 13 5/8 broke out of a CANSLIM type cup formation this week.
It's in a Short Term Up trend Channel (STUTC) with the top at 15 1/4 (Dev at
2) and the bottom at 12 1/8. It's also been in a Long Term Up trend Channel
(LTUTC) for five years. The top of the LTUTC is at 16 1/2 and the bottom is
at 9. It made its last bounce off the bottom of the LTUTC on 4/9/99 and is
now about in the middle of the LTUTC. I got a MS PV Binary Wave StochRSI
buy signal on Thursday. The fundamentals are great with a price/sales of
3.0, no debt, 5 yr projected earnings growth of 30%, 1999 PE of 15, and PEG
of 0.5. Since this is a breakout, I'll buy it shortly after the open
Monday. I'll set my initial target just under the top of the LTUTC at 16.
I'll set my stop just under the bottom of the STUTC at 11 3/4.
PMRY at 14 is in a MS standard deviation STUTC with the top at 15 3/4
(dev at 2) and the bottom at 13 5/8 (dev at 1). It's a volatile stock
(Beta=2)
that set its all time high of 30 5/8 way back in Oct97. It then fell 50% in
three months only to rebound to its 52 week high of 28 3/8 on 7/20/98. It
then fell to a double bottom of 11 in Sep98 and Oct98. It then rose to a
high
of 23 1/8 on 2/26/99 before again testing the 11 area and setting a multiple
bottom in the 11 1/2 to 11 3/4 area in March, then in April, and finally
again
on 5/11/99. From there it rose to break out of a Short term Down trend
Channel and set its current STUTC. It gave a MS Tema StochRSI buy
signal on 05/17/99. It's fundamentals are terrific with a price/sales at
0.3,
debt/equity at 0.1, 5 yr projected earnings growth at 21%, 1999 PE at 6,
and PEG at 0.29. I've entered a buy stop just above the last several days
high at 14 3/8. If I get the position, I'll set my target just below the 52
week
high at 28 and my stop just below the bottom of the STUTC at 12 3/4. If it
closes below the stop before it hits the buy stop, I'll cancel the buy stop
order.
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