Opportunity Buffet Part 1 | stockbee

7/22/2007

Opportunity Buffet Part 1

With only 55 stocks up 4% or more on Friday, we have a small set of opportunities to work with. Many times when you have a very lopsided upside breakout to downside breakout ratio like we saw on Friday, the breakouts are best avoided as chances of follow through diminishes.

The 4% breakout system is self adjusting. When market enters a prolonged bearish phase, you get very few long side breakout. That itself reduces your risk as it is unlikely you will find much in long scans during such periods. When the long opportunities dry up, short opportunities increase. Most downside moves involve intense selling periods where you will have 4-6 days of concentrated selling, such period is the riskiest for long entries. Once that period passes the long to short ratio stabilizes and it is easier to find long opportunities.

Bullish IBD 70 plus EPS

There are only 9 stocks in this list. Many of the moves in these stocks are event related.

ACO,Amcol International Corp (Google Yahoo Earnings Chart)
ANIK,Anika Therapeutics Inc (Google Yahoo Earnings Chart)
BGH,Buckeye Group Holdings LP (Google Yahoo Earnings Chart)
ISRG,Intuitive Surgical Inc (Google Yahoo Earnings Chart)
KCI,Kinetic Concepts Inc (Google Yahoo Earnings Chart)
OMCL,Omnicell Inc (Google Yahoo Earnings Chart)
PVG,Penn Virginia GP Holdings (Google Yahoo Earnings Chart)
TPX,Tempur-pedic Intl (Google Yahoo Earnings Chart)
WDC,Western Digital Corp (Google Yahoo Earnings Chart)

Out of this list 4 stocks: ANIK, OMCL, ISRG, and TPX have less than 10% price growth in last one month. ANIK was a buy three daysago when it appeared in the same scan . The three remaining stocks have earnings or news related breakouts and gap. They are better buys on pullback. Tomorrow I will have a post on how to further narrow down this list to one or two best opportunities on days when you have 10 to 15 candidates meeting the criteria.

Bullish Double Trouble


The Double Trouble system works on a simple premise of relative strength. Stocks with shorter term relative strength have been shown to continue outperforming the market for next 6 months to a year. Unlike the IBD 70 plus scan, this scan candidates earnings or other fundamentals are irrelevant. There are many reason these stocks are going up and all we care about is that Mr Market thinks that they are worth going up.

Lets take a stock like REFR appearing in this scan today. It is up 273% in last 260 days. If you study this company, it owns patents on some glass related technology. This company has been in existent for last 40 years. It has never been commercially successful. From time to time it signs up some glass manufacturers in some obscure corner of the world for its technology. Management appears on TV, rings the opening bell. Bingo stock goes up . During the ride up several carefully worded press release with forward looking projections are issued. A rights issue happens. Management sells tons of shares and the cycle continues. Now if you speculate based on fundamentals, you would never touch this company. But in Double Trouble, you should not be troubled by such companies. As long as there are greater fools above this price, how does it matter. So if you intellectualize too much about Double Trouble candidates, you will be in trouble. Why buy them, because they are going up.

BGH,Buckeye Group Holdings LP (Google Yahoo Earnings Chart)
CHTP,Chelsea Therapeutics International Ltd (Google Yahoo Earnings Chart)
GMO,Idaho General Mines Inc (Google Yahoo Earnings Chart)
ISRG,Intuitive Surgical Inc (Google Yahoo Earnings Chart)
KCI,Kinetic Concepts Inc (Google Yahoo Earnings Chart)
NCST,NUCRYST Pharmaceuticals Corp (Google Yahoo Earnings Chart)
PTEC,Phoenix Technologies Ltd (Google Yahoo Earnings Chart)
PVG,Penn Virginia GP Holdings (Google Yahoo Earnings Chart)
REFR,Research Frontiers Inc (Google Yahoo Earnings Chart)
TPX,Tempur-pedic Intl (Google Yahoo Earnings Chart)
WFII,Wireless Facilities Inc (Google Yahoo Earnings Chart)

Out of this list 4 stocks meet the less than 10% growth in one month criteria: REFR, NCST, ISRG, TPX. All four are possible buys on pullback.


Bullish Multi Year Leaders
Only one stock, ISRG, appears on this scan today.

Bullish Distressed Stock
There are seven stocks in this list today.

ADLR,Adolor Corporation (Google Yahoo Earnings Chart)
DRL,Doral Financial Corp (Google Yahoo Earnings Chart)
KAL,Callisto Pharmaceuticals Inc (Google Yahoo Earnings Chart)
NEOL,Neopharm Inc (Google Yahoo Earnings Chart)
VSGN,Vasogen Inc (Google Yahoo Earnings Chart)
WEDX,Westaim Corporation (Google Yahoo Earnings Chart)
WGAT,Worldgate Communications (Google Yahoo Earnings Chart)

Out of this stocks worth a second look are : NEOL, WEDX, and VSGN.

Bullish Two Year IPO
As I said last week, there is a request to add the IPO breakout list to opportunity buffet from one of the regular IPO trader. So we have 15 stocks in this scan today. They have all IPOed in last two years as per Telechart data.

BGH,Buckeye Group Holdings LP (Google Yahoo Earnings Chart)
CHTP,Chelsea Therapeutics International Ltd (Google Yahoo Earnings Chart)
FOXH,Foxhollow Technologies Inc (Google Yahoo Earnings Chart)
GMO,Idaho General Mines Inc (Google Yahoo Earnings Chart)
IOMI,Iomai Corp (Google Yahoo Earnings Chart)
LDK,LDK Solar Co Ltd (Google Yahoo Earnings Chart)
LIV,Samaritan Pharmaceuticals (Google Yahoo Earnings Chart)
LUNA,Luna Innovations Inc (Google Yahoo Earnings Chart)
NCST,NUCRYST Pharmaceuticals Corp (Google Yahoo Earnings Chart)
NSTR,Northstar Neuroscience Inc (Google Yahoo Earnings Chart)
POSH,BabyUniverse Inc (Google Yahoo Earnings Chart)
PP,Pipex Pharmaceuticals Inc (Google Yahoo Earnings Chart)
PVG,Penn Virginia GP Holdings (Google Yahoo Earnings Chart)
QRCP,Quest Resource Corp (Google Yahoo Earnings Chart)
SPSN,Spansion Inc (Google Yahoo Earnings Chart)


Out of this list 6 stocks are worth further research: SPSN, NCST, FOXH, POSH, PP, PVG.
Tomorrow I will have a post by one of the IPO trader on her observations about what works in trading IPO's.

Now besides this there are 17 stocks in the Bullish Episodic Pivots list. These are the kind of stocks which have the fuel to buck the negative trend in market and power ahead. Many of them have powerful catalyst. As you must have noticed I have added a spreadsheet in the sidebar for Episodic Pivots, it tracks the bullish candidates end of day and some days intra day. This is a collaborative effort headed by Mike along with other volunteers. I will be adding my comments to it from time to time and at some future date add the EP candidates to daily Opportunity Buffet analysis.

6 comments:

Joe said...

Pradeep,

Thanks so much for sharing such valuable information with us. It's the most valuable blog for me by far.

My question: How do you get Bullish IBD 70 plus EPS list? Is it from your subscrition to IBD tables?

Thanks, Joe

Pradeep Bonde said...

IBD allows you to put 40 stocks each in 2 list, if you are IBD subscriber.
This is under My Stock List (you don't need IBD etables subscription for this)

So I have got my wife to write a software hack, which takes the 4% plus breakout list and feeds it in to IBD semi automatically. From that I pick 70 plus EPS candidates. Because of the 80 limit, one has to iterate this on days when there are more than 80 candidates.

So in short part of it is done automatically, part manually.

Pradeep Bonde said...

In more simple language what the hack does is :
1 takes 4% breakout list from Tlechart
2 Breaks it down in to batch of 40 each.
3 Removes certain B shares which IBD does not recognize.
4 Loads the list to IBD my stock list
5 Manually I note the 70 plus stocks in to a formatted table in the hack.
6 It creates a file and loads it back to Telechart as Watchlist.

I do not know how it happens, but that is what happens and I specified what I wanted.

Joe said...

Thank you, Pradeep.

I enjoy your explanatons as much as your comments on the general sentiment and perma-bears, a most stunning group of individuals.

Joe

mgold said...

Pradeep, u continually mention entering after pullbacks......is that a pullback with a 4% BO or just pullback?

Also, how do you narrow down the 70plus to 1 or 2 candidates?

Thanks!

Pradeep Bonde said...

1just pullback
2 see todays Opportunity Buffet for answer to how to narrow down.